I’m not clear on how this affects the mortgage loan business in Boston; I don’t get too involved with my clients’ loans, except to make sure they have them. Most of them, I think, end up with 80% first loans, and 10-15% second loans (actually, lines of credit), so they end up not paying PMI.

(Not only that, am I right that you can only get PMI if it’s a conforming loan? That might be the other reason my clients never use it.)

Perhaps a mortgage expert will leave a comment, to let us all know?

Beginning next month, MGIC Investment Corp., the country’s largest mortgage insurer, will reduce its exposure in weak housing markets by requiring at least 5 percent down on homes in what it calls restricted markets.

These markets include the entire states of Arizona, California, Florida, and Nevada, as well as the metropolitan areas of Washington, D.C., Detroit, Chicago, Boston, and Atlanta.

Home owners hoping to insure condos will have to put down 10 percent.

The company also will refuse to insure mortgages with little or no documentation, nor will it insure investment property loans in restricted areas. Home owners in the restricted markets who put down 10 percent will have to have FICO scores of at least 620 out of a possible 850. If they put down less, their scores will have to be at least 680.

Home owners typically must get mortgage insurance when they put down less than 20 percent of their home’s value.

MGIC expects the new requirements to result in the issuance of fewer new policies, according to its filing with the Securities and Exchange Commission.

Competitor PMI Group Inc. also announced in a filing that it would stop covering home loans with loan-to-value ratios of more than 97 percent.

Source: Mortgage Insurer Tightens Standards – By Emily Fredrix, Associated Press, by way of Realtor.org

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