Arch Mortgage Insurance Co. plans to launch a new risk-based pricing program in the fourth quarter.
The new program will take into account an expansive set of variables beyond just a borrower's loan-to-value ratio or FICO score, the Walnut Creek, Calif.-based company announced in a Monday news release.
Risk-based pricing is a flexible pricing model that charges lower premiums to borrowers with a better quality profile, and ups the prices on borrowers at the other end of the scale.
"RateStar provides a more targeted approach than the conventional rate sheets used for decades in the industry," said Arch MI's President and Chief Executive David Gansberg in the announcement. "Instead of loans being grouped in large risk buckets, each loan will be priced based on its individual risk attributes."
In 2010, AIG's United Guaranty Corp. rolled out its own version of this type of program. Previously, it had been
