PMI insurance companies, whose backing is required for borrowers that don't have the traditional 20% down payment requirement, have already cut off 25% of nation's zipcodes. They are refusing to insure home loans in a wide variety of areas. See if your area is listed below for areas that are blackballed on some insurer's lists.
The entire States of Florida, California, Nevada, Ohio, Michigan, and Arizona.
Of course these are the States with the highest foreclosure rates, so I can't say that I blame them. I guess you have to ask, if it were your money, would you loan it? It looks like it is going back to the old days, at least for now, where you will need 20% down payment to get a mortgage loan to get into home. You haven't needed 20% down for about 20 yrs. Foreclosures have more than tripled in the last year in Broward & Palm Beach County, FL. The foreclosure rates are expected to continue through this year.
If you own a home now, your best bet is to try your best to stay in it, even if it's lost value. The values will come back. It may take a few years for the values to come back up, but it may be years before the mortgage industry loosens up mortgage lending again.
In recent weeks, mortgage insurers have flagged over 9,600 ZIP codes in at least 34 states where they won't insure certain types of home loans - those for investment properties or second homes, those with riskier adjustable-rate or interest-only mortgages, or for buyers making down payments of less than 3 percent.
Wells Fargo now requires a 25 percent down payment in the most distressed markets, according to a document sent to mortgage brokers last month. Companies that provide second mortgages are now denying requests, common in a refinance transaction, to take secondary position in the event of a foreclosure. Those lenders now want to be paid off if the borrower is refinancing their first mortgage.
Have a Great Day,
Sandra Sheely
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Depending upon the loan limits FHA will replace the PMI company however for the upper end that are above and beyond the HUD loan limits that obviously will be a problem and the FED will be working on the resolution for that too.
Good information.