brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 6, 2003
- Messages
- 18,085
I am far from a Milton Friedman fan, but I think that in the case of the mortgage market, self-interested players are reforming lending standards a lot faster and more effectively than the regulators could ever hope to.
To wit:
" PHILADELPHIA, March 27 /PRNewswire/ -- Radian Guaranty Inc., the primary
mortgage insurance subsidiary of Radian Group Inc. (NYSE: RDN), announced
today that mortgages originated under "stated income" and "stated asset"
programs will no longer be eligible for mortgage insurance. In a message to
clients this week, Radian commented, "while certain forms of alternative
documentation used to verify assets and income are appropriate with a
disciplined underwriting process, the stated programs will no longer be
insurable as a result of poor performance." This change will take effect on
April 30, 2008 for all new mortgage insurance applications.
As announced earlier this month, revisions to existing underwriting
guidelines and pricing policies will take effect on March 31, 2008. These
significant changes represent a variety of adjustments to loan-to-value,
documentation and FICO requirements, and are part of an on going process at
Radian to respond quickly to market conditions. In addition to guideline
changes, updated declining markets territories have also been posted to the
Radian website."
Translation: If you don't have 20% down you can no longer get a piggyback second, so you need mortgage insurance (aka PMI). Radian (a mortgage insurer) and its brethren have been greatly tightening up their standards and raising prices, seemingly competing on who could tighten faster. This is the first I have seen of any of these guys wholesale exiting the liar's loan market, and I would imagine the rest of these guys will stampede out shortly. I bet its a loooong time before we see stated income and stated asset loans available for those with less than 20% down.
To wit:
" PHILADELPHIA, March 27 /PRNewswire/ -- Radian Guaranty Inc., the primary
mortgage insurance subsidiary of Radian Group Inc. (NYSE: RDN), announced
today that mortgages originated under "stated income" and "stated asset"
programs will no longer be eligible for mortgage insurance. In a message to
clients this week, Radian commented, "while certain forms of alternative
documentation used to verify assets and income are appropriate with a
disciplined underwriting process, the stated programs will no longer be
insurable as a result of poor performance." This change will take effect on
April 30, 2008 for all new mortgage insurance applications.
As announced earlier this month, revisions to existing underwriting
guidelines and pricing policies will take effect on March 31, 2008. These
significant changes represent a variety of adjustments to loan-to-value,
documentation and FICO requirements, and are part of an on going process at
Radian to respond quickly to market conditions. In addition to guideline
changes, updated declining markets territories have also been posted to the
Radian website."
Translation: If you don't have 20% down you can no longer get a piggyback second, so you need mortgage insurance (aka PMI). Radian (a mortgage insurer) and its brethren have been greatly tightening up their standards and raising prices, seemingly competing on who could tighten faster. This is the first I have seen of any of these guys wholesale exiting the liar's loan market, and I would imagine the rest of these guys will stampede out shortly. I bet its a loooong time before we see stated income and stated asset loans available for those with less than 20% down.