Freddie MI bulletin has Amerin ruffled.

Freddie Macs recent decision to deepen its mortgage insurance coverage requirements has some mortgage bankers feeling angry, but the news was supposed to be good for mortgage insurersbut not for all.

Amerin Guaranty Corp. of Chicago said that when Freddie announced it was deepening its MI coverage requirements for high loan-to- value loans, it made it seem as though Amerins coverage was markedly higherand, subsequently, more riskythan other mortgage insurers.

Freddies new requirements, for example, require its sellers to ensure MI coverage of 30% for loans with LTVs 90% or higher. But Amerins coverage for those same loans is 36%.

Stuart Brafman, Amerins chief operating officer, maintains that while the required coverages are higher, Freddies bulletin failed to explain why, specifically that Amerins claim payment calculation methods differ from that used by the rest of the MI industry.

Traditional coverage, Brafman said, is expressed as a percentage of an aggregate claim amount composed of a number of variable components that can only be determined after a loan defaults. Amerin, however, expresses coverage as a percentage of the insured loans original principal amount.

That method, based on an average claim amount, applies that average against the claim amount and the original principal balance, resulting in higher coverage levels than those represented by other MIs.

The coverage isnt any riskier than other MIs, Brafman added, and Amerin is asking Freddie to clarify that to its seller/servicers.

Freddie said it didnt intend to mislead its customers about Amerin, and added that seller/servicers dealing with it are familiar with the details of its claim calculation methods.

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