Magazine article American Banker

GE Starts Fully Insuring No-Down-Payment Loans

Magazine article American Banker

GE Starts Fully Insuring No-Down-Payment Loans

Article excerpt

General Electric Co.'s mortgage-insurance unit has started offering 100% coverage for no-down-payment loans -- even before all the regulatory barriers have been lifted.

On April 11, GE Capital Mortgage Insurance Corp. began offering the coverage for loans of up to $325,000. The insurance is available only to borrowers with excellent credit; the minimum Fair, Isaac & Co. credit score to qualify is 700.

"The goal is to help people whose only barrier to homeownership is the down payment and who have the proven ability to handle it," said Mark E. Goldhaber, vice president for affordable housing at Raleigh, N.C.-based GE Capital.

Several mortgage insurers have no-down-payment programs, but GE Capital's is only the second that assumes all the risk.

The biggest obstacle to such programs have been state laws against fully insuring loans for more than 97% of a home's value. In three of those states, if an insurer does something in another state that is illegal under the latter's insurance laws, it can be barred from selling in its home state.

New York legalized 100% loan-to-value mortgage insurance last May, and California followed suit in January. That left Illinois as the only state with what amounts to extraterritorial authority to prohibit insurance for such loans.

The Mortgage Insurance Companies of America, a trade group, is lobbying the Illinois Department of Insurance -- which did not return a call to comment for this article -- to change that. …

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