One good reason why the banks aren't lending
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PRIVATE mortgage insurance, known to many as P.M.I., is a necessary evil for borrowers who cannot afford the 20 percent down payment often required by lenders. At least five of the six major insurers recently changed their policy qualifications.
The PMI Group, which is based in Walnut Creek, Calif., said in February that it would no longer insure mortgages obtained through brokers, and it stopped offering private mortgage insurance for condos and other attached-housing units.
Mortgage Guaranty Insurance Corporation (MGIC) of Milwaukee said that it would no longer insure cash-out refinance mortgages and mortgages for second homes or manufactured homes.
The company also placed restrictions on broker-originated mortgages, limiting insurance only to those loans where the borrowers make at least a 10 percent down payment and have a credit score of at least 720.
Ellen Bitton, the chief executive of the Park Avenue Mortgage Group, a Manhattan-based brokerage, said that P.M.I. had not been a factor for most lenders in the last year. Few of them, she said, will consider loans for people who have smaller down payments or who seek to refinance the mortgage on a home with less than 20 percent equity.
?I personally don?t even think about doing 90 percent mortgages anymore,? Ms. Bitton said.
In the New York area, she noted, borrowers can still seek government-insured loans from the Federal Housing Administration or the Veterans Administration.
But they may not always be a good fit. Borrowers face income restrictions, and the maximum loan amount is $625,500 in the New York City and Northern New Jersey area, and $511,750 in Fairfield County, Conn. That is a considerable jump from 2007, when the limit was $363,000, but still not enough to buy a home in many neighborhoods.
Mortgage experts say that there are some conditions under which lenders will offer mortgages to those with less than a 20 percent down payment or equity in a home. In those instances, a borrower will not only need to have excellent credit and adequate income but be in an area with stable housing prices.
Housing market conditions, however, have been less than stable in most regions, and the rise in mortgage default rates has been largely responsible for pushing up P.M.I. premiums.
?If mortgage insurers run out of capacity to write new business,? said Howard Glaser, a principal of the Glaser Group, a mortgage consulting firm in Washington, ?the last avenue for purchasing a home with less than a 20 percent down payment will be closed off for a lot of people.?
Full article: http://www.nytimes.com/2009/03/01/realestate/01Mort.html?_r=1
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PRIVATE mortgage insurance, known to many as P.M.I., is a necessary evil for borrowers who cannot afford the 20 percent down payment often required by lenders. At least five of the six major insurers recently changed their policy qualifications.
The PMI Group, which is based in Walnut Creek, Calif., said in February that it would no longer insure mortgages obtained through brokers, and it stopped offering private mortgage insurance for condos and other attached-housing units.
Mortgage Guaranty Insurance Corporation (MGIC) of Milwaukee said that it would no longer insure cash-out refinance mortgages and mortgages for second homes or manufactured homes.
The company also placed restrictions on broker-originated mortgages, limiting insurance only to those loans where the borrowers make at least a 10 percent down payment and have a credit score of at least 720.
Ellen Bitton, the chief executive of the Park Avenue Mortgage Group, a Manhattan-based brokerage, said that P.M.I. had not been a factor for most lenders in the last year. Few of them, she said, will consider loans for people who have smaller down payments or who seek to refinance the mortgage on a home with less than 20 percent equity.
?I personally don?t even think about doing 90 percent mortgages anymore,? Ms. Bitton said.
In the New York area, she noted, borrowers can still seek government-insured loans from the Federal Housing Administration or the Veterans Administration.
But they may not always be a good fit. Borrowers face income restrictions, and the maximum loan amount is $625,500 in the New York City and Northern New Jersey area, and $511,750 in Fairfield County, Conn. That is a considerable jump from 2007, when the limit was $363,000, but still not enough to buy a home in many neighborhoods.
Mortgage experts say that there are some conditions under which lenders will offer mortgages to those with less than a 20 percent down payment or equity in a home. In those instances, a borrower will not only need to have excellent credit and adequate income but be in an area with stable housing prices.
Housing market conditions, however, have been less than stable in most regions, and the rise in mortgage default rates has been largely responsible for pushing up P.M.I. premiums.
?If mortgage insurers run out of capacity to write new business,? said Howard Glaser, a principal of the Glaser Group, a mortgage consulting firm in Washington, ?the last avenue for purchasing a home with less than a 20 percent down payment will be closed off for a lot of people.?
Full article: http://www.nytimes.com/2009/03/01/realestate/01Mort.html?_r=1