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| Several mortgage insurers have tightened their credit score and debt ratio requirements. One mortgage insurance company is requiring that loans originated by mortgage brokers have credit scores 40 points higher than retail-originated mortgages.
Loans with credit scores below 680 will no longer qualify for mortgage insurance at United Guaranty Corp., according to bulletin No. CA 2009-27 Friday. On third-party originations, the minimum score has been increased to 720, United said.Greensboro, N.C.-based United, which last month saw its financial strength rating downgraded by Fitch Ratings, also capped the maximum debt-to-income ratio on loans higher than $417,000 at 41 percent. The DTI limit also applies to third-party originations and mortgages on properties in “severely declining” markets. The revised credit scores and DTI ratios are effective for all mortgage insurance applications received by United on or after July 6. Over at MGIC, borrowers with nontraditional credit will be limited to 90 percent loan-to-value for M.I. applications received after June 30, bulletin No. 06-2009 said last month. MGIC also stopped insuring two-unit properties in “restricted markets.” MGIC is reclassifying restricted markets as “tier one,” where markets are distressed. Hawaii and part of Michigan are considered tier one markets. “Tier two” markets — which are more severely distressed — include Arizona as well as California, Florida and Nevada. SplitEdge applications received after June 15 at Radian Guaranty Inc. will be subject to higher premiums and a minimum FICO score of 720, Radian eBulletin 2009-02 recently said. In addition, temporary buydowns and 1 percent adjustable-rate mortgages will no longer be insured. Last month, Radian updated its guidelines on flipping. PMI Mortgage Insurance Co. said in April that its online mortgage insurance ordering system has been expanded from just delegated lenders to M.I. submissions from all lenders. Flagstar Bank’s wholesale lending division recently told mortgage brokers that it stopped allowing lender-paid M.I. on Fannie Mae’s Desktop Underwriter Refi Plus program. GlobalOptions Group Inc. announced last week that a new offering from its fraud and special investigations unit will help mortgage insurers uncover mortgage fraud that occurred during the origination process — enabling a claim denial. The New York firm exposes misrepresentation of employment, income and assets. It also uncovers fraud tied to debt and residence occupancy. |
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