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MGIC’s new Master Policy

Our new Master Policy, #71-43342 (10/14), has been approved by Fannie Mae and Freddie Mac and all regulatory jurisdictions.

We will activate our new GSE-approved Master Policy on Oct. 1, 2014, to meet the requirements announced by Fannie Mae and Freddie Mac.

Our new Policy will cover loans where the initial MI application is received on or after Oct. 1, 2014, even if the loan application date is before then. Resubmitted MI applications initially received before Oct. 1 will be covered under MGIC Master Policy #71-7135 (8/94), also GSE-approved.

On or before the effective date, we will e-mail your new Declarations page and a link to the Master Policy.

Resources

Access the new Master Policy and Endorsements in the Resources column at right. These have not been approved in all states and are subject to changes before implementation.

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Gold Cert Coverage

Our Gold Cert Coverage offers rescission relief from Borrower misrepresentation, underwriting errors and Material Value Variances for all Loans after 36 months. You can also opt for this protection at 12 months.

All Loans, regardless of how you submit them, are eligible for either coverage level. The 12-month option requires that you submit Verification Information at application and/or after you notify MGIC to activate insurance.

36-Month Coverage

All Loans receive Gold Cert rescission relief from borrower misrepresentation, underwriting errors and Material Value Variances after 36 months if:

  • The Loan is current
  • All Loan Payments were made from the Borrower's Own Funds
  • No more than 2 Loan Payments were 30 days late; no Loan Payment was 60 or more days late
  • The Loan was not subject to a Workout
  • There is no First-Party Misrepresentation or Pattern Activity

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12-Payment Protection

You have the option to request Gold Cert 12-Payment Protection, which provides rescission relief for borrower misrepresentation and underwriting errors and for Material Value Variances if all of the following are met:

  • You submitted Verification Information as required, and the Loan passed our 12-Payment Protection Review
  • The Loan was not subject to a Workout
  • None of the first 12 Loan Payments was 30 or more days Delinquent
  • All Loan Payments were made from the Borrower's Own Funds
  • There is no First-Party Misrepresentation or Pattern Activity

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Verification Information

To request 12-Payment Protection for borrower misrepresentation, underwriting errors and Material Value Variances, submit the required Verification Information within 90 days of when you notify us to activate insurance.

Verification Information Requirements

  • MGIC Delegated MI Underwrite Loans — Submit a complete Loan Origination File and Closing File
  • MGIC MI Underwrite Loans — Submit:
    • Any Loan Origination File documents submitted at MI application that have changed since
    • Any Loan Origination File documents that were not submitted at MI application
    • A complete Closing File
  • MGIC MI Underwrite/Full-Doc Review Loans — Submit:
    • Any Loan Origination File documents submitted at MI application that have changed since
    • A complete Closing File

Loan Origination File Documents

  • MGIC Mortgage Insurance Application
  • Agency AUS Findings/Feedback Report, if applicable
  • 1008/1077 Uniform Underwriting and Transmittal Summary
  • 1003/65 Original Loan Application
  • Credit report and all other credit documentation, including Verification of Rent or Mortgage
  • Income and employment verification for all Borrowers
  • Asset verification for all Borrowers
  • Appraisal, including all addenda, attachments, schedules, photographs and other information included by the appraiser
  • Sales contract or equivalent
  • Loan approval notes
  • Underwriting and processing notes
  • Any other document used in the underwriting process not listed above

Closing File Documents

  • Final HUD-1 Settlement Statement or other settlement statement signed by the Borrowers
  • Signed promissory note
  • Signed Mortgage
  • Title insurance commitment
  • Any other closing-related documentation that we may request

To request 12-Payment Protection for Material Value Variances only, submit the required Verification Information within 90 days of when you notify us to activate insurance.

Verification Information Requirements

  • MGIC Delegated MI Underwrite Loans — Submit the appraisal and other Property valuation information
  • MGIC MI Underwrite Loans — Submit the appraisal and other Property valuation information, ONLY IF it wasn't submitted at MI application or it has changed since
  • MGIC MI Underwrite/Full-Doc Review Loans — Submit the appraisal and other Property valuation information ONLY IF it has changed since MI application

Appraisal Documents

  • Appraisal, including all addenda, attachments, schedules, photographs and other information included by the appraiser

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Underwriting

Underwriting Documentation Submission Options

Under the new Policy, flexible submission options allow you to continue to tailor the way you do business, submitting data and/or documents.

