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United Guaranty Enhances Guidelines

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United Guaranty has eased its requirements for properties in markets with an oversupply of inventory or a six-month marketing time. The change is among several updates by the mortgage insurer.

The updates were outlined in Bulletin CA 2009-54.

In February 2008, United Guaranty said it would consider property as a “declining-market” property if the appraisal indicated “oversupply” or “over six months” marketing time.

Today’s update eliminates that requirement.

But appraisals indicating that the neighborhood is declining will prompt a declining-market categorization.

The update is immediately effective.

United Guaranty said it made the change following a market analysis.

Other changes at the mortgage insurer included the requirement of at least 740 credit scores when the debt-to-income ratio exceeds 41 percent;.

Purchase transactions will be allowed on properties owned less than 180 days by the seller but more than 90 days as long as the loan is fully underwritten by United Guaranty, a new appraisal is obtained and any price increase is documented.

Properties acquired through divorce will no longer be considered flips. Also exempt from the classification are properties acquired by employers through relocation, REO sales and properties sold through an administrator or executor of an estate.

United Guaranty said it won’t insure “short refinances” where some portion of the principal balance was forgiven. But scheduled debt forgiveness for subordinate liens through a community homebuyer program is excluded from this requirement.

The bulletin noted that credit documentation and the appraisal can be 120 days old based on the note date for existing and new construction. Recertifications of value are required beyond 120 days — though no appraisal can be over 12 months old. New appraisals are required in declining markets on appraisals older than 120 days.

Projected trailing spouse income cannot be used.

The mortgage insurance company noted that a copy of either the executed Form 4506-T, Form 4506 or Form 8821 and IRS transcripts are required for a full-file underwrite or if available during a United Guaranty audit.

Federal tax returns must be analyzed to determine if any capital being taken from a borrower’s business will negatively impact the business.

Verbal verifications of employment will be require for all qualifying borrowers.

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