Some of the underwriters in the private mortgage insurance industry have ramped things up another notch in the efforts to recapture market share from the Federal Housing Administration.
Several firms, including Genworth, Radian and RMIC have announced they will accept appraisals for loans which originally had intended to have FHA insurance but for some reason are being switched to a conventional secondary market execution.
One of the reasons why this switch might become more popular: the Federal Housing Administration pricing and guideline changes which went into effect in October.
In its announcement, RMIC tells originators it instituted this policy to help borrowers get the best execution and faster underwriting.
Chris Mock, senior vice president of underwriting and servicing at Genworth, said not requiring the borrower to get a new appraisal if the loan changes to a conventional saves time and money.
“Switching an FHA application to conventional with Genworth Mortgage Insurance may reduce processing times by weeks and can now be done without the additional cost of a new appraisal,” he said.
Mock added that the company is not worried about the quality of the appraisal because the FHA’s process for appraisals is stricter with a higher standard of care required than most conventional lenders have.
By not having to get a new appraisal, he pointed out, turnaround time goes from weeks to in most cases 48 hours or less.
At Radian, Scott Theobald, chief risk officer for MI, said acceptance of Federal Housing Administration appraisals is something the company had been discussing for some time.
And like Genworth, Radian is not worried about quality.
The company is comfortable accepting an appraisal on a property where somebody has taken the trouble to go through the FHA loan approval process, he said.
With the Federal Housing Administration changes, Radian is expecting to see an increase in loans “repurposing” to conventional execution, he said.
In its notice to originators, the company is positioning the change as part of its “Radian is Ready” campaign, which seeks to recapture market share from FHA.
The company did put a caveat in its notice. “It’s important to note that Radian’s acceptance of an FHA appraisal for MI purposes may not be consistent with current GSE Appraiser Independence Requirements, or those of individual investors, so we encourage you to confirm your investor’s acceptance.”
A spokeswoman for MGIC said accepting Federal Housing Administration appraisals isn’t something new for that company.
At Essent, which entered the private MI business earlier this year, acceptance of FHA appraisals is under review, according to a spokeswoman.
Calls to PMI and United Guaranty were not returned by deadline.
