PMIOPTIONS–UpdatedOctober9,2013
PMI: If your down payment on a home is less than 20 percent of the appraised value or sale price, you must obtain private mortgage insurance, known as PMI, with your lender. This will enable you to obtain a mortgage with a lower down payment because your lender is now protected against any default on the loan.  Conventional loans only at LTV’s over 80%  Five main types of PMI: o Borrower paid monthly  Monthly vs ZOMP/ZIP ‐ always choose ZOMP/ZIP o Borrower paid single premium  refundable versus non‐refundable – Not all MI companies offer refundable single premiums (MGIC, Genworth and UGIC do, Radian does not)‐ when coverage is cancelled or terminated in the first 5 years, a prorated portion of the premium is refundable ‐ assume nonrefundable unless loan officer instructs you otherwise. Refundable Single premium is more expensive.  financed versus not financed assume not financed unless loan officer instructs you otherwise o Lender paid single premium (known as LPMI) o Lender paid monthly PMI (not using) o Split premium PMI (not using)  Five PMI companies that we currently use: o MGIC ‐ delegated o Radian ‐ delegated o Genworth – not delegated o United Guaranty (UGIC)‐ not delegated o Essent – not delegated o Not delegated means we will not underwrite the PMI coverage and get a cert until the PMI company reviews the underwriting of the file. How to calculate 1. Find out what percentage of coverage is needed. Standard coverage is as follows, but read the AU findings to get the exact covered. Reduced coverage options on DU findings cannot be used. 30 year mortgages standard coverage: 85% and under – 12% 85.01 to 90% ‐ 25% 90.01 to 95% ‐ 30% 2. Look up the rate one of three ways: a. In Mortgage Builder some rates are set up and can be chosen i. Radian and MGIC are set up with monthly rates ii. Radian is set up to display the single premium rates b. Use the rate sheets for MGIC (single premium), Radian, Essent and Genworth c. Use rate quote on UGIC website for pricing ‐ https://www.ugmiguide.com/RateQuoteWeb/?bidId=equityresources1208 3. Choose the correct rate a. Fixed versus Non‐Fixed rates:  Fixed rates are used for all fixed rates and ARM that adjust 5 years or more.  Non‐Fixed rates for an ARM that will adjust during the first 5 years. 5/25 ARM is based on 30 year fixed rates. b. Look up the middle score of all borrower’s and choose the lowest score c. Determine refinance or purchase 4. Figure out your premium amount a. Monthly PMI ‐ Take the rate (for example .32) divide by 100 x the loan amount divide by 12 months = monthly premium Example ‐ .32 / 100 = .0032 x $100,000 = $320 / 12 mos = $26.67 per month The monthly premium is added to the PITI for accurate DTI ratios b. Single Premium PMI – take the rate (for example 1.37) divide by 100 x the loan amount = single premium Example – 1.37 / 100 = .0137 x $100,000 = $1370.00 If financed, the loan amount increases to $101,370 If not financed, the loan amount remains $100,000 c. Lender Paid MI – calculate just like single premium, this figure DOES not calculate in any numbers – it should not appear on the GFE nor in the DOT How to input custom MI in MB when rates are not in MB In MB file – go to Loan Detail Example: Purchase 703 score – 30 year fixed – Choose MI Coverage – Custom Monthly MI with 30% coverage with Genworth: Under MI coverage – Complete the following: Vendor: Genworth  Vendor Calc Type: Level Zomp (Zero Option Monthly Premiums)  Calc Type Amort Type: Fixed  Amort Type Coverage: 30%  Coverage % Upfront: 0  Renewal Factor – (from chart) Renewal Factor: .99  MI Paid by ‐ Buyer MI Paid by: Buyer Example: Purchase 703 score – 30 year fixed – Nonrefundable Single Premium MI with 30% coverage with MGIC: Vendor: MGIC Calc Type: Single Premium Amort Type: Fixed Coverage: 30% Upfront: 3.48 Renewal Factor: 0 MI Paid by: Buyer
