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Mango

SoWal Insider
Apr 7, 2006
9,709
1,360
New York/ Santa Rosa Beach
I received a letter from one of my mortgage insurance underwriters, a large one called MGIC to announce the imposition of of an assessment by the State of Florida to help rebuild its catastrophic fund.

Regulatory changes:
To help fund the seriously depleted Hurricane Disaster fund, the State of Florida will impose a 1% assessment on most property and casualty insurance premiums. Mortgage insurance premiums paid on loans secured by Florida Properties are included.
This assessment will be charged on new premiums and renewals, including the renewals of insurance in effect prior to Jan.1 2007. As required the assessment will be added, billed and collected then remitted to Florida.

Also:
They are no longer offering insurance on applications where the LTV (Loan to value) exceeds 95% and the FICO score is less than 575.
if the score is below 620, then the rates are higher regardless of whether the loan has been approved outside of A minus guidelines.
 

pgurney

Beach Fanatic
Jul 11, 2005
587
66
ATL & Seacrest
I received a letter from one of my mortgage insurance underwriters, a large one called MGIC to announce the imposition of of an assessment by the State of Florida to help rebuild its catastrophic fund.

Regulatory changes:
To help fund the seriously depleted Hurricane Disaster fund, the State of Florida will impose a 1% assessment on most property and casualty insurance premiums. Mortgage insurance premiums paid on loans secured by Florida Properties are included.
This assessment will be charged on new premiums and renewals, including the renewals of insurance in effect prior to Jan.1 2007. As required the assessment will be added, billed and collected then remitted to Florida.

Also:
They are no longer offering insurance on applications where the LTV (Loan to value) exceeds 95% and the FICO score is less than 575.
if the score is below 620, then the rates are higher regardless of whether the loan has been approved outside of A minus guidelines.

This seems odd to me. Why would insurance rates be higher for an owner with a lower credit score? Higher for no hurricane shutters, higher for flood zones....makes sense, but credit scores?
 

Mango

SoWal Insider
Apr 7, 2006
9,709
1,360
New York/ Santa Rosa Beach
This seems odd to me. Why would insurance rates be higher for an owner with a lower credit score? Higher for no hurricane shutters, higher for flood zones....makes sense, but credit scores?

This is for mortgage insurance. This is a premium paid when someone buys a home and puts less than 20% down. This does not refer to homeowners insurance as it relates to this thread. Someone with alower score is more likely to default on their mortgage.

But an FYI- In New York when you apply for home, car or blanket policy, credit reports are pulled, so who knows. I am not sure if there will be surcharge for homeowners insurance based on credit scores. I just got this from a mortgage insurer and this was how they worded it.
 
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pgurney

Beach Fanatic
Jul 11, 2005
587
66
ATL & Seacrest
This is for mortgage insurance. This is a premium paid when someone buys a home and puts less than 20% down. This does not refer to homeowners insurance as it relates to this thread. Someone with alower score is more likely to default on their mortgage.

But an FYI- In New York when you apply for home, car or blanket policy, credit reports are pulled, so who knows. I am not sure if there will be surcharge for homeowners insurance based on credit scores. I just got this from a mortgage insurer and this was how they worded it.

Thanks! I knew I had to be missing something. :roll:

Note to self: read more thoroughly.
 

Mango

SoWal Insider
Apr 7, 2006
9,709
1,360
New York/ Santa Rosa Beach
Thanks! I knew I had to be missing something. :roll:

Note to self: read more thoroughly.

It is very easy to confuse to the two types of insurance. I suppose this isn't a normal thread about taxes, insurance etc., just a note that Florida is getting money anyway they can into that fund. Your question just probably answered someone else who was scratching their head. ;)

But realistically 1% is really not that much of a premium. For example, if someones monthy mortgage insurance payment is $200, the surcharge is only $2.00. Most people do not have it in SoWal, but I would imagine quite a few investors who put down as little downpayment as possible pay this premium.
Just makes me wonder what might be next? :dunno:
 
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sberry123

Beach Comber
Mar 5, 2006
39
0
PMI (Personal Mortgage Insurance), It is insurance the lender has in case the buyer defaults on the mortgage and the property is sold by the bank for a lesser amount than the mortgage. The owner or mortgage holder is the one who pays for this insurance.:dunno:
 

