MGIC extends 97% LTV mortgage insurance to existing homeowners
MGIC Investment Corp. ($6.07 0.11%) will insure 97% loan-to-value ratio mortgages for existing homebuyers effective Nov. 1.
The mortgage insurer currently insures such loans for first-time homebuyers only. Qualifying mortgages are written in non-restricted markets and hold a maximum loan amount of $417,000. The buyers must have a minimum credit score of 700.
"For sometime now, at least back to May 2010, we offered insurance on 97% LTV but limited to first-time homebuyers," an MGIC spokesman said. "In order allow more borrowers to take advantage of the benefits of Private MI (mortgage insurance) versus FHA we removed that restriction."
Loan-to-value is a measurement of the property's value versus the amount of the loan. A 97% LTV mortgage means the property is worth three percentage points more than the loan, usually after a downpayment.
Through the third quarter of 2009, MGIC held $196.9 billion of primary insurance in force, down 9% from a year ago. Of the loans it insures, 15.1% were reported delinquent, down 35 basis points from last year.
The company did lose $51.5 million for the quarter, but it's an improvement from the more than $1 billion in losses a year ago.
"The underwriting guidelines that are currently producing better performing business as we reflect in our portfolio supplement we publish each quarter," the spokesman said. "As Standard and Poor's and Moody's Investors Service have both recently published, and as we have disclosed in our filings, we continue to believe that MGIC has sufficient claims paying resources to meet its claim obligations."
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