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M.I. LTVs Expanded

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Updated guidelines just released by one mortgage insurance company include expanded loan-to-values. The most generous changes impact loans that don’t involve a mortgage broker and utilize a risk-based premium.

The maximum LTV on loans that were not originated by a broker is being raised to 97 percent at United Guaranty. The LTV is good on loans up to $417,000 that are secured by a one-unit primary residence. Purchase and rate-term refinance transactions are eligible.

Mortgage broker originations will be limited to 95 percent LTV in all markets unless the mortgage insurer’s “performance premium” offering is utilized, in which case third-party loans will be eligible for insurance up to 97 percent. “Performance premium” utilizes risk-based pricing.

In “severely declining markets” the LTV will be limited to 95 percent, though “performance premium” customers will have access to 97 percent LTV.

The Greensboro, N.C.-based company outlined the changes today in bulletins CA 2010-09 and CA 2010-10. The updated guidelines apply to mortgage insurance submissions beginning June 14.

On loans where the mortgage insurance premium is being financed, the total LTV is being expanded to a maximum of 97 percent in all declining markets.

Jumbo mortgages that don’t involve a broker will be eligible for 90 percent LTV in all declining markets. United Guaranty’s jumbo limit is $625,500.

But temporary interest-rate buydowns will no longer be allowed in situations where adjustable-rate mortgages with an initial fixed-rate period of less than five years are ineligible.

Owner-occupied condominiums and co-ops will be limited to 95 percent LTV in all markets unless a broker was involved — in which case “severely declining markets” will be limited to 90 percent.

Second homes will be insurable up to 90 percent LTV in stable markets, though condos and co-ops are ineligible for second-home financing. With “performance premium,” 90 percent LTV is available in all markets. Broker-originations are ineligible for second-home coverage.

Two-unit properties will be available up to 90 percent LTV as long as a broker wasn’t involved. The maximum two-unit loan amount is $533,850.

The minimum credit score is 720 on non-brokered loans in stable markets above 95 percent LTV, in standard declining markets up to 90 percent LTV, and in standard declining markets with loan amounts between $417,001 and $625,500 up to 85 percent LTV.

But the minimum score on “performance premium” is 700 for LTVs higher than 95 percent in moderately declining markets.

Broker originations require a 720 credit score on LTVs up to 90 percent in standard declining markets.

Maximum debt-to-income ratios are limited to between 41 percent and 45 percent, though “performance premium” DTIs are just 45 percent.

read CA 2010-09

read CA 2010-10

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