MGIC is making changes to its underwriting requirements that impact required documentation and cashout availability. Also changing are mortgage insurance premiums.
According to the Milwaukee-based company, loans with an “Approve/Ineligible” or “Accept/Ineligible” can utilize documentation requirements for employment, income and assets from Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Prospector.
But standard documentation required by the mortgage insurer for manual underwriting is needed for transactions that receive any other response.
The changes, outlined in MGIC Bulletin #04-2013, become effective on March 4.
MGIC is modifying cashout requirements so that the loan amount can include up to $100,000 for closing costs and prepaids; payments to any other payees, including subordinate lienholders; and cash directly back to the borrower.
Expanded cashout requirements are available on loans secured by detached, attached, condominium and cooperative properties. However, attached properties, condominiums and cooperatives are unacceptable property types for some areas of Florida and Nevada.
The mortgage insurance company requires that at least one borrower in a cashout transaction has had an ownership interest in the subject property for at least six months.
In addition, no foreclosures, deeds in lieu or short sales are allowed within the last seven years.
MGIC noted that borrowers still need a 720 minimum credit score and maximum 40 percent debt-to-income ratio on cashout transactions.
Subject to regulatory approval, new MGIC premium rates will go into effect on May 1.
Impacted borrower-paid programs include mortgages with loan-to-value ratios of between 95.01 percent and 97 percent with monthly, annual and nonrefundable single premiums. Lender-paid monthly and single premiums are also changing.
On loans with LTV ratios that don’t exceed 85 percent, borrower-paid non-refundable single premiums and lender-paid single premiums will change.
In addition, loans at all LTV levels with terms of 25 years or less and credit scores of at least 760 will see borrower-paid non-refundable single premiums updated and lender-paid single-premiums revised.
