Mortgage insurance companies are easing guidelines, increasing loan amounts and eliminating declining market status for many metropolitan areas. The relaxed standards are emerging as the sector is seeing improved conditions.
Radian Chief Financial Officer Bob Quint recently noted that the improving market has stabilized the performance of loans it insures. He also said the market started shifting to privately insured mortgages from loans insured by the Federal Housing Administration during February.
PMI Group Inc. said last month that a sale of common stock and senior notes raised $706 million –enough to bring its primary mortgage insurance underwriter back into compliance with the risk-to-capital ratio and minimum policyholders’ position required by some states. The unit’s risk-to-capital ratio on a pro forma basis was 13.4:1 as of March 31.
On June 18, Radian began waiving its adjustment on rate-and-term refinances for borrowers with FICO credit scores of at least 760, according to eBulletin 2010-04. The waiver applies to BPMI and LPMI prime rate cards.
Two months earlier, Radian said in eBulletin 2010-03 that rate cards now include risk-based pricing for single premium policies for borrowers with FICO scores of at least 760.
MGIC said in bulletin 02-2010 that non-retail guidelines were expanded on May 1 to match retail guidelines. The move was the result of historical data that the company began recording on third-party originations last year.
It also announced that underwriting guidelines in non-restricted markets were expanded. Among the changes was the ability to insure refinances of purchase-money seconds and home-equity lines-of-credit as long as the loan-to-value doesn’t exceed 95 percent and the credit score is at least 720.
MGIC also raised the maximum insurable loan amount to $625,500 on loans up to 90 percent LTV with credit scores of at least 700. Higher loan amounts are available based on caps set by the Federal Housing Finance Agency. On construction-to-permanent loans, MGIC said it now goes to 95 percent up to $417,000 and 90 percent LTV to $625,500
Fannie Mae recently issued announcement SEL-2010-07 indicating that its selling guide has been updated to clarify questions arising from announcement 09-29. The updates address the types of payment plan options mortgage insurers can offer for borrower-paid mortgage insurance premiums.
United Guaranty recently lifted its 3 percent limit on seller contributions, according to bulletin 2010-08. In addition, the company will consider properties owned less than 90 days in purchase transactions, and taxable income can now be grossed up by 25 percent.
Bulletin 2010-06 reminded lenders that all partial releases and most loan modifications on loans insured by United must be sent to the insurer for approval or notification. The mortgage insurer also must approve loan assumptions based on a full credit package for the new borrower if the original borrower is to be released from liability.
On Friday, PMI removed 105 metropolitan statistical areas from its distressed markets list. Among the areas removed were Chicago, Los Angeles and New York City. Also lifted from the list were Boston, Seattle and Washington, D.C.
In bulletin CA 2010-11, United moved 20 CBSA’s from a classification of “severely declining” to “moderately declining.” In addition, 59 CBSA’s were moved to “stable” from “moderately declining.” The updates were effective on June 14.
United said in bulletin CA 2010-07 that properties on its list are still considered to be in declining markets even if the appraiser notes the area is stable. In addition, properties which the appraiser considers to be in a declining areas aren’t considered as such unless they are on United’s list.
MGIC said in May that 17 tier-one markets were moved to non-restricted market status, while seven tier-two market were moved to tier-one status. In addition, guidelines for tier-one markets were updated, and guidelines in tier-two markets were expanded. The updates, outlined in bulletin 02-2010, were effective on May 1.