Delegated MI Underwrite

To apply for MGIC mortgage insurance under our Delegated MI Underwrite program, you must:

  • Meet program requirements
  • Have our Delegated Underwriting Endorsement

Submit data-only files via the Loan Center, your LOS or other electronic data interface.

When you apply for MGIC MI through our Delegated MI Underwrite program, you represent:

  • Data is true and accurate and consistent with the Loan Origination File
  • The Loan meets our Eligibility Criteria

We are not responsible for:

  • The accuracy of the data you submit
  • Determining whether the information you submit meets our Eligibility Criteria

If you don't qualify for our Delegated MI Underwrite program, apply for MI via our MGIC MI Underwrite or MGIC MI Underwrite/Full-Doc Review programs below.

Advantages of using our Delegated MI Underwrite:

  • You don't need to gather, scan and submit any documents
  • With a data-only submission, you'll typically receive a response in less than one minute
  • You have the option of adding Gold Cert 12-Payment Protection for Borrower misrepresentation, underwriting errors and Material Value Variances or just Material Value Variances by submitting the appropriate Verification Information

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MGIC MI Underwrite

Submit documents with your MGIC MI application via the Loan Center or other document delivery service, fax or courier.

Upon reviewing the documents you submit, we may request additional documentation.

When you apply for MGIC mortgage insurance with an MGIC MI underwrite, you represent:

  • Submitted Loan documentation is true and correct
  • The information you have not submitted meets our Eligibility Criteria

We are responsible for:

  • Accurate data entry
  • Determining whether the information you submit meets our Eligibility Criteria

Advantages of using our MGIC MI Underwrite:

  • You have fewer documents to gather, scan and send
  • We are responsible for evaluating the documents you submit
  • We make an MI underwriting decision based on the documents you submit
  • You have the option of adding Gold Cert 12-Payment Protection for Borrower misrepresentation, underwriting errors and Material Value Variances or just Material Value Variances by submitting the appropriate Verification Information

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MGIC MI Underwrite/Full-Doc Review and ATR Check

This option can simplify post-closing work for 12-Payment Protection and provides MGIC's ATR Check.

Submit a complete Loan Origination File via the Loan Center or other document delivery service, fax or courier.

When you apply for MGIC mortgage insurance with an MGIC MI Underwrite/Full-Doc Review:

  • You represent:
    • Submitted Loan documentation is true and correct
    • You have no other information that affects compliance with our Eligibility Criteria
  • We are responsible for:
    • Accurate data entry
    • Determining whether the information you submit meets our Eligibility Criteria
    • Reviewing Loan documentation, based on the Consumer Financial Protection Bureau's (CFPB) Ability to Repay (ATR) checklist regarding Borrowers':
      • Current or reasonably expected income or assets
      • Current employment status
      • Monthly payment on the covered transaction
      • Monthly payment on any simultaneous Loan
      • Monthly payment for Mortgage-related obligations
      • Current debt obligations, alimony and child support
      • Monthly debt-to-income ratio or residual income
      • Credit history

Please note: MGIC is not a creditor subject to the Dodd-Frank Ability-To-Repay (ATR) determination requirements, and our ATR Check is not intended to satisfy your independent responsibility for complying with regulatory or investor requirements. We review only your submitted loan documentation, and we do not independently reverify any information for ATR determination.

Submission Documents

  • MGIC Mortgage Insurance Application
  • 1008/1077 Uniform Underwriting and Transmittal Summary
  • Agency AUS Findings/Feedback Report, if applicable
  • 1003/65 Original Loan Application
  • Credit report and all other credit documentation, including Verification of Rent or Mortgage
  • Income and employment verification for all Borrowers
  • Asset verification for all Borrowers
  • Appraisal, including all addenda, attachments, schedules, photographs and other information included by the appraiser
  • Sales contract or equivalent
  • Loan approval notes
  • Underwriting and processing notes
  • Any other document used in the underwriting process not listed above

Advantages of using our MGIC MI Underwrite with Full-Doc Review:

  • We are responsible for underwriting errors
  • You pay no fees for this service
  • We review the appraisal for Gold Cert 12-Payment Protection

Underwriting Guide — Coming Soon

Our new Underwriting Guide will further clarify our Underwriting Requirements.

