Changes in PMI - Industry Wide!

The following mortgage insurance companies have issued bulletins announcing a number of eligibility changes going into effect soon.   
United Guaranty:  Effective March 10^th the following changes will go into effect:

• DU Expanded Approval Level I and LP Caution 500 Eligible loans with LTV > 95% will be ineligible
• Pay Option ARM’s with potential negative amortization will be ineligible
• Non Traditional Credit with LTV > 95% will be ineligible
• ARMs with first rate adjustment less than 5 years max 95% LTV
• Does not apply to loans receiving DU Approve/Eligible or LP Accept/Eligible
• Limited Doc loans:
•  must have at least 50% of the qualifying income from self-employment.  All non-self-employed income used for qualifying must be documented.
• SIVA and SISA with LTV > 90% will be ineligible
• SIVA  minimum FICO 680 for 2 units
• SISA  minimum FICO 700 for 2 units
• Cash out refinances will be ineligible
• ARMs with first rate adjustment less than 5 years are ineligible
• Limited documentation that does not require disclosure of income and/or assets is ineligible (i.e. No Ratio, NINA, No Doc)

          AUS Doc waiver loans that meet the following are not subject to these policy changes:

• Borrower is applying for full doc loan
• Loan is underwritten by DU/LP and receives either an Approve/Eligible or Accept/Eligible
• Findings do not require income and/or asset documentation

·         Loans that do not use lowest score of all representative borrower scores are ineligible.

·         Maximum of two loans insured per borrower, with only one insured per borrower of the following:

• Primary
• 2^nd home
• NOO
• A-miunus
• Limited Doc

• Interest-Only:
•  maximum LTV 95%
• Minimum 680 FICO
• 2^nd homes are not eligible
• 3-4 units are not eligible
• These changes do not apply to loans receiving DU Approve/Eligible or LP Accept/Eligible

·         A-minus:

• Max 95% LTV for purchase and rate term refinance of 1 unit, primary residence
• Minimum first rate adjustment of 3 years for ARMs
• 2^nd home ineligible
• NOO ineligible
• 3-4 units ineligible
• These changes apply to all loans including DU Expanded Approval Level I, II or III, and LP Caution 500-Eligible

  Effective March 31^st, some rate fees will be increased including but not limited to:

         Monthly ReadiRates

        Selected adders for loans > 95.01% LTV

         Limited Doc

         A-minus monthly

  RMIC: Effective March 21^st the following changes will apply regardless of any Automated Underwriting System (AUS) decision or recommendation.

• A Paper and A-Minus:

        Loans with a FICO score below 620 will be ineligible.

       Loans with a loan to value ratio (LTV/CLTV) over 95% and a representative FICO score below 680 will be ineligible.

        Cash-out refinance loans with representative FICO scores below 680 will no longer be eligible.

        Cash-out refinances will no longer be eligible.

        A-Minus loans with representative FICO scores below 660 will no longer be eligible.

         Declining Value:

• In addition to loans which receive a declining value message from an automated underwriting system (AUS) such as Desktop Underwriter or loans on properties for which the appraisal indicates that property values in the subject neighborhood are "declining" being subject to Declining Value Policy guidelines and eligibility requirements, all properties in the states of AZ, CA, FL, MI, NV and OH must meet these requirements.

        In addition to the maximum allowable LTV/CLTV on declining value properties requiring a five percent reduction from the LTV/CLTV otherwise allowed by RMIC's underwriting guidelines, the following guidelines and eligibility requirements will also apply:

         A-Minus loans, Investment Properties, Cash-Out Refinances, and loans with Reduced Documentation on declining value properties are not eligible for RMIC coverage.

         LPMIpreferred pricing will require a minimum representative FICO score of 720 on declining value properties.

         Loans secured by condominiums determined to be of declining value will be limited to a maximum LTV of 90%, except where the LTV is limited to less than 90% by other factors

• A Paper Monthlies/ZIP Monthlies base rates for loans with LTVs over 95% will be split into two segments: 95.01-97.00% and 97.01-100.00% LTV. Each of these LTV bands will be segmented by two FICO score ranges: 680-699 and 700+. The table below shows selected new A Paper premium rates.

GE:   Effective March 17^th the following changes will go into effect:

• Standard A Loans:

• Loans with LTV > 95% and a credit score < 680 will be ineligible.
• Loans with LTV < 95% and a credit score < 620 will be ineligible.
• Cash out refinances with a credit score < 680 will be ineligible.
• The 103% LTV product will no longer be available as a standard product.

• A Minus Loans:
• EA II, EA III, Refer w/ Caution, and Refer w/ Caution IV will be ineligible.
• All A Minus loans with a credit score < 660 will be ineligible.
• Cash out refinances will be ineligible.
• Manufactured homes will be ineligible.

         Nontraditional Credit or Unscoreable maximum LTV will be 95%.

         Update to Declining/Distressed Markets Policy:

• For properties located in Declining/Distressed markets (as indicated by Genworth’s Declining/Distressed Market Policy, the Appraisal, or Agency AUS indication) the following loan characteristics will be ineligible:

        LTV/CLTV > 95%

         A Minus

         Alt A

         Investment properties

         Cash out

        Interest only

         Nontraditional credit

         Condominiums with LTV >90%

• As per Genworths Declining/Distressed Market List as of January 6, 2008, the following MSAs are considered Declining/Distressed:

         19740 Denver-Aurora, CO Metropolitan Statistical Area Principal Cities: Denver, Aurora Adams County, Arapahoe County, Broomfield County*, Clear Creek County, Denver County, Douglas County, Elbert County, Gilpin County, Jefferson County, Park County

      *Broomfield organized as a new county on November 15, 2001     

      and is coextensive with Broomfield city. For purposes of

      defining metropolitan statistical areas, Broomfield city was

      treated as if it were a county at the time of the 2000 census;

      the standards were applied to data for Broomfield city.

         24540 Greeley, CO Metropolitan Statistical Area  Principal City: Greeley, Weld County

PMI:  Effective March 21^st the following changes will go into effect:

• Loans with LTV and/or CLTV ratios of 97.01% and above, regardless of the automated underwriting system (AUS) decision, are not eligible
• DU Expanded Approval Level I (EA I) AUS recommendations for LTV/CLTV ratios of 95.01% and above are not eligible.
• Limited Documentation: at least 50% of the total qualifying income will need to come from non-salaried sources.
• Distressed Markets:
• 5% LTV/CLTV reduction will be required from the maximum financing allowed for all loan products/programs, not to exceed 90% LTV/CLTV

• Pay options ARMs and A-Minus (FICO scores 575-619) loans for properties in distressed markets are not eligible for mortgage insurance.

          Distressed Markets are defined as (1) specific geographic areas where

          property values are declining or are likely to decline; and (2) specific

          geographic areas where property values are being influenced by 

          foreclosures and unemployment rates, among other factors.

          This policy applies when the following indicators are present:

• The appraisal report indicates declining values; or
• A declining market message from an AUS system is received; or
• A lenders independent research reveals that the subject property is located in a declining market; or
• The subject property is located in an MSA/MSAD on the PMI Distressed Markets List

*Information courtesy Tonya Esquibel, WR Starkey Mortgage,Franklin Tn*

Stay tuned for updates.

Vanessa Stalets
Brentwood TN Real Estate

RE/MAX Elite
615-957-6333
615-661-4400