New York Insurance Law §6501(c)(3) states that for a cooperative ownership in real estate (co-op) the issuance of mortgage insurance must be based on the “purchase price of the ownership interest and the proprietary lease.” FNMA Selling Guide B7-1-01 states that the determination of value for properties in New York is different from Fannie Mae’s standard definition of value that is used to calculate the LTV ratio. Therefore, the determination of whether mortgage insurance is required for co-op purchase loans in NY must be based on the sales price. This is different than the calculation for the cutoff for mortgage insurance if mortgage insurance is needed. We are adding a System Default setting “Enable DI check for Edge Case MI Determination in New York” which will enable a DI Check that will determine whether mortgage insurance is needed based on the purchase (sales) price for co-op purchase loans. We are setting this System Default to “Yes” by default, which will trigger the DI Check to let Lenders know if they don’t need to have mortgage insurance premiums on their NY co-op purchase loans.
This change is available for testing on Stage & Stage 2 servers and will take effect on September 19, 2024. If you have any questions or concerns, please contact Client Support at 1.800.497.3584.
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