Mortgage insurer Genworth Financial has tightened its underwriting standards ahead of tougher conditions in 2009.With effect from December 1, Genworth will no longer cover 100 per cent LVR loans. The highest LVR it will cover now is a 95 per cent loan.Genworth has also changed its criteria for low doc loans. Borrowers will have to provide a business activity statement. Low doc borrowers who are refinancing will have to show bank statements.The other big mortgage insurer, QBE LMI (formerly PMI), announced changes in September, when it increased premium pricing on high LVR loans by up to 15 per cent and withdrew cover on loans with LVRs above 95 per cent.This means loans where the lender will advance 100 per cent of the valuation are very difficult to get. One lender still promoting these loans is Rams Home Loans, a brand of Westpac, though it's not clear how, or whether, Westpac is laying off any of the additional underwriting risk. Genworth country executive Peter Hall said the changes were in line with industry trends. Hall said: "When low doc came in in the late 1990s it was a loan for self-employed borrowers who had cash flow in their business but did not have up-to-date financial statements. "In recent years it has been used for purposes it was not designed for, such as providing development finance. Over time the documentation requirements were watered down. "We said let's take it back to what it used to be. When we told lenders we were going to make these changes they endorsed them."The market has changed. We are reflecting that."QBE LMI chief executive Ian Graham said the same was true of the changes to underwriting high LVR loans. QBE LMI's rules allow the lender to capitalise the insurance premium, effectively taking the maximum LVR to 97 per cent.  Graham said: "The volume of loans written with LVRs above 95 per cent was minimal. Regulators and others had been asking lenders whether providing those loans to people with no equity in the deal was a good thing."In this market there is not much incentive to lend when the borrower has not contributed any equity. The level of equity is a good indicator of discipline and commitment."Lenders are being very considered in their approach. We can only write the business that lenders want to write."Graham said the outlook for 2009 was uncertain, given that no one was sure where the balance would be struck between the positive impact of lower interest rates and the negative impact of expected higher unemployment rates."Our long run average loss rate is 35 to 40 per cent (claims as a percentage of earned premium). This year it is up, but less than 50 per cent. Defaults will increase in 2009 but it will be part of the normal cycle."Graham said there was mis-information about the number of stressed borrowers in the community. "We have 4000 loans 60 days or more in arrears out of a total of 900,000 insured loans. Genworth would