SINGLE PREMIUM PMI ERC and ERW will NOT allow financed Single Premium MI at all BBT and USB – will allow up to 95% LTV max with financed single premium mortgage insurance (the LTV with the financed MI cannot go over 95%) ER5 – will not allow single premium mortgage insurance at all (not using ER5 at this time) FLG – will allow up to 97% LTV max with financed single premium mortgage insurance only with MGIC (680 min score), Genworth (720 min score), or Essent FNMA has no overlays on financed single premium PMI  Single Premium MI is paid once, upfront, on the HUD and there is not any monthly PMI.  The Single Premium amount should be on the GFE and on the HUD1. This DOES affect the APR so make sure the APR box is checked in the GFE.  Templates in Mortgage Builder for Single Premium MI options are with the Radian. If you are financing the single premium into the loan you MUST select the MI FINANCED check box – see picture here: If the customer is not financing the single premium PMI then do not check that box PMI on JUMBO LOANS PMI for JUMBO loans are NOT set up in Mortgage Builder. Guidelines vary between each PMI company on Jumbo loans and it is in your best interest to review the guidelines manually then calculate the PMI rate if the loan qualifies. Please get pricing directly from the PMI website for all JUMBO loans and choose CUSTOM as the PMI coverage in Mortgage Builder and manually update your coverage by clicking in the MI Insurance button at the bottom of the screen. PMI on Rental Properties PMI for Rental Properties are NOT set up in Mortgage Builder. Guidelines vary between each PMI company on Investment loans and it is in your best interest to review the guidelines manually then calculate the PMI rate if the loan qualifies. Please get pricing directly from the PMI website for all Investment loans and choose CUSTOM as the PMI coverage in Mortgage Builder and manually update your coverage by clicking in the MI Insurance button at the bottom of the screen. LPMI LPMI loans are fairly complicated so good communication between the loan officer and all parties in the transaction are very important. Here are some general parameters:  LPMI is private mortgage insurance paid by Equity Resources for the customer. We increase the RATE to cover the cost of the LPMI. There is nothing shown on the HUD1 and there is not any monthly PMI.  We have four investors that we can do LPMI loans with–BBT, ERC, ERW & FNMA  They all can be with any of our PMI insurers  LPMI cannot be priced in NYLX. We have to price the PMI policy with one of our PMI companies then price the loan to cover the cost of the LPMI. For example, if the policy is $3000 per the PMI company for LPMI then we will need to get an additional $3000 in premium through our Yield Spread to cover the policy price. We then pay the PMI at funding time to the PMI company & provide that receipt with the PMI policy when we sell the loan. LOAN OFFICER:  CHOOSE “LENDER‐PAID‐MI” IN MB AS THE MI COVERAGE OPTION  WHEN YOU ORDER RESPA – SPECIFY LENDER PAID MI  WHEN YOU LOCK THE LOAN – MAKE SURE YOUR COMMENTS SAY THE LOAN HAS LPMI COMPLIANCE SPECIALIST:  SEND LPMI DISCLOSURE WITH RESPA DOCS  THE mortgage insurance premium SHOULD NOT BE ON THE GFE PROCESSOR:  ORDER LENDER PAID MI WITH WHOM THE LO SPECIFIES  EMAIL RATE LOCK DESK WITH PMI FACTOR (EXAMPLE 1.55 OR 2.10) SO PRICING CAN BE UPDATED ACCURATELY  PUT A NOTE ON YOUR DOC ORDER THAT THE LOAN HAS LENDER PAID MI RATE LOCK DESK:  SUBTRACT LENDER PAID MI AMOUNT FROM NET PRICE (SEE WAIKART AS EXAMPLE) – GET AMOUNT FROM LO/PROCESSOR  EXAMPLE – YSP WAS 2.653 AND LENDER PAID MI WAS 1.74, SO LOAN OFFICER NETTED .913  LOCK LOAN WITH BBT, ERC, ERW or FNMA ONLY UNDERWRITING:  PLEASE STIP AS A CLOSING CONDITION: PMI CERT SHOWING LENDER PAID, CLOSING TO GIVE COPY OF PMI CERT WITH ”PROOF”  MAKE SURE THE ADDITIONAL DISCLOSURE IS IN THE FILE CLOSING:  MAKE SURE YOU GIVE THE PMI CERT TO HUD1 REVIEWER WHEN YOU HAND OVER THE CLOSING PROOF. KEEP COPY IN UNDERWRITING FILE.  