Lender Paid Mortgage Insurance HARP Refinance

by Shelly from Anaheim, California USA

Ask Kate about Lender Paid Mortgage Insurance HARP Refinance: Hi Kate, We have lender paid mortgage insurance (LPMI). We would like to refinance under the Home Affordable Refinance Program (HARP). Is this possible? My husband and I bought our first home in 2007.



Shelly continues... We financed the loan for 100% of the cost of the home. Our interest rate is 6.5% and the mortgage insurance is paid by the lender.

Our loan originated (or is backed) by Fannie Mae. We have never been 30 days late with a payment. We have excellent credit. Our home value is under water. We bought it for $350,000 and owe $335,000 and our home value is around $299,000.

We would like to refinance under the Home Affordable Refinance Program (HARP). I understand there is a change that is becoming effective sometime this month or next month that will allow under water homeowners to refinance.

Our current mortgage servicer when asked told me they are not participants of this HARP program. I contacted our original mortgage broker that found us our loan originally but he says it may be a problem to refinance because it has to be refinanced through the current mortgage servicer because of the lender paid MI.

Can you offer me advice on how to get refinanced when we have a loan with lender paid MI?

Kate Answers: Lender Paid Mortgage Insurance HARP Refinance

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Shelly,

It is possible to HARP refinance with Lender Paid Mortgage Insurance (LPMI) and Borrower Paid Mortgage Insurance (BPMI).

But first, a little background for those who are not familiar with LPMI. Lender paid mortgage insurance cost is calculated into the interest rate. On the other hand, when the cost is a separate charge in the mortgage payment, it is borrower paid mortgage insurance . (For many years, it has merely been referred to as private mortgage insurance or PMI.)

Why would a borrower choose LPMI over BPMI? Various mortgage programs require the use of lender paid mortgage insurance. Before the IRS offered homeowners PMI tax breaks, LPMI was the best way to write off mortgage insurance.

But here's the problem encountered by homeowners since 2009 when HARP program began. Lenders have been skittish when it comes to refinancing the underwater mortgages that carry LPMI, very similar to the quandary you are in. Homeowners with BPMI have met lenders' reluctance too.

HARP Refinance for Borrower and Lender Paid Mortgage Insurance

The bright light in the mortgage insurance gloom is this! March 17, 2012 marks the date of Fannie Mae, Freddie Mac and the mortgage insurance companies simplifying HARP refinances with both borrower and lender paid mortgage insurance.

April 2013 guideline updates for HARP 2.0 Loan Program!

Easy steps to writing your representatives! Who to contact about the HARP program.

Although the same levels of coverage will need to be carried over, and there are bound to be a few exceptions, this is the expectation. Borrowers with either lender paid mortgage insurance (LPMI) or borrower paid mortgage insurance (BPMI) will be able to switch to a different lender during the HARP refinance or stay to refinance with the current lender.

Ask Kate! Home Affordable Refinance Program HARP Updates

For breaking HARP updates and announcements, watch the blue box you see on my Bookmark the pages in your favorites for a simple return.

Best wishes,

Ask Kate

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HARP Loan and LPMI- HELP PLEASE!!!
by: Kim

Hi. I read here that those of us with Lender Paid Mortgage Insurance CAN qualify for a HARP REFI Loan, but that has not been the case with us.

Our Loan is paid to CHASE bank and our LPMI is through Radian Guaranty. We bought our house for $310,000 in 2008 and now owe $267,000. The AGENCY (whoever that is) considers it to be valued at $287,000.

I have been told by CHASE and a couple of other Mortgage companies that they cannot refi us under HARP with the LPMI, that guidelines don't allow it unless I get Radian to go to a month to month payment? Radian says they will NOT do that and we are just stuck.

We have excellent credit, have never been late on a house payment in five years...So, can you please tell who could help us?

Our house payment is $1900 a month - way more than it should be. Our current interest rate is 5.25%.

I am so frustrated and don't understand why with our credit and payment history that we can't get someone to help us.

Hi Kim, Kate here...

