Here are a few the NEW changes, effective 6/2/08, coming from MGIC, the oldest and largest mortgage insurance company in the world. And when MGIC makes changes, the rest of the industry follows.

1. MGIC will no longer insure a low or no-doc type of loan.
2. Negative amortization loans, those which can the loan balance can grow due to the payment structure, are no longer insurable.
3. Non-warrantable condo's are no longer insurable.
4. Cash-out refi's are not insurable.
5. 2 months of reserves may be required and more reserves can strengthen the overall picture.

As noted in the story above this post, the MI companies have been bleeding cash for some time now and are tightening up their belts and adopting stricter underwriting guidelines. They realize the loss of some of their potential business to FHA and FHA lenient lending guides. Being publicly traded companies that have to earn a profit to stay afloat, the MI companies are forced them to tighten up their ships and move towards profitability with stricter guidelines, increased insurance costs where applicable and enforcing their sound guidelines.

You can find more information on this topic at www.MGIC.com

Information provided by Ken Pederson, Certified Mortgage Planner, CMPS at FAIRWAY Independent Mortgage Corp. in Lancaster, PA.