United Guaranty Corp. has issued a bulletin indicating that the required reserves for refinance originations have been reduced. The change has a bigger impact on jumbo mortgages.
The guidelines that are in place at the mortgage insurer require borrowers who are obtaining a rate-term refinance to have at least two months’ reserves in place for principal, interest, taxes, insurance and association fees. Loans up to $729,750 are subject to the two-month reserves guideline.
On loans from $729,751 to $850,000, United Guaranty requires six months’ reserves.
But in Bulletin CA2011-23, the American International Group subsidiary has relaxed the reserve requirements.
Mortgage insurance submissions through the Performance Premium program will no longer require reserves as of Jan. 3, according to the Greensboro, N.C.-based company.
United Guaranty noted that the change impacts one-unit, owner-occupied properties.