The new Underwriting Guide will be effective Oct. 1.

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Servicing

Impact Summary for Servicers

Our Impact Summary for Servicers highlights changes you can expect with the new Master Policy and identifies sections of the document that may affect your servicing processes.

Servicing Guide

The Servicing Guide provides clarity, transparency and information related to our servicing guidelines. This guide is a combination of our current MI Servicing and Default Servicing Guides and incorporates changes as a result of the new Master Policy.

The new guide will become effective with MGIC’s new Master Policy as of Oct. 1, 2014. The existing MI Servicing and Default Servicing Guides remain your reference documents until that time.

Servicing Report

The new Policy requires that you submit a monthly Servicing Report for all MGIC-insured loans, current or in default.

MILAR Servicing Report
The Mortgage Insurance companies created this uniform, updated template for reporting insured loan activity. Formerly known as the MICA template, it's now called the MILAR. It contains additional data fields that meet the new Master Policy requirements.

Minimum Data Servicing Report
Servicers who do not currently submit the MILAR template can opt to submit this template, an abbreviated form of the MILAR, containing only a minimum required data set of 32 fields.

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Q & A

General

How will the new Master Policy be distributed?

On or before Oct. 1, we will e-mail all Master Policyholders a new Declaration Page along with a link to the Master Policy and all endorsements.

The Declaration Page states the effective date of the new Policy and identifies:

  • You as the insured
  • Your Master Policy number
  • All applicable endorsements and notices
  • Your principal place of business
    • We are issuing the policy only to the principal place of business of the Insured, as reflected in our records
    • The Policy covers all of the Insured's branches
    • The Commitment/Certificate will identify the originating branch

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Can I review the new Master Policy now?

Yes, here is the new Master Policy. You may also view all endorsements to the new Master Policy.

We first posted the new Master Policy, with a revision date of 2/14, in March 2014. In July 2014 we reposted the Policy with a revision date of 10/14 to reflect the actual effective date. We also removed the "Sample" watermark. Aside from these two superficial changes, content in the 2/14 and 10/14 versions of the Policy is identical.

We made the same changes to the endorsements.

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Do I need to sign something to be activated under the new Master Policy?

No, you do not need to sign anything. No action is required on your part. The terms of the new Policy will cover all MI applications you submit beginning on the effective date noted on your Declaration Page.

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Why are you issuing Delegated and co-op endorsements to all customers?

All data submissions will be covered under our Delegated Endorsement. All customers who are eligible for data-only submissions will need this endorsement.

By issuing the co-op endorsement to all customers, we will eliminate delays associated with issuing a new endorsement for any customers who are or become involved in co-op Loans.

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Will the Commitment/Certificate be different?

There will be several key changes to the Commitment/Certificate:

  • It displays both the Insured's principal place of business and ordering branch office
  • Your Loan number is now displayed on the top of the document to locate more easily
  • The Endorsements and Notes section will show the new Master Policy form number as well as those for all applicable endorsements
  • The Endorsements and Notes section will also note the applicable underwriting program — Delegated, MGIC MI Underwrite or MGIC Underwrite/Full-Doc Review
  • With the new Commitment/Certificate, you will have the option to display the borrower's DTI based on our calculation and used to approve the loan for MI

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Rescission Relief

What rescission relief features does your new Master Policy include?

All Loans, regardless of how you submit them, are eligible for our Gold Cert rescission relief.

Rescission relief after 36 months

All Loans receive Gold Cert rescission relief for Borrower misrepresentation, underwriting errors and Material Value Variances after 36 months if:

  • The Loan is current
  • All Loan Payments were made from the Borrower's Own Funds
  • No more than 2 Loan Payments were 30 days late; no Loan Payment was 60 or more days late
  • The Loan was not subject to a Workout
  • There is no First-Party Misrepresentation or Pattern Activity

Rescission relief after 12 months

The same rescission relief protections are available after only 12 months under Gold Cert 12-Payment Protection rescission relief if you submit certain required documentation to us within 90 days of notifying us to activate insurance coverage.

