Credit Requirements For MI with MGIC Will Tighten!! This Could Be CRUCIAL!!

Mortgage and Lending with Keystone Alliance Mortgage NMLS# 1219828

I recieved this letter from MGIC and they are one of the largest MI companies. It will only be a matter of time before the other MI companies follow suit. This will now require stricter guidelines for approvals. 



Mortgage Guaranty Insurance Corporation

February 6, 2008

Dear Valued Customer:

As a result of our ongoing evaluation of market conditions and loan performance, we are making a number of changes to our base underwriting guidelines and have created a new set of guidelines for areas exhibiting market weaknesses. The following underwriting guideline changes are effective for mortgage insurance applications received by MGIC on or after March 3, 2008:

Standard (A) guideline changes:

LTVs greater than 95% require a minimum credit score of 680.
LTVs 95% or less require a minimum credit score of 620.
Loans with nontraditional credit require a manual MGIC underwrite and are limited to a maximum LTV of 95%.
Primary residence cash-out refinances require a minimum credit score of 680; and the maximum LTV is 90%.
Cash-out refinances of investment property loans are ineligible.
Loans with potential negative amortization, including Pay Option ARMs, are ineligible.
Expanded Criteria (A-) guideline changes:

The maximum LTV is 95%.
The minimum credit score is 660.
Primary residence cash-out refinances require a minimum credit score of 680. (The current maximum LTV of 90% remains.)
Reduced Documentation (Alt-A) guideline changes:

The maximum LTV is 90%.
The minimum credit score is 660.
As announced on Nov. 30, 2007, at least 50% of qualifying income must come from self-employment. See our Underwriting Guide at for our self-employed definition.
Streamline Refinance changes:

Only loans already insured by MGIC are eligible for our Streamline Refinance program.
Additional revisions to our refinance guidelines will be posted on our website by February 15, 2008.
Restricted Markets:

We are further modifying our Restricted Markets policy (originally announced on Nov. 30, 2007). While we will no longer require reducing maximum LTV/CLTV by 5%, we are establishing specific underwriting guidelines for loans insured in Restricted Markets. MGIC's list of Restricted Markets is posted on our website,

Standard (A) guideline changes in Restricted Markets:

LTV/CLTVs of 90.01%-95% require a minimum credit score of 680.
LTV/CLTVs of 90% or less require a minimum credit score of 620.
The maximum LTV/CLTV for condominiums is 90%.
The maximum LTV/CLTV for MGIC's SingleFile program is 95% and a minimum credit score of 720 is required for all LTVs.
The following are not eligible in Restricted Markets:

LTV/CLTVs greater than 95%
Expanded Criteria (A-) product
Reduced Documentation Alt-A) product
Investment property loans
Cash-out refinances
Potential negative amortization, including Pay Option ARMs
Additionally, loans not in an MGIC Restricted Market must meet the declining markets policy of both the lender and of the applicable Agency at the time of origination if:

The appraiser designates the secured property as in a market having declining values and/or
The loan receives a "Declining Markets" message from Desktop Underwriter® or Loan Prospector®
Please note that MGIC does not automatically approve loans for mortgage insurance based upon specific Agency AUS recommendations/decisions.

All of the above underwriting policy changes supersede existing lender exceptions and program approvals.

As previously announced, new premium rates across many of our insurance products
( will also go into effect March 3, 2008, subject to regulatory approval.

In addition to these changes, we are in the process of revising our SingleFile, LPMI, Split Premium and One-Time MI programs. We will provide you with updated information as soon as possible.

Thank you for your business in these challenging times.


Sal Miosi
Vice President - Marketing


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Kirk Williams
Private Venture Capital - Everett, WA
YEP, FHA is going to be doing the heavy lifting for the lower tier credit profiles and if they modify the down payment from 3 to 1.5% that will be a good thing.
Feb 09, 2008 04:39 AM #1
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

I wonder if the performance of regular A paper high LTV loans has really been that bad?  From what I understand, the foreclosure rate has doubled, but that something like 96% of loans are still performing.  When you take all of the 2/28's and other sub-prime mortgages (which directly didn't have PMI) I would think that the foreclosure rate on regular A paper < 80% loans wouldn't be that bad?  I'd love to see the figures???


Bob Mitchell

ValueList Real Estate Services, Inc. 

Feb 09, 2008 04:42 AM #2
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana
I would have to guess this will become widespread over time.  Owning a home will become the American dream once again.
Feb 09, 2008 04:43 AM #3
Andres Munar
Keystone Alliance Mortgage - State College, PA
Experience The Difference
John- This is so true it will only be a DREAM now..... 1 in every 10 applications I get and thats being nice are over 680....and since fannie mae only allows 3% sellers borrowers will now have to put down 5% plus the rest of their closing costs and still have some kind of reserves left over
Feb 09, 2008 04:49 AM #4
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Andres Munar

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