A look at Biden’s first week in office

This episode reviews last week’s inauguration of President Joe Biden, examining which housing issues the new administration has already taken action on.

Biden’s executive order will extend foreclosure moratorium

President Biden revealed his plan to sign 17 executive orders his first day in office, including am extension of the eviction and foreclosure moratorium to at least March 31.

If consumers aren’t holding lenders back, then who or what is?

The challenge for lenders and investors is understanding how to meet borrowers where they are without layering on risk or getting bogged down in third-party intermediation.

HomeBridge’s Brian White on diversity at a practical level

HomeBridge's Brian “Woody” White discusses ways to increase diversity within the housing finance industry.

Mortgage

Mortgage insurance companies push back against 50% DTI

Increase credit score requirements

Last year, the GSEs announced they were increasing their debt-to-income ratio to 50%, a move that mortgage insurance companies are starting to fight back against.

In June last year, Fannie Mae announced it was preparing to raise the debt-to-income ratio, the No. 1 reason that mortgage applicants get rejected. It announced it would be raising its DTI ceiling from 45% to 50% as of July 29, 2017. However, qualified mortgages still need a DTI of 43%.

DTI is a borrower’s total amount of debt, including credit cards, student loans, auto loans and mortgages, versus their total income.

But now, private mortgage insurance companies are pushing back, announcing new underwriting requirements for loans with DTIs exceeding 45%.

Private mortgage insurer MGIC recently announced that beginning March 1, the company would only insure mortgages where the credit score is at least 700 on loans with DTIs exceeding 45%.

The company explained this change applies to loans with an agency automated underwriting system response. It’s non-agency underwriting requirements do not allow for DTIs more than 45%.

“We are concerned with the recent increase of loans that have debt-to-income ratios exceeding 45%, particularly when combined with weaker credit profiles,” the company stated in its announcement. “We will continue to monitor this development and evaluate the need for further changes.”

Another mortgage insurer, Genworth, also announced it was re-evaluating its underwriting standards due to an increase in loans with DTIs greater than 45%.

The company announced any mortgage insurance applications received on or after March 19, 2018 would need a credit score of 700 or more if the DTI exceeded 45%.

Genworth announced these changes apply to both its Simply Underwrite SM and Standard Guidelines.

“The updated Underwriting Guideline Manual and supporting material will be posted to our website on or before March 19,” John Clifford, Genworth senior vice president of commercial operations said in the announcement. “Please note this change supersedes previously issued Genworth approved program exceptions.”

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