diff --git a/java/java-psi-impl/src/com/intellij/psi/PsiDiamondTypeImpl.java b/java/java-psi-impl/src/com/intellij/psi/PsiDiamondTypeImpl.java
index 1fd0373825f0..06ac9c07309a 100644
--- a/java/java-psi-impl/src/com/intellij/psi/PsiDiamondTypeImpl.java
+++ b/java/java-psi-impl/src/com/intellij/psi/PsiDiamondTypeImpl.java
@@ -18,8 +18,6 @@ package com.intellij.psi;
 import com.intellij.lang.java.JavaLanguage;
 import com.intellij.openapi.diagnostic.Logger;
 import com.intellij.openapi.project.Project;
-import com.intellij.openapi.projectRoots.JavaSdkVersion;
-import com.intellij.openapi.projectRoots.JavaVersionService;
 import com.intellij.openapi.util.Comparing;
 import com.intellij.openapi.util.Computable;
 import com.intellij.openapi.util.text.StringUtil;
@@ -211,8 +209,8 @@ public class PsiDiamondTypeImpl extends PsiDiamondType {
     final DiamondInferenceResult result = new DiamondInferenceResult(classOrAnonymousClassReference.getReferenceName() + "<>");
 
     if (PsiUtil.isRawSubstitutor(staticFactory, inferredSubstitutor)) {
-      if (!JavaVersionService.getInstance().isAtLeast(newExpression, JavaSdkVersion.JDK_1_8) && 
-          PsiUtil.skipParenthesizedExprUp(newExpression.getParent()) instanceof PsiExpressionList) {
+      //http://www.oracle.com/technetwork/java/javase/8-compatibility-guide-2156366.html#A999198 REF 7144506
+      if (!PsiUtil.isLanguageLevel8OrHigher(newExpression) && PsiUtil.skipParenthesizedExprUp(newExpression.getParent()) instanceof PsiExpressionList) {
         for (PsiTypeParameter ignored : parameters) {
           result.addInferredType(PsiType.getJavaLangObject(newExpression.getManager(), GlobalSearchScope.allScope(newExpression.getProject())));
         }
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/NotErasedReturnValueUnderJdk7.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/NotErasedReturnValueUnderJdk7.java
new file mode 100644
index 000000000000..c2c898006bd4
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/NotErasedReturnValueUnderJdk7.java
@@ -0,0 +1,12 @@
+import java.util.*;
+
+class Test {
+
+  void foo() {
+    set<error descr="'set(java.util.List<java.lang.String>)' in 'Test' cannot be applied to '(java.util.ArrayList<java.lang.Object>)'">(new ArrayList<>(new Vector()))</error>;
+  }
+
+  void set(List<String> list) {
+  }
+
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
index faa15dc0412a..5c8f7b79a01e 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
@@ -618,4 +618,8 @@ public class GenericsHighlightingTest extends LightDaemonAnalyzerTestCase {
   public void testUncheckedConversionInReturnType() throws Exception {
     doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false);
   }
+
+  public void testNotErasedReturnValueUnderJdk7() throws Exception {
+    doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_8, false);
+  }
 }