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MGIC Tightens DTI Requirements

An alarming number of loans with high debt-to-income ratios have Mortgage Guaranty Insurance Corp. tightening its DTI and credit requirements.

The Milwaukee-based organization has revealed that it has seen an increase in residential loans which have DTI ratios that exceed 45 percent.

The recent phenomenon has the mortgage insurance company
concerned — especially in cases where the higher ratios are combined with weaker credit profiles.

So it issued MGIC Bulletin
01-2018 indicating revisions to its requirements.

According to the bulletin, loans with DTI ratios that exceed 45 percent will only be insured when the representative credit score is at least 700.

“This change applies to loans with an agency automated underwriting system response,” MGIC stated. “Our non-agency underwriting requirements currently do not allow DTIs exceeding 45 percent.”

The change impacts mortgage insurance applications received on or after March 1.

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