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
***zz-portrait-left.shtml*** 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. ***zzz-link-harp-mini.shtml*** 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
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