Mortgage Insurance Guides Loosen

What a long strange trip it has been, indeed. Not the least of which included the evaporation of mortgage insurance coverage for loans above 80% loan to value (LTV). Further crippling the already dazed market mortgage insurers began eliminating coverage plans for the majority of loans, not only non-coventional (aka sub-prime) , but for stronger borrowers with good credit and employment histories looking to make less than a 20% down payment.

In a sign things may just be looking up, at least sometime in the relatively near future, mortgage insurance companies such as United Guaranty, have begun loosening their very tight restrictions at least on some loan programs.

Included in the betterment are loan up to 97% flex in stable markets to borrowers with a 700 or higher middle credit score. Before the nay saying begins consider the reasons this is good for the housing market and the US economy and, more importantly, why it has been needed for several months. The home seller, for example, who may be transferring to a new market for their career may have sold their existing home with a huge loss of equity or may even have had to dip into their savings to pay the difference between the sales price and their existing home mortgage. Obviously this leaves a very stable and credit worthy home buyer in the shadows if they intend to purchase in their new location.

Buyers who exhibit a long history of good credit decisions and who may have assets but do not want to remove them from higher yield investments are perfect fits for higher LTV loans even in this still uncertain market. Though we are facing yet another round of defaults and foreclosures due to resetting rates on conventional mortgages the insurers have some sense of certainty we are at or near the bottom.