This just in; one of the leading mortgage insurance companies has announced plans to insure conventional loans up to 95% LTV with a minimum fico of 660.
In addition they have increased the maximum debt to income ratio they will accept for borrowers with fico’s over 740.
What does this mean? It means that since tightening their lending guidelines they have lost all of their insurance business to FHA. In the meantime they have continued to lose money paying out claims on all the bad loans that they have insured. You don’t have to be an economics major to understand that if your revenue goes down and your expenses go up you will lose money. In an effort to try to get more revenue they have made these moves. Will they work? Only time will tell, but for now it could be the beginning of loosening of credit that will help stimulate the mortgage market after the tax credit ends on June 30, 2010.
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