Borrowers who don’t qualify for a government-supported refinance or don’t meet United Guaranty’s current underwriting requirements now have another option.
The mortgage insurer has announced a Refinance with Certificate Modification.
According to United Guaranty, the program applies to loans that are already insured by the Greensboro, N.C.-based company.
Borrowers who are not eligible to refinance under the Home Affordable Refinance Program and unable to qualify under the United Guaranty’s current underwriting requirements for a rate-term refinance can take advantage of the “Refi with Cert Mod program.”
The program is available whether or not the borrower stays with the same servicer or moves the loan to another company.
“Loans that would otherwise meet United Guaranty’s current underwriting requirements for a rate-term refinance are not eligible for this program and should be submitted as a new mortgage insurance application,” an accompanying bulletin said.
The new transaction will be considered a loan modification to the existing certificate of insurance. The existing certificate number will not change, and an endorsement to the original certificate will be issued.
The mortgage insurance company said it will waive its representation and warranty rights when the original transaction was a full-file submission and closed on or prior to Dec. 31, 2003.
The new loan needs to positively impact the borrower through a lower payment, rate or amortization term. Refinancing out of a negatively amortized loan is also considered an acceptable benefit.
Cash back to the borrower can’t exceed $250, and closing costs are limited to the lower of 4 percent of the unpaid principal balance or $5,000.
Transactions where there is subordinate financing can’t include the junior lien in the new loan.
If the new loan is an adjustable-rate mortgage, the rate needs to be fixed for at least the first five years.
There are no limits on the loan amount, the maximum loan-to-value ratio or the minimum credit score. Properties can be owner- or nonowner-occupied.
When the new payment rises at least 20 percent, then employment must be verified.
A full appraisal and new credit report is required.
The “Refi with Cert Mod program” goes into effect on Jan. 14, 2013.