  • For protection against rescission due to Borrower misrepresentation, underwriting errors and Material Value Variances, submit complete Loan Origination and Closing Files
  • For protection against rescission due to Material Value Variances only, submit complete appraisal and other Property valuation information, including all addenda, attachments, schedules, photographs and other information included by the appraiser

Our review of the documentation will determine whether the Loan is eligible for Gold Cert 12-Payment Protection. Eligible Loans receive rescission relief when:

  • None of the first 12 Loan Payments was 30 or more days Delinquent
  • All Loan Payments were made from the Borrower's Own Funds
  • The Loan was not subject to a Workout
  • There is no First-Party Misrepresentation or Pattern Activity

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Are there any additional fees for the Gold Cert 12-Payment Protection?

No, but you must submit certain required documentation to us within 90 days of notifying us to activate insurance coverage.

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What documents does MGIC require as Verification Information for a Loan to be considered for Gold Cert 12-Payment Protection?

For protection against rescission due to Borrower misrepresentation, underwriting errors and Material Value Variances, submit complete Loan Origination and Closing Files.

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What is MGIC going to do with the information in the Loan Origination and Closing Files?

In order to grant Gold Cert 12-Payment Protection for Borrower misrepresentation and underwriting errors, we are required by the Agencies to reunderwrite the Loan File to ensure:

  • There are no inconsistencies
  • The transaction closed as represented in the Origination File

This reunderwrite must be more than a standard MI underwrite in that, should we discover any questionable information, we are obligated to take any reasonable steps necessary to confirm that there are no material deficiencies in the information or the underwrite.

Regarding value, we must confirm that the value we are relying upon is supported by the appraisal and other Property valuation information.

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What is "Pattern Activity"?

Pattern Activity means a pattern of misrepresentations related to or in connection with Eligibility Criteria, whether by information furnished, omitted, falsified or forged, involving two or more Loans, at least one of which is insured by us, and either:

  • Two or more Pattern Parties or
  • The Borrower and one or more Pattern Parties

A Pattern Party is:

  • Any individual acting with actual or apparent authority for the Initial Insured
  • Any First Party other than the Initial Insured
  • Any Property seller, Property builder, real estate broker or real estate agent

A First Party, with respect to a Loan, is the Initial Insured and any other Persons (other than the Borrower or the Borrower's agent) who performed or had a duty to perform any acts related to the Insurance Application or Origination of such Loan. See MGIC Master Policy Section 1, Definitions, for details.

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What does "not subject to a Workout mean"?

A Workout means any assumption or modification of the terms of a Loan, regardless of its status, including:

  • Any change in the principal balance, interest rate, payment terms or amortization schedule
  • Any change in or release of the Property, subject to the Mortgage
  • Any forbearance or partial release of the Borrower's Loan obligations
  • A Pre-Settlement Sale by the Borrower
  • Acceptance of a deed in lieu of foreclosure

Loans subject to any of the events listed above are not eligible for Gold Cert 12- or 36-month rescission relief.

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Does MGIC still allow a variance of up to 15% of the Property value?

Yes. Our new Master Policy defines a "Material Value Variance" as an Eligibility Criteria Violation relating to the Property value that exists when:

  • There is a percentage variance of 15% or more between the Origination Valuation and the opinion of market value for the subject Property, as determined by a licensed appraiser in an appraisal report prepared at our request as of the date of the Origination Valuation in compliance with industry standard appraisal practices, AND
  • The loan-to-value ratio calculated as of the Certificate Effective Date using the appraised value from our requested appraisal report does not meet the Eligibility Criteria applicable to the Loan

Determine the percentage variance by dividing the difference between the two values by the Origination Valuation, expressed as a percentage.

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What is the MGIC MI Underwrite/Full-Doc Review with ATR Check?

It's a new underwriting submission option that can simplify post-closing work for 12-Payment Protection and provides MGIC's Ability to Repay Check.

After you've determined that Loan documentation meets our Underwriting Requirements, submit a complete Loan Origination File via the Loan Center or other document delivery service, fax or courier.

We will simultaneously review Loan information for compliance to our MI Underwriting Requirements and to Consumer Financial Protection Bureau (CFPB) Ability to Repay (ATR) considerations.

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Servicing Report

What is the "Servicing Report" described in the new Master Policy?

Under the new Policy, we will require you to submit a monthly Servicing Report including status and other key information for all Loans insured under the new Policy — whether they're current or in Default.

You also may include Loans insured under our current Master Policy in your monthly Servicing Report.

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What's the monthly deadline for delivering the Servicing Report?

Submit the report by the 25th of the month for the prior month's activity.

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What data does the Report require?

