Lender Paid Mortgage Insurance Halts HARP Refinance

by Amy in Columbus, OH, by Chris in Kirkland, WA, and by Lloyd in Houston, TX

Ask Kate about lender paid mortgage insurance (LPMI) that was never paid to the MI company: Amy's situation is totally unfair! Although she has made her house payments which include her mortgage insurance, her lender never sent them to the MI company. So Fannie Mae won't approve her for a HARP refinance.


Chris from Washington and Lloyd from Texas each have their own questions about private mortgage insurance and why their lenders refuse to remove it.

HARP Refi with LPMI - Difficult Situation

By Amy in Columbus, Ohio
HARP Refinance with LPMI - Amy's Difficult Situation

Hi Kate,

My original mortgage had Lender Paid Mortgage Insurance (LPMI). It has since been assigned to my current lender. I've been trying to refi under HARP program with my current lender and have hit the brick wall once again.

Apparently my original LPMI was "never in force" with UGIC - the premium was never paid. Current lender is trying to figure out a work-around but I have my doubts!!

Why am I suffering every month because I cannot complete a refinance when someone else obviously did not do their job properly?

How can I make my current lender (or the original lender) make this right internally AND make Fannie Mae's underwriters happy so they will complete the refi?? Please help. Thanks!

***zz-portrait-left.shtml*** Ask Kate answers: HARP Refi with LPMI - A Difficult Situation

Hi Amy,

You really have two issues.

1st issue: Your lender has been pocketing your MI premiums every month.

Yes, you have been paying mortgage insurance every month to your lender by way of an increased mortgage rate and monthly payment. But your mortgage insurance policy has never been in force at United Guaranty Insurance Company.

So your first job is to find out what happened to the premiums you paid! Call UGIC directly at their servicing phone number, 888-822-5584, to launch your investigation.

If this does not bring satisfactory results, file a complaint with Ohio Attorney General Mike DeWine at 800-282-0515.

2nd issue: Fannie Mae won't allow the completion of your HARP refinance without current LPMI properly in force.

For this you should call FNMA directly. Try the Fannie Mae Resource Center (coincidentally, also their fraud hotline) at 800-732-6643.

It's a terrible shame that the responsibility for mopping up the negligence of supposedly regulated financial institutions is going to fall on you. But no one is going to care more about your HARP refinance than you. I certainly wish you the best in getting this ironed out.

Go to Lender Paid Mortgage Insurance to learn more about PMI and HARP refinance.



PMI Cancellation

By Chris in Kirkland, WA

Hi Kate:

Does a bank have to drop your PMI if your home increases in value and appraises at a level increasing your LTV to below 78%?

Assume that without a re-appraisal the LTV would be above 78%.

***zz-portrait-left.shtml*** Ask Kate answers: PMI Cancellation

Hi Chris,

Perhaps if the stars are perfectly aligned, then private mortgage insurance can be either terminated or removed. Maybe... Maybe not.

Of course my comment about the alignment of the stars is tongue-in-cheek but many homeowners will confirm that attempting to get rid of mortgage insurance isn't an easy process. It's loaded with ifs, ands, and buts.

So before you get into a discussion with your lender, educate yourself on the differences between MI removal and MI termination.

You will get the best results if you know which to pursue. Go to How Do I Cancel Private Mortgage Insurance to learn which applies to your situation.

Best wishes,


I Want to Cancel My PMI

By Lloyd B. in Houston, Texas

Hello, I would like to cancel PMI on a home purchased 3 years ago.
Purchase price: $119,705
Loan amount: $81,400
Loan balance: $63,301

The lender Flagstar Bank won't take the PMI off. Why? Lloyd

***zz-portrait-left.shtml*** Ask Kate answers: I Want to Cancel My PMI

Hi Lloyd,

There are more details to removing mortgage insurance than loan-to-value ratios (arrived at by dividing loan amount by appraised value).

Follow the links above that I provided to Chris from Kirkland, WA and apply the criteria to your individual circumstances to find out why Flagstar Bank won't remove your PMI.

Afterward, if you feel you're being treated unfairly, you can report them to the Consumer Financial Protection Bureau. Go to Problems Cancelling PMI for more information.

Learn more about private mortgage insurance basics and how PMI is calculated by following these links to other pages on my website.

Best wishes,



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Can LPMI Built into the Rate Be Removed?
by: Khalid

Can I remove LPMI if it is built into the rate?

My rate was 3.8 and it was increased to 4.8 (including the LPMI). I spoke to customer service representative and he said it cannot be removed.

Thanks. Khalid.

Hi Khalid, Kate here.

In general, no, lender paid mortgage insurance cannot be removed from your house payment because it is built into the interest rate.

I preface with 'in general' because I cannot possibly know of every loan term in existence. But usually it takes refinancing to get rid of LPMI.

Read more at Refinancing an FHA Mortgage in Exchange for LPMI.

Thank you for asking, Kate

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