Radian Guaranty Inc., Philadelphia, will accept Fannie Mae Desktop Underwriter Approve/Eligible and Freddie Mac Loan Prospector Accept/Eligible loans for mortgage insurance without the need for a separate underwriting decision by the company starting on July 11. This is just one of a series of guideline changes the company is making.
Chief franchise officer Brien McMahon said the package of changes is being marketed to its clients as "PowerPak" and the package components may change as Radian adds new products and services.
"We are trying to show that conventional financing with MI is a much better alternative that FHA for the low down payment borrower. By packaging all of this together, we are trying to emphasize that point," he said. It was one year ago that the company rolled out its "Radian Is Ready" campaign as part of its efforts for the private mortgage insurer business to regain market share from the Federal Housing Administration.
The One Underwrite offering is Radian's attempt to simplify the process for its originator clients, McMahon noted.
A Radian spokeswoman added that some of the other private MIs have a similar program, but what sets Radian's apart is that there are only five, relatively simple, overlays.
One of those overlays is that the borrower can have a FICO score as low as 620. Another is a requirement that 3% of the downpayment comes from the borrower's own funds. Other overlays address geography and property type.
In creating One Underwrite, McMahon explained, "We reviewed the guidelines for LP and DU to make sure they meet our credit standards. So we're comfortable in making this change and being a little more aggressive."
As part of the PowerPak, Radian has expanded its monthly pricing matrix to include both borrower-paid and lender-paid mortgage insurance where the borrower's FICO is at least 620. Radian's previous FICO floor was 680 for all of its product line, and this move expands the number of eligible borrowers, the spokeswoman said.
Radian is also lowering by an average of 14 basis points its BPMI monthly standard coverage rates for loans with loan-to-values to 95% and the borrower has a FICO score of 720 and higher.
Anticipating lower government-sponsored enterprise maximum loan amounts later this year, Radian has revised its nonagency jumbo guidelines to where it will provide MI on loans up to $650,000 with LTVs between 85.01% and 90%, and up to $750,000 for loans with LTVs of 80.01% to 85%. The minimum FICO for MI from Radian for nonagency jumbos has been dropped to 720 from 760, which also expands borrower eligibility, McMahon said.
Separately, Radian reported an over 8% increase in the number of new notices of delinquency between April and May, while the number of cures reported fell by 13%.
The company had 7,844 new delinquencies and 5,217 cures in May, compared with April's 7,222 and 5,978, respectively. Still, Radian's primary delinquent loan inventory declined by 827 loans as the number of paid claims increased to 2,613 from 2,2528 and the number of rescissions and denials increased to 841 from 592.
For the first two months of the second quarter, Radian has seen "a relative improvement" of the impact on reserve development and its loss provision as a result in the composition of its delinquent loan inventory, a company statement said.
Chief financial officer Bob Quint explained the statement is narrowly focused on reserve development. In previous quarters, the aging of Radian's delinquent loan inventory has affected its reserves and incurred losses; as a loan stays in the inventory longer, more reserves need to be held.
So far in the current quarter, that impact has been lessened.
