December 15, 2014
Affordable Housing and 97% LTV Underwriting Requirement Changes—Effective January 5, 2015

Effective with MI applications received on or after January 5, 2015, we are expanding our underwriting requirements for the following:

Affordable Housing Loans Benefit from Expansion:

Due to the expansion of the New Subordinate Financing and Gift/Grant requirements (detailed below), the following will apply to Affordable Housing:

In addition, we will clarify that the following loans are considered Affordable Housing (the complete definition for Affordable Housing is provided below:

Minimum Credit Score Lowered to 620 for Loans with 97% LTV Submitted Delegated:

The minimum credit score has been lowered to 620 (previously 680) for the following delegated submissions:

New Subordinate Financing:

The following are the changes to the requirements for loans with New Subordinate Financing. There are no changes to the requirements for loans with Existing Subordinate Financing. The complete requirements are below.

Loans with new subordinate financing will be available for 1-unit primary residence purchase and rate/term refinance transactions subject to the following (previously only allowed for HFA purchase transactions):

Note: We will continue to align with the Agencies' requirements for subordinate financing types and terms.


The following are the changes to the Gift/Grant requirements. Complete requirements are below:

Rental Income:

Rental income from the subject investment property is now eligible for use in the DTI calculation. This restriction will be removed from the Guide. We will align with the Agencies' requirements for use and documentation of subject investment property rental income.

Additional Underwriting Requirement Changes and Clarifications:

Condominiums and Cooperatives (Co-ops):

We will align with the Agencies for the following Condominium requirements and therefore will remove them from our Guide:

We are combining the Condominium and Cooperative sections of the Guide and making the following clarifications:

In order for a condominium or co-op to be eligible for insurance, it must be eligible for sale to one of the Agencies based on the following:

Restructured Mortgage Loan (Previously Short Refinance)

The Short Refinance section of the Guide (section 14.04.03) has been renamed Restructured Mortgage Loans to align with the Agencies' use and definition of the term.

The following restructured mortgage loans will be eligible for insurance when they meet all other United Guaranty underwriting requirements (previously these loans either were ineligible or required a waiting period after the restructure):

If a restructured mortgage loan is modified instead of refinanced, it may not be submitted as a new insurance application. The loan must be submitted as a modification using our Loan Modification Request Form, located at

Desktop Originator (DO):

We will clarify within the Guide that a Desktop Originator® (DO®) Findings Report may not be used as the equivalent of a Desktop Underwriter® (DU®) Findings Report.

Updated Documents:

The following documents will be updated and posted to our corporate website ( by January 5, 2015:

Please contact your United Guaranty Account Representative if you have questions concerning this announcement. For questions regarding underwriting requirements or submissions, contact our Underwriting Customer Service team at 877.MI.CHOICE (877.642.4642) or email UGC:customerservice.

The following two sections contain the complete content of the updated requirements as indicated above:

New Subordinate Financing Requirements, Effective January 5, 2015

Funds that may require repayment under any circumstance are considered loans and must be included in the CLTV, including those that are forgivable or for which the monthly payments are deferred. The requirement for repayment may be recorded with a mortgage document or as a restriction within the recorded deed.

Transactions with new subordinate financing are eligible for insurance when meeting all of the following requirements. Exceptions to these requirements are not allowed, including the credit score and DTI ratio variances:

Occupancy Transaction Type Property Type Maximum LTV/CLTV Maximum Loan Amount Minimum Credit Score Maximum DTI
Primary Residence (only) Purchase and Rate/term Refinance (only) 1-Unit, Detached, Attached, Condos, Co-ops 97%/1001 $417,000 620 45%
1CLTVs 97.01% to 100% available for Affordable Housing loans only (see section 8.02 of the Guide).

Gifts/Grant Requirements, Effective January 5, 2015:

Gifts and donated grants (with no condition of repayment) may be used to satisfy United Guaranty's minimum borrower contribution requirement when certain other requirements are met. See details below:

Affordable Housing Definition, Effective January 5, 2015:

The following is the complete Affordable Housing loan definition, including the clarifications from section above:

© 2014 United Guaranty Corporation. All rights reserved. United Guaranty is a marketing term for United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company. United Guaranty and CU SwiftClose are registered marks. Coverage is available through admitted company only. Desktop Originator, DO, Desktop Underwriter, DU, Community Seconds, and MyCommunityMortgage are registered marks of Fannie Mae. Affordable Seconds and Home Possible are registered marks of Freddie Mac.


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