As both tipsters and readers alike have noted, as of next month a major private mortgage insurer will no longer write coverage for condominiums in “declining” markets. And as far as AIG United Guaranty is concerned, that includes San Francisco. Yes, proper.
[S]tarting May 1, AIG United Guaranty…no longer will write coverage on condominiums in hundreds of ZIP codes across the country that it designates as having “declining” market conditions. The ban is irrespective of applicants’ credit scores, assets or equity stakes. Even in the healthiest real estate markets, United Guaranty will require buyers to put at least a 10 percent down payment into the deal, and will reject applications on units in condo projects where more than 30 percent of the owners are investors.
Of course AIG is but one insurer. And over the past seven years or so an increasing number of condo buyers turned to piggyback mortgages to avoid PMI altogether. But with ever tightening lending standards, and increasing rates for second mortgages, we just might see a resurgence in use throughout San Francisco. Then again, if other insurers follow suit, perhaps not.
∙ Condo-loan restrictions tightening [Baltimore Sun]
∙ AIG United Guaranty’s Declining Markets List (pdf) [ugcorp.com]