Mortgage Insurance Companies drop the Hammer today

By
Mortgage and Lending with Gateway Mortgage Group 760290
Here is a quick VERY important article, basically new changes taking effect in March are as follows:  620 mid fico to qualify for mortgage insurance and any a minus customers must have a 660 score to qualify for mortgage insurance or these people will have to put 20% down, no mi is available..see below for company change here is just one of the companies that are changing but I have checked the other 2 MGIC is worse and RMIC is very translucent but along these same lines...  

Eligibility, Guideline, and Declining Market Changes

Effective March 10, 2008

Based on continuing evaluation of industry changes and performance, AIG United Guaranty is making the following guideline and eligibility changes effective for all applications for mortgage insurance received on or after March 10, 2008.

These changes append the notice sent to customers by AIG United Guaranty on January 22, 2008. All changes can be viewed at https://www.ugcorp.com/miunderwriting.html.

Eligibility Changes

LTV/CLTV and Credit Score:

• All loans with an LTV and/or CLTV above 97% are ineligible for AIG United Guaranty mortgage insurance, including loans underwritten by Fannie Mae Desktop Underwriter® and Freddie Mac Loan Prospector.®

• All loans with an LTV and/or CLTV of 95.01 to 97% and a credit score below 680 are ineligible for AIG United Guaranty mortgage insurance, including loans underwritten by Fannie Mae Desktop Underwriter and Freddie Mac Loan Prospector.

• All loans with an LTV and/or CLTV up to 95% and a credit score below 620 are ineligible for AIG United Guaranty mortgage insurance, including loans underwritten by Fannie Mae Desktop Underwriter and Freddie Mac Loan Prospector.

These LTV/CLTV and credit score eligibility changes do not apply to rate/term refinance transactions that are currently insured by AIG United Guaranty when:

 The new loan amount is not increasing more than 2% above the original loan amount; and

 The coverage percentage is not increasing above the original coverage percentage.

A-minus:

•A-minus loans with a credit score below 660 are ineligible for AIG United Guaranty mortgage insurance, including loans underwritten by Fannie Mae Desktop Underwriter and Freddie Loan Prospector.

Guideline Changes

Investment Properties:

•Investment property loans underwritten by Fannie Mae Desktop Underwriter and Freddie Mac Loan Prospector require a minimum 660 credit score. All other investment property loans will continue to require a minimum 660 credit score.

Cash-Out Refinance Transactions:

•Cash-out refinances are ineligible for second homes and investment properties.

2/22/2008

Declining Markets

The following changes remove AIG United Guaranty's recently announced restrictions for California and Florida effective March 10, 2008.

Declining Markets Definition:

Effective with all applications for mortgage insurance received on or after March 10, 2008, AIG United Guaranty will consider the property being a declining market when any one or more of the following exist:

•Property is located in an AIG United Guaranty identified MSA;

•Property appraisal has any negative comments, including but not limited to, adjustments or indications of being in a declining market (oversupply, over six months' marketing time, or declining markets check box noted);

•GSE AUS response identifies the subject property location as being in a declining market;

•Lender has any other market intelligence or knowledge of the subject property being in a declining market.

AIG United Guaranty's MSA Listing will be posted on www.ugcorp.com by the end of February and will be updated quarterly.

Declining Market Underwriting Restrictions:

In addition to the changes to AIG United Guaranty's definition of declining markets shown above, the following restrictions apply to all loans secured by properties located in a declining market. These restrictions are effective for all applications for mortgage insurance received on or after March 10, 2008, and apply to loans located in a declining market.

AIG United Guaranty's Declining Markets Underwriting Restrictions do not apply to rate/term refinance transactions that are currently insured by AIG United Guaranty when:

 The new loan amount is not increasing more than 2% above the original loan amount; and

 The coverage percentage is not increasing above the original coverage percentage.

A full Uniform Residential Appraisal Report (URAR), with interior/exterior inspections, is required when the property is located in an MSA identified as a declining market on AIG United Guaranty's MSA Listing.

The following loans are ineligible when located in a declining market as defined above (no exceptions):

 LTV/CLTV greater than 95%.

 Cash-out refinance.

 A-minus loans.

 Investment properties (including owner-occupied 3- to 4-unit dwellings).

