MGIC Pulling Back Dramatically on Mortgage Insurance in 19 States
MGIC Investment Corp. said earlier this week that its mortgage insurance arm will pull back dramatically on underwriting new mortgage insurance in housing markets spanning 19 different states. In a policy update sent to customers February 6, MGIC vice president Sal Miosi announced a host of program changes effective March 3, designed to help the mortgage insurer weather what he called "challenging times." Among those changes: new restrictions on underwriting in so-called "restricted markets" identified by the insurer. MGIC has designated the entire states of Arizona, California, Florida and Nevada as "restricted markets," as well as flagging various core-based statistical areas within 14 other states and the District of Columbia. (Click here to see MGIC's updated restricted market list). MGIC said it will no longer offer mortgage insurance on any loan where the LTV/CLTV is greater than 95 percent in its restricted markets, and eliminated loans on investment property, cash-out refinancing, and pay option ARMs completely from underwriting eligibility in these areas. Also, MGIC said it will not underwrite insurance on any expanded criteria or Alt-A/reduced doc loan product. Even outside of its "restricted markets," MGIC said insurance on loans where the LTV is greater than 95 percent will only be offered when the borrower's credit score is at least 680; eligibility for mortgage insurance at all will require a minimum score of 620. For Alt-A loans, MGIC will only insure where LTV is 90 percent or less, and the borrower's credit score in above 660. In a filing with the SEC Thursday, the company said it expects the changes to "negatively impact MGIC's volume of new insurance written." For more information, visit http://www.mgic.com.