Radian Guaranty Inc. said late Thursday
that mortgages originated under so-called "stated income" and "stated asset" programs will no longer be eligible for mortgage insurance -- for all borrowers, including those that are self-employed.
In a message sent to clients this week, Radian said that "while certain forms of alternative documentation used to verify assets and income are appropriate with a disciplined underwriting process, the stated programs will no longer be insurable as a result of poor performance."
The change to eliminate SISA programs will go into effect at the end of April, the insurer said. Other policy changes, including adjustments to loan-to-value, documentation and FICO requirements, will go into effect at the end of this month. In addition to guideline changes, Radian also said it had updated its list of so-called "declining markets," in which strong restrictions on underwriting new policies will be in place -- the list is 138 pages long
"These changes reflect the current market conditions and a commitment to our business partners and shareholders to write new business that will allow homebuyers appropriate and affordable alternatives," said Dave Applegate, president of Radian Guaranty.
"The continued weakness in the housing market and overall economy has created unprecedented challenges for the industry and our clients. It is critical that we act quickly to assist our clients in producing high quality, profitable business. Accordingly, we have tightened guidelines and increased pricing in areas in which we continue to see deterioration in our risk adjusted returns."
Radian lost $618 million during the recent fourth quarter, absorbing a huge increase in loss reserve charges tied to expected losses on the loans it had insured.
For more information, visit http://www.radian.biz
Disclosure: The author owned no positions in RDN when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.