As mortgage insurers grapple with losses and shifting strategies, a number of guideline updates were issued. New laws have been enacted in three states to help mortgage insurers cope deteriorating finances, while two new insurers continued to seek state approvals.
In eBulletin 2009-05, Radian Guaranty Inc. said borrowers who refinance with the same servicer under the Home Affordable Refinance Program can utilize guidelines for loan amounts, loan proceeds and closings costs and prepaids from either Fannie Mae’s Refi Plus / DU Refi Plus or Freddie Mac’s Relief Refinance Mortgage / Relief Refinance Mortgage – Open Access.
When a new servicer is involved, Radian said the The AUS response of DU Refi Plus Approve/Eligible or Relief Refinance Mortgage – Open Access Accept/Eligible LP is acceptable. The maximum HARP debt-to-income ratio with a new servicer is 45 percent, while the new loan amount will include the unpaid principal balance, non-delinquent interest and the lesser of 4 percent or $5,000 in closing costs and prepaids rounded up to the nearest thousand.
A prior eBulletin from Philadelphia-based Radian reported rate changes and indicated that delegated lenders must underwrite all loans before ordering mortgage insurance, though high-risk and exception loans can be submitted to Radian’s service center for non-delegated underwriting. Radian noted lenders cannot use their delegated authority when Radian denies a loan or insurance or contract underwriting.
United Guaranty issued announcement CA 2009-49 indicating its guidelines were updated on Oct. 1. The updates include previously announced changes policies for condominium, renovation, refinance and modification transactions.
PMI Mortgage Insurance Co., which this week announced expanded loan-to-values and guidelines, said in a quarterly distressed markets policy update that four metropolitan statistical areas were removed from the distressed markets list. But two states, as well as 29 MSAs, were added.
PMI also increased its maximum debt-to-income ratio on all loans to 45 percent.
On Nov. 10, The PMI Group Inc. announced that all of the issued and outstanding common capital shares of subsidiary PMI Insurance Co. were transferred to PMI Mortgage Insurance Co. — boosting its capital by $92 million.
MGIC Investment Corp. announced in its third-quarter earnings report that Fannie Mae had approved subsidiary MGIC Indemnity Corp. as an approved mortgage insurer in selected areas. Once expected approval is obtained from Freddie Mac, MGIC Chairman and Chief Executive Officer Curt S. Culver is “optimistic that the Office of the Commissioner of Insurance for the State of Wisconsin will issue a decision allowing the reactivation of MGIC Indemnity Corp. in the very near future.”
The Milwaukee-based firm reported an $0.5 billion third-quarter loss, worsening from the $0.1 billion loss a year earlier. Culver blamed the weak economy, worsening unemployment and lower home prices for the deteriorating performance. But he said there were signs that the Home Affordable Modification Program as well as private modification programs were beginning to bear fruit.
In California, Senate Bill 291 was signed into law by Gov. Arnold Schwarzenegger last month, PMI Mortgage Insurance Co. announced. The new law could provide regulatory relief to PMI and other mortgage insurers by granting California’s insurance commissioner the discretion to allow a mortgage insurer to continue issuing policies if its capital falls below the legal minimum.
The measure is similar to Arizona legislation signed into law during September and a North Carolina law that was signed in July, PMI said.
Newcomer Essent Guaranty Inc. reported in July that it was approved by the Pennsylvania Insurance Department to write mortgage insurance. It also was approved by a working group of the National Association of Insurance Commissioners to participate in an expedited licensing pilot project that seeks to streamline state-specific application requirements — including the need for hard copies of forms and supplemental information involved in Uniform Certificate of Authority Applications.
Essent launched its business with the October acquisition of Triad Guaranty Inc.’s information technology and operating platform. Among firms that invested $500 million in Essent were Goldman Sachs, JPMorgan Chase & Co. and PartnerRe.
