HARP Refinancing Lender Paid Mortgage Insurance

by Randy in Memphis, Michael in Tacoma, Ashley in Raleigh

Ask Kate about HARP Refinancing with Lender Paid Mortgage Insurance (LPMI): Hi, Kate here. Mortgage Insurance is confusing. So I'm not surprised to be asked almost daily if home loans with less than 20% equity and LPMI are eligible for consideration under the HARP 2.0 Program. Get your Making Home Affordable facts here.


Randy from Memphis,TN asks about Lender Paid Mortgage Insurance... Kate, We bought our home in 2007 through a local mortgage company at 6.5%. The loan is owned by Fannie Mae and serviced by a huge national lender.

Upon hearing the new rules coming, I called our loan servicer and inquired about the possibility of us refinancing. The agent told us NO because we have Lender Paid Mortgage Insurance. Our local agent told us this is completely wrong and has never heard anything like it. Any suggestions?

***zz-portrait-left.shtml*** Ask Kate answers: Hi Randy, There has been a lot of confusion over Lender Paid Mortgage Insurance and whether a mortgage is eligible to be considered for HARP if it is currently insured with LPMI.

The answer is that LPMI is NOT an automatic dis-qualifier for applying to HARP, as some homeowners have been led to believe. Your local agent is more informed than your loan servicer.

Go here for more Lender Paid Mortgage Insurance HARP Refinance details. ***zzz-link-harp-announcement.shtml***

Michael from Tacoma, WA asks about refinancing when you have LPMI... Kate, I have a home I want to refi. My lender says no, no, no you have a Fannie Mae loan, but you have LPMI so your mortgage doesn't qualify. I am underwater with a home that has lost about 20% of its value. As a bonus I am stuck with 6.125%.

I also was never told I had LPMI either verbally or via any disclosure docs at my closing back in April 2008. Was my lender required to disclose this? Thank you!

***zz-portrait-left-empower.shtml*** Ask Kate answers: Hi Michael, In spite of having LPMI, you can apply for the HARP refinance. Sounds like with your current interest rate, you would certainly benefit from the Making Home Affordable Program.

Concerning your second question about nondisclosure, call the Washington State Department of Financial Institutions at 877-746-4334 to discuss your rights.

Go here to learn who determines the cost of PMI.

Ashley from Raleigh, NC asks about HARP... Kate, My husband and I refinanced about 4 years ago. We are paying lender paid mortgage insurance. We are trying to HARP refinance and were told we could not because of the LPMI.

I have dealt with three mortgage companies this week, and not one has offered this. Is this something not many know about? Thank you for your time.

***zz-portrait-left.shtml*** Ask Kate answers: Hi Ashley, As long as a mortgage was purchased by Fannie or Freddie before June 1, 2009, even with Lender Paid Mortgage Insurance, it can be considered for eligibility under HARP.

Lenders should be aware of this. Perhaps they don't want to admit their company has overlaid HARP guidelines with stricter requirements.

Here is where to find more Ask Kate answers to your questions about paying private mortgage insurance.

Best wishes,


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