Let me first try to cut through the lingo. The term Agency generally refers to Fannie Mae (FNMA) and Freddie Mac (FHLMC) as they fall under the umbrella of the Federal Housing Finance Agency (FHFA).

Fannie Mae and Freddie Mac allow borrowers to participate in the Making Home Affordable Refinance Program (HARP) when they have lender paid mortgage insurance (LPMI) vs borrower paid mortgage insurance (BPMI).

Beyond your control when your mortgage was originated, the lender placed your mortgage insurance coverage with Radian Guaranty. Now you fall under the whims of Radian Guaranty.

So I would take action myself. If you haven't already, call Radian Customer Care at 877-RADIAN1.

Here is why I'd place the call instead of depending on the lender to watch out for you. Historically speaking, banks have buried their reasons for not approving a loan request in a common statement, We'd approve your loan but the mortgage insurance company turned it down. See How to Cure Mortgage Approval Hiccups.

A second reason for calling yourself is that although Fannie Mae allows loans with LPMI to refinance with HARP, many lenders form stricture guidelines. See HARP 2 Program Guidelines vs Infuriating Lender Overlays.

A second source of help may come directly from Fannie Mae or Freddie Mac. Borrowers call Fannie Mae at 800-7FANNIE (M-F 8am to 8pm ET) and Freddie Mac's representative at 877-300-4179. Ask if there are local offices near you.

If you can't get anywhere with these sources of help, call a Making Home Affordable counselor at 888-995-HOPE. Prepared for the call with this list of paperwork.

Best wishes, Kate

HARP2 Refi with LPMI
by: Anonymous

Hi there,
I have a loan with LPMI that is currently with Green Tree. I have great credit and never been late on my payments for five years and my LTV is 145%. But I have been turned down with 3 different brokers because I have LPMI.
The MI company is Triad Guaranty. Could you help?

Hi, Kate here.
Although one of several ailing mortgage insurance companies, Triad should be able to modify your existing coverage so you can take advantage of refinancing under the HARP plan.

See if your current loan servicer has an easier time working with Triad. If not, you can continue contacting other mortgage companies. But I'd also go directly to Triad to see if they can shed some light on your difficulties. Ask them which lenders they prefer to work with.

To read more about Triad and get contact information, do a search for "Triad Guaranty" and then proceed to "Homeowner Affordability and Stability Plan" on the Triad website.

Good luck, Kate

PMI Question HARP 2 Refinance
by: Amy

Hi Kate: Thanks for all the information on your website. It's been helpful. Could you help clear up some confusion?

We have our mortgage thru a major lender (Freddie Mac loan). Of course we are under water, not sure how much but we bought in 2005 at peak market rates. Current mortgage balance is $299,506 at 5.5%. Our lender says we can refinance under HARP right now to a new rate of 4.625%. Shaves off about $343 per month. They said we are paying PMI now so we have to continue to pay PMI.

I have been shopping around with other lenders. A large online lender told me as of March, they could refinance our loan through HARP. Said they cannot do it right now. What I found odd was the mortgage consultant said we could get our PMI taken off. I asked her to repeat herself again to make sure I wasn't hearing things. She said "yes, if you currently pay PMI, you would no longer have to pay PMI under new loan with us." How can that be? I checked with our current lender and they haven't heard of this new HARP regulation.

Thanks, Amy (Massachusetts)

Hi Amy, Kate here! $343 off your mortgage payment? That is SO awesome! Congratulations.

The following quote is from Making Home Affordable HARP FAQ:
"If your existing loan has private mortgage insurance, you will need the same amount of insurance coverage for a refinance under HARP. " ~ Making Home Affordable

But if you are satisfied with their HARP mortgage rates and fees and decide to go forward, make allowances in your expectation. Figure PMI cost into the proposed monthly house payments.

One more thing! If in fact, your private mortgage insurance IS dropped in your HARP 2 refinance, please let me know. You can come back and add a comment here. I'd appreciate it and I know other Readers would also.

Thanks so much and best wishes. Kate

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