MGIC tightens default guidelines for mortgage servicers

MGIC Investment (MTG) released an updated default servicing guide for mortgage servicers looking to file a claim with the private mortgage insurer. When a borrower defaults on a mortgage that MGIC insurer, the firm requires servicers to perform a set of tasks in accordance to its delegated guidelines. MGIC ‘clarifies’ these guidelines as housing market conditions change. The company, for example, said its new short-sale guidelines now allow a property loss up to $150,000. MGIC also said it will no longer pursue a deficiency judgment on an MGIC-approved short sale or deed in lieu. The broker’s price opinion or an appraisal can now be no more than 120 days old, and must included interior photographs. For real estate owned properties, MGIC now wants to see a copy of the appraisal from the original mortgage origination, as well as contact information for individuals with access to property. MGIC also now limits attorney’s fees to 3% of the sum of the claimable unpaid principle balance and interest due. Not all mortgage workouts that meet MGIC guidelines require prior approval, and clients are required to report any loan modifications within 30 days of completion, the company said. List prices for real-estate owned properties also do not require prior approval, for example. With more clients living in states where foreclosure backlogs are stalling the process, MGIC also has new details on how clients can report delayed foreclosure proceedings to the insurer. Mortgage servicers should file a claim within 60 days after title transfer, whether as a foreclosure sale or the property is sold as a borrower-titled short sale. If Fannie Mae is the investor, mortgage servicers can file on behalf of the government-sponsored enterprise. Freddie Mac files its own claims. A deed in lieu of foreclosure must be executed and the claim filed within 90 days from the date of approval from MGIC. “If the stated time frame for foreclosure is exceeded, retain and submit with your claim to MGIC a chronological listing from the foreclosing attorney detailing the events from the date of default to claim filing date, including court delays and attorney’s notes,” MGIC said. “If the chronology provided by the foreclosing attorney does not encompass all reasons for delay, include all additional information available, including reason for all court delays and time lapses within the chronology.” Write to Kerri Panchuk.