Mortgage Guaranty Insurance Corp. has published more restrictive underwriting guidelines in bulletin #10-08 which changes its underwriting criteria to apply to mortgage insurance applications received on or after Nov. 24, 2008:
[1] the maximum debt-to-income ratio will be limited to 45 percent, according to the bulletin. DTIs between 45 and 55 percent will require manual underwriting in addition to an automated underwriting approval from Fannie Mae or Freddie Mac.
[2] credit reports must reflect a minimum of three open and active tradelines during the most recent 12 months in order for the borrower's FICO score to be valid. This requirement stands regardless of the automated underwriting decision. Exceptions require manual underwriting.
[3] loans with credit scores below 660, but higher than 619, will only be insurable under expanded criteria rates.
[4] borrowers with adverse credit -- including bankruptcies, foreclosures, deeds-in-lieu and short sales -- will require four years of seasoning prior to the application date.
[5] borrowers whose current residence has not sold by the time the subject loan closes must be qualified using principal, interest, taxes and insurance payments for both properties unless an executed sales contract with no financing contingencies on the current residence is documented.
[6] borrowers with less than 30 percent equity in their current residence will be required to have six months of reserves, while borrowers with at least 30 percent equity will only be required to have two months.
[7] the maximum LTV on second homes is 90 percent, while the minimum FICO score is 680. Second home financing is unavailable in Arizona California Florida Nevada
[8] cashout refinances require at least six months reserves at the time of the application, though cashouts are not available if the house had been listed for sale during the prior six months.
[9] as-is appraisals are required on cashout transactions. Commitment certificates are good for 120 days when the property is appraised as-is and 12 months for properties appraised subject-to-completion -- in which case a re-certification of value is require after 120 days of the commitment.
[10] the maximum LTV on properties subject-to-completion is 95 percent in unrestricted markets and 90 percent in restricted markets, while the minimum credit score is 700.
[11] commitments on properties in Arizona California Florida Nevada
[12] on properties in restricted markets and restricted states, the maximum LTV on loans higher than $417,000 is 85 percent, though it can go to 90 percent if the property is appraised subject-to-completion and not in a restricted state.
[13] the minimum FICO score in restricted states is 720, and no construction-to-perm loans are allowed.
