Mortgage Insurers, Banks Rewrite Rules

Indianapolis Star (03/21/08); Zibel, Alan; Elphinstone, J.W.
With mortgage insurers now unwilling to insure home loans in almost 25 percent of the nation's ZIP codes, experts say borrowers with good credit are finding it difficult to obtain financing. Some mortgage insurers will not insure loans in any community in Arizona, California, Florida, Michigan, Nevada and Ohio, for instance; and there are concerns that such a move will put the brakes on the spring home-buying season and further injure the housing market and the national economy. Markets experiencing home-price declines or stagnant appreciation are affected; and borrowers are expected to have high credit scores and large down payments, among other requirements, under the new paradigm. Stricter underwriting criteria already has eliminated up to 40 percent of borrowers who would have qualified for financing previously, according to Wholesale Access managing director Tom LaMalfa. Inside Mortgage Finance, meanwhile, reports a 38-percent drop in the value of new mortgages to $450 billion in the fourth quarter, with the subprime niche registering a 90-percent decline to $13.5 billion.