Following the lead of Genworth Mortgage Insurance, Radian Guaranty Inc. is eliminating its overlay for borrower downpayment requirements.
On its One Underwrite program, the Philadelphia-based company said it has removed the requirement for a 3 percent contribution from the occupant borrower’s own funds.
Instead, Radian is following guidelines for Fannie Mae DU/DO and Freddie Mac LP findings for borrower contributions.
The updates were discussed in Radian eBulletin 2014-1.
“Personal gifts, gifts of equity, downpayment assistance or grants meeting GSE requirements are considered acceptable sources of occupant borrower own funds for purchase transactions of single family primary residences,” the bulletin stated.
The mortgage insurer noted, however, that Freddie has a minimum 5 percent borrower contribution when loan-to-value ratios exceed 80 percent.
On housing finance agency affordable housing programs with subordinate financing, a minimum contribution of the lesser of $1,000 or 1 percent will be required for the occupant borrower’s minimum contribution.
Radian said that the revised guidelines are effective on all new M.I. applications.
While the change is immediately available through Radian’s service center, the change won’t be available until Feb. 3 through MI Online.
“Delegated loans may only be submitted through MI Online beginning Feb. 3, 2014,” the announcement stated. “Submissions via the insured’s LOS connectivity with Radian are not eligible at this time. These loans must be properly identified in MI Online by populating ‘No’ to Borrower 3 percent Funds field and answering the corresponding questions regarding source of funds for closing.”
Rival Genworth announced similar changes to its guidelines last week.
