Mortgage Insurers Back Away from Certain U.S. States, Loan Types

Miami–The mortgage industry is being stricter about issuing home loans to consumers with good credit and is refusing to insure certain loans in almost a quarter of the nation’s ZIP codes–including areas such as Miami, which is experiencing falling home prices and a high foreclosure rate.Mortgage insurers’ backing is required for borrowers who can’t put down a 20 percent down payment; but the industry is no longer interested in backing loans for a variety of properties–including big homes in Scottsdale, Ariz., ranch homes in Flint, Mich. and luxury Miami condos, according to Newsweek. Mortgage insurers have singled out more than 9,600 ZIP codes in at least 34 states in recent weeks. Insurers won’t guarantee loans in those areas for buyers making a 3 percent or less downpayment, buyers purchasing investment properties and second homes–or ones taking out riskier adjustable-rate or interest-only mortgages.In addition, some mortgage insurers have blackballed entire states, including high-foreclosure-rate areas such as California, Florida, Arizona, Michigan, Ohio and Nevada. Lending standards are now as strict as they were 20 years ago, Newsweek says.However, state and federal programs for first-time buyers and buyers with imperfect credit are trying to offer an alternative for buyers as banks and mortgage insurers become more reluctant to issue and back loans.