Mortgage Insurance Companies drop the Hammer today

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.

• 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 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.

•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 refinances are ineligible for second homes and investment properties.

2/22/2008

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.

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