PLEASE GET A COPY OF THE CHECK SHOWING LPMI PAID BEFORE UPLOADING PACKAGE TO INVESTOR.  SEND PMI CHECK TO THE PMI COMPANY TO ACTIVATE THE PMI CERT FUNDING:  ON DAY OF FUNDING, PAY THE LENDER PAID MI  ENTER THE AMOUNT PAID ON THE FEES TRACKING PAGE LPMI in MB:  Choose Vendor  Change MI paid by – LENDER  Enter the MI Cert # once you get it MGIC: Monthly PMI charts are in Mortgage Builder. MGIC guidelines & rates can be found at www.mgic.com. Rep: Jane Coleman‐Porter Phone: 614‐561‐5400 Email: [email protected] RADIAN: Monthly and Single Premium MI charts are set up in Mortgage Builder. Rates and guidelines can be found at: www.radian.biz Processors: Request a user ID and password from website – choose Register. Our master policy # is 025349‐29785‐
000. Inside Rep: Cathrine Black Phone: (330) 936‐9620 Email: [email protected] Rep: Paul Gawin Phone: 800‐926‐1621 Cell: 513‐659‐8977 Email: [email protected] Genworth: Genworth’s pricing is not in Mortgage Builder. Genworth’s website for pricing is http://mortgageinsurance.genworth.com/RatesAndGuidelines/RateFinder.aspx?org=9XHL Rep: Melissa Lineberry Phone: 614‐499‐2578 Email: [email protected] UGIC: United Guaranty is unique... their traditional rate sheets are not really the rates the borrower will get. The traditional rates are the worst case scenario. The customer gets priced through what they call their "Rate Runner Quote" and is priced based on the true risk quality of the borrower. To get to the "Rate Runner Quote", you must click on this link and type your borrower's information in and submit and you'll get a quote back. "Rate Runner Quote" link for our company: http://www.ugmiguide.com/dg‐raterunner‐web/RateRunnerMain.jsp?bidId=equityresources1208 No rates are set up in Mortgage Builder for them because of this pricing system. Our master policy number is 34‐1209‐000 Rep: Sheila Rohal Phone: 216‐225‐8103 Email: [email protected] ESSENT: Essent pricing is not in Mortgage Builder Essent’s website for pricing is www.essent.us Master Policy #35‐0041‐0001 Email rep to get a new user set up or request on their website Rep: Kent McKenzie Phone: 734‐751‐9223 Email: [email protected] Is there a way we can do a comparison between different types of MI options? All of the PMI companies we use have a comparison grid on their website. United Guaranty had the best comparison and you simply go to the link shown below and & choose “get quote”. I ran the same scenario through the other PMI companies and got the best quote from United Guaranty The example I ran through was as follows: $100,000 Purchase at 95% LTV at 30 Year Fixed rate with a 700 score, as of 10/4/13 the following is a price comparison MONTHLY = .94 with Essent, Radian, Genworth and MGIC, .86 with United Guaranty SINGLE non‐refundable = 3.48 with Essent, Radian, Genworth, and MGIC, 3.27 with United Here are the websites: Genworth Comparison Page – will compare whatever choices you choose and will compare to FHA http://mortgageinsurance.genworth.com/RatesAndGuidelines/RateFinder.aspx MGIC Comparison page – will compare monthly with FHA http://www.mgic.com/rates/compare‐calcs.html Radian Comparison Page – will compare whatever choices you choose (No FHA comparison option) http://www.radian.biz/page?name=MIRateFinder United Guaranty – just type in for the quote and Monthly, Single, Lender Paid, Split and FHA all come up in the comparison https://www.ugmiguide.com/RateQuoteWeb/?bidId=equityresources1208 Example: Essent comparison page – will compare monthly with FHA http://essent.us/index.php/home/lenders/mi‐vs‐fha‐resource‐center/