 Second homes secured by 2- to 4-unit and cooperative dwellings.

 Limited documentation (this does not include AUS doc waiver loans).

 Manufactured housing.

 Interest-only ARMs with first rate adjustment less than 5 years.

 Potential negative amortization.

 Loan amounts greater than $650,000.

2/22/2008

Owner-occupied, purchase and rate/term refinance transactions are limited as follows:

 Maximum LTV/CLTV of 95% requires a minimum credit score of 680.

 LTV/CLTV of 90% requires a minimum credit score of 620.

 Maximum LTV/CLTV of 90% for condominiums, cooperatives, and 2-unit properties.

 ARMs are limited as follows:

•Minimum first rate adjustment of 5 years (5/1, 7/1, 10/1).

•Maximum 90% LTV for interest-only.

•Minimum interest-only period of 10 years.

 Borrowers must make a 5% down payment contribution from their personal funds. An additional down payment

greater than 5% may be from a gift. See AIG United Guaranty's Underwriting Guidelines at www.ugcorp.com for additional information on gift funds.

Second Home (1-unit only), purchase and rate/term refinance transactions are limited as follows:

 Maximum LTV/CLTV of 90% with a minimum credit score as follows:

•Single-family detached dwellings require a minimum credit score of 660.

•Condominiums and PUDs require a minimum credit score of 700.

 No gifts are allowed for down payment.

 ARMs are limited as follows:

•Minimum first rate adjustment of 5 years (5/1, 7/1, 10/1).

•Minimum interest-only period of 10 years.

United Guaranty Residential Insurance Company •United Guaranty Mortgage Indemnity Company

230 N. Elm Street/27401, P.O. Box 21567, Greensboro, NC 27420-1367 •800/334-8966 •ww.ugcorp.com •www.aig.com

A Member Company of American International Group, Inc. (AIG)

AIG United Guaranty is a marketing term for United Guaranty Corporation and its subsidiaries.

Desktop Underwriter (DU) is a mark of Fannie Mae, Loan Prospector (LP) is a mark of Freddie Mac.

2/22/2008

Sincerely,  

Shelby A. Chapin
Broker/Owner
Texas Country Mortgage
(210)858-6713 Office
(210)745-2965 Fax

Comments (6)

Jimmy McCall
JimmyMcCall.com - Cunningham, TN
The Ex-Mortgage Consultant
Shelby,  Thank you for this contribution.  It is very good information.  We have so much to keep up on as originators it is nice to have this reference.
Feb 26, 2008 11:50 AM
Darren Stewart
Mortgage Investment Services Corporation - Broken Arrow, OK

Shelby,

Great information on the changes, thanks for updating me, I wanted to make sure that you heard the new Freddie Mac announcements and the changes on the delivery fees on credit scores below 740 and LTV's above 80 percent... there are some changes and I am trying to spread the word.

 

Darren Stewart

OakStar Bank

 

Feb 26, 2008 03:15 PM
Shelby Chapin
Gateway Mortgage Group - New Braunfels, TX
A Known Expert in Mortgage Lending
Yes Darren, I heard on FHA not good ..higher rates...the thing I am concerned most about is being able to refinance the Aminus customers out of their arm...I definitely think this will impact foreclosures and plan to type a letter to everyone who needs to know..Bernanke, Frank Barney,Dodd etc.  If they do not qualify for an FHA Secure, they could have been EA1,2,3 and I could still have done them, actually just closed an EA3 618 full doc teacher deal, took them off an arm, cannot do these anymore, unbelievable
Feb 27, 2008 02:16 AM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States
Thanks for the updates, Shelby. MGIC and PMI are making similar adjustments. Now, we have FNMA's "appraisal clearinghouse" coming down the pipe, too!
Feb 28, 2008 04:59 PM
Thomas Frankito
Bank of America Home Loans - Mentor, OH

I love these mi companies.  For years they cried and cried about how the 80/20 was hurting business for them.  Now we give it back to them and they don't want it.  Nice.  I am fighting with them over an appraisal that they are underwriting for our state bond program.

Mar 09, 2008 07:30 PM
Anonymous
Anonymous

 

KKKK

Mar 11, 2008 05:24 PM
#6