Mortgage mess expanding, says AIG

Borrowers in the category just above subprime are reporting more residential mortgage delinquencies, according to AIG
In a presentation to investors, the world’s largest insurer and one of the biggest mortgage lenders said that more than 10% of its subprime mortgages were 60 days overdue, while 4.6% in the category just above subprime were late during the second quarter.
Also, total delinquencies in AIG’s $25.9 billion mortgage insurance portfolio came out to 2.5%.
Delinquency rates for first mortgages, which represent 90% of AIG’s domestic mortgage business, also jumped to 3.89% in June, up from 3.56% in April, the insurer reported.
Although second-lien mortgages only made up 10% of AIG’s mortgage insurance portfolio, it incurred $159 million in the losses during the second quarter.
These mortgages are susceptible to defaults and are especially sensitive to falling home values, New York-based AIG said.