A host of upcoming changes have been unveiled that are designed to expand the loans insured by United Guaranty Corp. Property flips, rural property appraisals and minimum borrower contributions are impacted.
On submissions through the Reporting Acceptance Program, gifts or grants are eligible as part of the minimum borrower contribution.
The mortgage insurer said it is easing up on its restrictions for flips. Properties that have been owned for less than 180 days are eligible for RAP submissions.
The Greensboro, N.C.-based company spelled out the changes Wednesday in Customer Announcement CA 2014-01.
Requirements for adjustment periods on adjustable-rate mortgages have been added in order to allow for non-agency products. Also added were requirements for ARM caps, balloon loans and bi-weekly mortgages.
United Guaranty also made changes to its guidelines for condominiums, construction-to-permanent loans and renovation mortgages that align with requirements from Fannie Mae and Freddie Mac.
The changes will impact M.I. applications received on or after March 31.
Then, beginning on April 28, reserve requirements will change. The revision kicks in when the borrower is retaining the current primary residence and buying a two- to four-unit property or a one-unit primary residence with a loan amount between $625,501 and $850,000.
Reserves will be six months principal-interest-taxes-insurance-association payments on both properties.
However, reserves on the old primary residence can be reduced to two months if there is at least 30 percent equity in the property.
Also starting on April 28, comparable sales will be acceptable on rural property appraisals when the rural locations are similar and the property types are similar.
An adequate explanation is expected from the appraiser.
An updated Underwriting Requirement Guides is planned for the end of April.