The Servicing Report requires a minimum data set of 32 fields as identified by our trade association, US Mortgage Insurers (USMI). Note that all fields may not be applicable to all Loans.

Minimum Required Data Set

  • Reporting Date
  • MI Company Code
  • Primary Certificate Number
  • Contract ID
  • Pool Certificate Number
  • Current Principal Balance
  • P & I Payment
  • Removal Code
  • Primary Borrower Name
  • Servicers Loan Number
  • Servicer Name
  • Investor Name
  • Investor Loan Number
  • Subject Property Street Address 1
  • Subject Property City
  • Subject Property State
  • Subject Property Zip Code
  • Next Payment Due Date
  • Workout Type
  • Workout Status
  • Workout Status Date
  • Workout Program Name
  • Current Interest Rate*
  • Original Closing Date*
  • Eviction Proceeding*
  • Eviction Proceeding Start Date*
  • Eviction Proceeding End Date*
  • Pending Borrower Proceeding*
  • Borrower Proceeding Start Date*
  • Borrower Proceeding End Date*
  • Servicing Transferee*
  • Interest Accrual Rate*

*New MILAR fields

Non-MILAR users

For Servicers who do not currently submit the MILAR (Mortgage Insurance Loan Activity Report) template, you can use the Minimum Data Servicing Report. This new template is an abbreviated form of the MILAR (see below), containing only the minimum required 32-field data set.

Current MILAR users

The MILAR template has been updated to incorporate all of these fields. New fields were added at the end of the template to eliminate any mapping rework. Each of the fields in the minimum required data set is highlighted in green to distinguish them from the rest of the data.

You can continue to use the MILAR Servicing Report, taking care to provide the information in the required minimum data set.

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When will MGIC implement this requirement?

We recognize that this process change may take some time for you to operationalize, so we will not require a monthly Servicing Report from you any sooner than Jan. 1, 2015.

At that time, we will only require you to submit the Minimum Data Set via either the Minimum Data Servicing Report or the MILAR Servicing Report.

We will provide you at least 60 days notice prior to implementing the requirement.

You have the option to begin submitting your monthly Servicing Report as early as the new Master Policy's effective date, October 1, 2014.

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How do I submit the Servicing Report to MGIC?

Submit either template using one of these options:

  • MGIC's Secure File Transfer — Select Servicing Report as the file recipient
  • Secure e-mail to servicingreport@mgic.com

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Will the service bureaus be able to provide these reports in the future?

Through USMI, we are working with service bureaus to develop standard reporting. At this time, there is no scheduled delivery date for a standardized report. We will provide updates here as this effort progresses.

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Does the new Servicing Report alter any current reporting requirements?

No, the Servicing Report will not replace any reports you are currently providing, such as default reporting. It will not replace the need for an MI cancellation notice.

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Servicing

Are there any changes to Premium billing?

Yes. Under the new Policy, if a Loan is in Default, we will continue to bill for renewal Premiums.

Your Premium billing cycle and the method by which you receive your bill will continue as it is today.

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Does the new Master Policy change the timing of when a Claim should be filed?

No. Continue to file Claims within 60 days of the earlier of:

  • Acquisition of Borrower's Title
  • Completion of a Property Sale

In states where a redemption period exists, you have the option to file the Claim anytime after the foreclosure sale date, but no later than 60 days after the expiration of the redemption period.

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Do the submission options for Claim filing change?

No. Continue to file Claims as you do today. See our current Claim submission options.

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When should I submit Claim documents to MGIC?

Continue to submit Claim documents as you do today:

  • Ahead of Claim filing to expedite processing your Claim
  • At Claim filing
  • When we request documents

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Are the required Claim documents changing?

No. See the current MGIC Default Servicing Guide for required Claims documentation.

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What happens after a Claim is filed?

As we do today, we will acknowledge receipt of your Claim. No later than 20 days after receipt, we will inform you of any additional Claim documentation or information we need to process your Claim. We will provide up to two additional reminder requests for missing information.

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Endorsements

We will issue all Master Policyholders the following endorsements to MGIC's new Master Policy:

Delegated Underwriting Program (All jurisdictions except Montana. For Montana, see state-specific section.)

Cooperative Properties (All jurisdictions except Puerto Rico)

State-Specific Endorsements

Please note: The endorsements listed above do not apply to MGIC's current Master Policy; they are endorsements to the new Master Policy.

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