A market is to be considered declining if any of these tests are true:

(1) The appraisal indicates that property values are declining,

(2) An over-supply of properties exist,

(3) Marketing times exceed six months

(4) Desktop Underwriter generates a message stating the property is located in an area of declining home prices,

(5) There are comments on the appraisal that indicate values may be declining

(6) RMIC's Property Value Trends tool indicates that property values are declining

So why do we care what the Mortgage Insurance Companies say? Well, for any number of reason's but primary among them is this:
With the markets for seconds basically gone (can you find over 85% stated?/90% full-doc?) the onus falls on the Mortgage insurance companies to help us write high LTV single lien loans (FNMA 95/Flex/MCM/HP etc.). Well now the Mortgage Insurance Companies are taking the same view as FNMA/FHLMC on declining markets (see my site: here:) They are adjusting as indicated above and lowering maximum LTV's to maximum of 95%.
For those of you keeping score at home, almost every county in California is declining or soft (excluding: Marin, San Mateo, SF).
Some of my competitors haven't come around to this line of reasoning and quite frankly if they haven't they may end up on the ol' implode list too. BTW: Guidelines changes can be implemented after lock-in.
This also means that max LTV's on other Programs are (going to be) limited (cut/reduced) by 5% as well. Cash-out @ 85% max, Stated @ 85% max etc.
You might've noticed that FNMA/FHLMC have implemented Loan Level Price Adjusters (LLPA's) for FICO bands under 680? You didn't? Check my rate sheet to see some examples.
The Mortgage Insurance Companies are going to follow suit come March of this year. What that means is that in addtion to paying a premium in rate for lower FICO score your borrower will also pay a premium in MI every month.
These changes in MI will be across the board for Scores below 660. Basically folks that used to be A or maybe Alt are going to bear the brunt of this housing downturn when it comes to refinancing/purchasing.
So, if you seem to have many of these clients or have in the past, be aware of the changes and inform them that now more than ever before Credit Scores are the most important piece of the puzzle!
Submit your loans with me and lock to take advantage of massive gains!
Thanks again for all the early support.