Mango

SoWal Insider
Apr 7, 2006
9,709
1,360
New York/ Santa Rosa Beach
PMI (Personal Mortgage Insurance), It is insurance the lender has in case the buyer defaults on the mortgage and the property is sold by the bank for a lesser amount than the mortgage. The owner or mortgage holder is the one who pays for this insurance.:dunno:

The owner pays for this insurance. The Bank has the right to determine the coverage rate based on the loan program type. An adjustable rate mortgage carries more risk, thus the rate is higher for example. The rate also goes up in 5% increments. 85% financing - one rate- 90% financing another and so on. It also is not tax deductible.
Quite a few people in the past have taken 80% first mortgages and then financed the rest with equity lines of credit to avoid mortgage insurance.
I broker mortgage loans, and I always did this with my clients because they had the ability to pre-pay the equity lines with bonuses or pay them down considerably if rates went up as they obviously did.

As I stated in earlier posts, the amount is nominal really, but surprised that the State has gotten involved in collecting these monies. I have never heard it done anywhere else. I wonder what kind of revenue they think they can generate. Obviously they did their homework, so I think that this is good indication that many people bought investment properties with low downpayments or did not qualify for a mortgage with an equity line attached.

I just wonder what will be next.
 
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spinDrAtl

Beach Fanatic
Jul 11, 2005
367
2
I have never heard this called Personal Mortgage Insurance. It has always been known as Private Mortgage Insurance in my neck of the woods. Automated underwriting normally spits out a coverage rate. Required coverage is less on terms under 30 years as well.

The 80/20 loan is quite standard for 100% purchases, using a 20% 2nd mortgage which can be a fixed rate, just like the first, although at a higher interest rate. Many first time buyers who want 100% financing have no concept of what PMI is and for conforming loans, if we can get them over the idea that making two loan payments is 'bad', they jump at it when they realize what they might save by not paying PMI. For subprime loans, no PMI is required.

As far as HAZARD insurance is concerned, I have heard of instances where people were charged higher premiums due to low credit scores.
 

Bob

SoWal Insider
Nov 16, 2004
10,364
1,391
O'Wal
I have never heard this called Personal Mortgage Insurance. It has always been known as Private Mortgage Insurance in my neck of the woods. Automated underwriting normally spits out a coverage rate. Required coverage is less on terms under 30 years as well.

The 80/20 loan is quite standard for 100% purchases, using a 20% 2nd mortgage which can be a fixed rate, just like the first, although at a higher interest rate. Many first time buyers who want 100% financing have no concept of what PMI is and for conforming loans, if we can get them over the idea that making two loan payments is 'bad', they jump at it when they realize what they might save by not paying PMI. For subprime loans, no PMI is required.

As far as HAZARD insurance is concerned, I have heard of instances where people were charged higher premiums due to low credit scores.
Assuming good credit score and a rising market it used to be better to take, say 95 percent on a first. A year or so later you could then appraise your way out of pmi. Now that scenario isn't available. PMI on subprime isn't necessary because of lender yield. Selling seconds as a way to bridge down payment deficiencies is good for the broker because it sets the table for a refi. Better for the client to pre-pay PMI if the underlying financing is good. That's how you help establish long term relationships.
 

Mango

SoWal Insider
Apr 7, 2006
9,709
1,360
New York/ Santa Rosa Beach
Assuming good credit score and a rising market it used to be better to take, say 95 percent on a first. A year or so later you could then appraise your way out of pmi. Now that scenario isn't available. PMI on subprime isn't necessary because of lender yield. Selling seconds as a way to bridge down payment deficiencies is good for the broker because it sets the table for a refi. Better for the client to pre-pay PMI if the underlying financing is good. That's how you help establish long term relationships.

The 95% scenario you stated above in a rising market may have worked in some areas of the country, but not all. Secondly, not everyone was able to re-appraise themselves out of PMI. Many people are not aware that the appraised value needed to be around 70-75% LTV, not 80% to get out of PMI via appraisal.The LTV is set by the Bank. Many people who had the appraised values at 80%, had to refinance.
In defense of Spindr., and being a broker myself, I can tell you that people asking for 100% financing barely have enough money to cover closing costs, never mind pre-pay mortgage insurance.:blink: Right now also, the rates on second mortgages with a fixed payment works out better than equity lines. Many people who had variable equity lines are refinancing those into fixed , and still keeping their low rate first mortgages. At least they are getting a tax deduction on seconds. You don't get that with mortgage insurance.
I don't think Spindr. or myself would still be in the business if we hadn't done right by our clients in the past. I personally only work by referral.
 
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