Making Credit Available in the New Mortgage Market: What

1
Making Credit Available in the New Mortgage
Market Whats the Impact for Borrowers?

• NeighborWorks Symposium
• May 7, 2008

2
Topics

• Back to the basics- Underwriting Guidelines.
• Program Eligibility.
• Declining Markets

3
Underwriting Approach- General Overview

• A new (?) approach we will do the following
• Require that the borrower have a contribution to
  the down payment.
• Have a credit history that supports their ability
  to be a a successful home owner.
• Require pre-purchase home buyer education on low
  down payment programs so that borrower
  understands the responsibilities of home
  ownership
• Require that the borrower have verified income
  and assets to support the home purchase.

4
Guideline Changes

• Eligible Loan Parameters
• Targeted loan programs with Loan to value ratios
  of 95.01-97
• Pre-purchase home buyer education is required.
• Maximum income limits apply.
• Borrower must provide 3 of own funds toward down
  payment.
• Minimum credit score of 700.
• First time home buyer requirement.
• Premium discounts for State Housing Finance
  Agency loans.
• 95 LTV and less
• Minimum FICO of 620
• Pre-purchase home buyer education recommended for
  first time home buyers.
• No maximum income limits
• Borrower must provide 5 of own funds toward down
  payment.

5
New eligibility requirements

• Loan programs that are currently ineligible
• 100 LTV
• A minus
• Investor
• All limited documentation ( exception for GSE Doc
  Waivers)
• Manufactured Housing

6
Declining Markets Policy

• Applies to loans located in a declining market,
  as determined by AIG United Guaranty model,
  appraiser comments or Lender local knowledge.
• 90 Maximum LTV
• 5 Contribution from borrowers own funds
• No condominiums or Co-ops
• No cash out refinance loans
• ARMs with first rate adjustment less than 5 years
• No nontraditional credit

7
General Underwriting Parameters

• Nontraditional Credit- Maximum 90 LTV ratio-
  Standard premium rates.
• Condominiums- Maximum 90 LTV
• Qualifying Income Ratios- 28/36 (97 LTV) 33/38
  (95 LTV).- Can be exceeded with compensating
  factors, will accept ratios from DU/LP approve
  eligible decisions.

8
AIG United GuarantyOne Partner. Countless
Advantages.
United Guaranty Residential Insurance
Company United Guaranty Mortgage Indemnity
Company One Partner. Countless Advantages. is a
mark of American International Group. AIG United
Guaranty is a marketing term for United Guaranty
Corporation and its subsidiaries.