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Unformatted text preview: HA mortgage insurance (MIP) cannot be cancelled. 6-22 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 6: HARD MONEY LOAN & CONVENTIONAL LOANS
APPLICATION FOR PMI
Each of the PMI companies has its own procedures for the application of coverage. Usually the lender will submit a completed loan package to the PMI company. Using the form of the investor or those supplied by the PMI company, the PMI company will review the materials and approve or disapprove the borrower based on the materials. Normally the PMI companies will have standard underwriting guidelines concerning the relationship of the total monthly income to the total mortgage payment, including all escrows and any fees that may affect the title to the property. In addition to the ratio of the total monthly income to mortgage payment, the PMI companies will review the ratio of the total monthly income to the total long–term obligations of the borrower, including the total mortgage payment. In most cases, the PMI companies define long–term obligation as any obligation that will take 10 or more months to pay off. The PMI company will review the credit history of the borrower, his and/or her work record, and any other factor that may affect the borrower's ability or willingness to repay the obligations. Some of these factors are court judgments, pending lawsuits, and bankruptcy. The PMI company will also review the property that will serve as the security for the mortgage. The economic life of the property will be checked to see if it is sufficient to support the term of the loan. Also considered is whether the property can be sold rapidly if it is taken back, and whether it is an existing construction or proposed construction. These are only a few of the guidelines used by the PMI companies. If you would like further information, you may contact a PMI company and they will be able to supply you with the in–depth underwriting guidelines they use. If all of the underwrit...
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- Spring '10