innerworkings of PMI questions (loan, premium, foreclosures, credit score)

[weartoomanyhats]

Before this year, PMI was something you know existed but wasn't an issue. Now that it's an issue, I still find myself confused. I HATE not understanding how a process works, so I was hoping somebody could help.

As I understand it now, PMI is issued by roughly 6 companies not affiliated with the actual lenders as mortgage insurance for the lender.

(1) Now I am hearing that PMI is based on credit scores. Do all companies have to follow the same credit score guidelines? Can one company require a different credit score for PMI than another company? Does the government do any regulation of all this, or is it all private sector driven?

(2) Calculators for figuring your PMI exist on the web, based on your down payment. They seem to indicate that the formula is set, period. But, apparently you can have higher PMI due to credit scores. Are those web formulas only for a certain credit scores?

(3) Can you find the names of the PMI companies and get their guidelines from their websites? Do they make their requirements public?

(4) How often are PMI companies issuing changes these days?

(5) Have any PMI companies gone out of business due to the payments they are having to make because of foreclosures? Are banks that foreclose on homes still covered by PMI not losing any money on those foreclosures?

Thanks for any info you can give. I just like knowing what's going on.

Deanna

[weartoomanyhats]

And another question:

Do PMI companies change their premium between lenders? Say a particular lender made a lot of risky loans, and that lender's mortgages are now being defaulted on. Will any new clients that lender gets be required to pay higher PMI because the lender is considered "risky" by the PMI company?

[Debsi]

I'm NOT an expert on this subject but I can tell you that the two companies used where I work are MGIC and REMIC. I believe their charges are similar, but there are some loans that MGIC will insure that REMIC won't and vice versa. (otherwise we'd only have one company.)

PMI rates are definitely effected by credit scores.

They have majorly tightened up what kinds of loans they will do recently, and I believe there will be more changes coming. I think MGIC is issuing new rates July 1st (or maybe that was REMIC?).

[Daddys///M3]

Originally Posted by weartoomanyhats

Before this year, PMI was something you know existed but wasn't an issue. Now that it's an issue, I still find myself confused. I HATE not understanding how a process works, so I was hoping somebody could help.

As I understand it now, PMI is issued by roughly 6 companies not affiliated with the actual lenders as mortgage insurance for the lender.

(1) Now I am hearing that PMI is based on credit scores. Do all companies have to follow the same credit score guidelines? Can one company require a different credit score for PMI than another company? Does the government do any regulation of all this, or is it all private sector driven?

(2) Calculators for figuring your PMI exist on the web, based on your down payment. They seem to indicate that the formula is set, period. But, apparently you can have higher PMI due to credit scores. Are those web formulas only for a certain credit scores?

(3) Can you find the names of the PMI companies and get their guidelines from their websites? Do they make their requirements public?

(4) How often are PMI companies issuing changes these days?

(5) Have any PMI companies gone out of business due to the payments they are having to make because of foreclosures? Are banks that foreclose on homes still covered by PMI not losing any money on those foreclosures?

Thanks for any info you can give. I just like knowing what's going on.

Deanna

1. PMI has always been credit score driven. There are other factors that determine the rate of PMI as well, such as loan to value, fixed or ARM instruments, length of amortization, and coverage requirements. Income documentation used to play a role as well but I believe that the MI companies have stopped covering reduced documentations, so that would be a non-issue.

2. If you check the MI rates on mgic.com you will be asked the LTV, credit score, amortization term, county and state, doc type, coverage percentage requirement (all loans have different coverage requirements) and instrument type.

3. I would just google "mortgage insurance". You should get the company names and I believe that most will not only publish their guidelines but offer a rate finder as well.

4.About as often as lenders and the GSE's are changing their guidelines I suppose.

5. I don't have an answer for this question unfortunately.

As for your other question, I'm pretty sure that PMI companies do not have premium differences for the same loan program through different lenders.