Mortgage Insurance
Can I use the HARP program if I currently have mortgage insurance?
(2 votes, average: 5.00 out of 5)
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What are the MI Requirements for HARP 2.0?
MI coverage is only required for DU Refi Plus loans with a loan-to-value ratio higher than 80%. The lender may obtain standard MI coverage or the amount of MI coverage on the existing loan. However, if the MI on the existing loan was previously canceled or terminated, a new MI policy is not required for HARP 2.0 financing.
How does MI flexibility work with HARP?
The Fannie Mae Charter permits some flexibilities in refinancing for Fannie Mae-backed loans due to unique circumstances in the housing market. This includes flexibility concerning the credit enhancement requirements for LTVs greater than 80%. However, the MI flexibilities are bound by specific time and eligibility restrictions.
How is my new MI calculated?
The end date or cancellation date for the new MI should be calculated using the terms of the note for the new loan, including the new unpaid balance, loan-to-value ratio and life of the loan. To ensure that a reasonable date of coverage is calculated, have your lender contact their MI provider.
Do I have to use my same MI company?
There is no need to retain the same MI company for the new loan. The only requirement is that the lender must insure the new mortgage at the same level of coverage as the existing mortgage. However, a DU Refi Plus loan that does not use the same MI company may have additional restrictions or pricing applied to it.
Can my lender pay my MI?
Yes. For any Refi Plus transaction, the new loan may have either new or existing MI coverage paid by the lender.
What if my loan has lender-paid MI?
Your loan is eligible for refinancing under Refi Plus (manual underwriting) as long as you are retaining the same servicer for the new loan. The continuation of MI coverage is the responsibility of the servicer.
If your loan was acquired by Fannie Mae earlier than June 1, 2009, it is eligible for refinancing under DU Refi Plus. If the loan is being refinanced with a different servicer, the lender will be responsible for providing MI coverage at the same level as the existing mortgage.
What if my MI company is no longer issuing new policies?
Your loan is still eligible for refinance. Although some MI companies are currently not allowed to issue any new policies, they are still allowed to modify terms of existing loans, so long as they:
- benefit the position of the borrower
- comply with their published guidelines
- lower the risk of default and therefore the risk of the MI company's payment of a claim. (Any claim that is unpaid by the MI company, due to a financial inability to pay, will become the risk and responsibility of Fannie Mae, not the lender.)
What if I had financed MI?
If your existing loan includes financed MI, it is still eligible for refinancing under Refi Plus; the MI coverage will continue on the refinanced loan in the same way as it would for an existing loan without financed MI. Also, it doesn't matter if the financed premium was paid as a single or as a split premium, as this does not affect the continuation of coverage.
What terms of Mortgage Insurance do I need?
The terms of the Mortgage Insurance should last the full life of the new mortgage, or until the MI coverage is canceled in accordance with legal rules and guidelines. Therefore, if an existing 15-year loan gets refinanced into a new 30-year loan, the MI should be effective for the full 30-year period.
Can my Mortgage Insurance company charge me a fee?
MI companies may charge modification fees for the transfer of MI certificates, and these fees can be rolled into the new loan's unpaid balance. Fannie Mae requests that such costs should be reasonable and that the new loan will continue to meet all guidelines issued by Fannie Mae and the MI company.
Will an MI company work with HARP 2.0?
Mortgage insurers are more than willing to allow for HARP refinances on loans that they insure. MI companies are aware of the repayment crisis that many homeowners are facing, and will provide the resources to allow them to refinance and stabilize their mortgages. Fannie Mae has been collaborating with the MIs to modify existing MI certificates so that loans with MI coverage can be easily refinanced.
Comments (11)
ksall31
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I just tried to refinance with Harp 2.0, first off I was bombarded by lenders on my phone and via email after I filled out the info on the govt web site. After weeding through all the callers I decided to go with Capitol FInancial here in the chicago area. After giving all of my information and going as far as pulling my credit report , which I told the loan guy I was not interested if this was not a serious offer, I was told I had a loan for 3.25% no problem. Then the bad news 2 days later, The loan guy I was talking to emailed me that for some unknown reason his lenders won’t work with United Guaranty which holds the PMI for my current loan. This is one of the biggest PMI insurers in the country. So I could not get a loan . REALLY??? Then I finally heard back from my mortgage company, PNC, and the very polite guy on the phone told me I don’t meet criteria because my loan was not bought by Fannie mae until July 2009, one month after the current guidelines require. When I told the Capitol financial guy this he had the gall to tell me that he could still get me a HARP loan if wasn’t for the pesky united Guaranty company. So just a cautionary note, when you try to refi, don’t believe everything you are told. For now I am waiting for the guidelines to change and maybe I can refi in the future. In the meantime I am paying extra principle per month to try to pay down my mortgage and get rid of the PMI altogether. I make a good living and have paid my mortgage faithfully every month but this is ridiculous, I will just pay off my loan as soon as possible and make sure that the mortgage company gets the least amount of interest from me as I possibly can
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susan
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I have a fannie mae and PMI. go try a morgage broker. they’ll make it happen. worst case senario. they charge you 1 point.
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TTCE
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I have Fannie Mae loan. It looks like my loan was not insured even if I didn’t put 20% down payment. I asked my lender to give me a document stating my loan does not have a PMI or LPMI. They send me a letter saying “the lender does not maintain mortgage insurance on the loan”. The loan is possibly a self-insured loan. They simply increased my interest rate by 0.59% on top of the base interest rate. But, the lender didn’t notify Fannie Mae that the loan was not insured. So, now, the DU finding says I am eligible and the loan needs mortgage insurance. I couldn’t move forward with the refi because there is no mortgage insurance certificate to transfer to the new loan.Any advice is greatly appreciated.
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Szymon
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Not likely. You would think it makes sense beuacse you are more likely to meet a lower payment. However, the way mortgages are financed makes this a terrible deal for the bank. They cannot sell your new loan when the borrower has poor credit.
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Terry
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Hi we have been approved thru my credit union for refi at 4.125..i told them i wanted to go thru the Harp ..they gave us the okay..now they are telling us we have to have a impound account..we have always paid our taxes without impound account ..see their note: We received the updated payoff demand and the amount to payoff is $341,052, plus $2,237 in closing costs and we are also requiring to set up an impound account to pay for your property taxes and homeowner’s insurance policy due to the loan-to-value being over 80%. We will need to collect 3 months upfront for taxes and 10 months for the insurance which total up to $1,433.
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Rory
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the program requirements for harp state that you are only required to escrow for taxes and HOI if your previous loan had an escrow account. If your previous loan did not escrow taxes or HOI then you do not have to set up an account, but if either taxes or HOI or both were escrowed on your original loan you must escrow both.
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Maureen
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I am going through the same ridiculous situation. I have lender paid PMI and am unable to refinance because of my LTV. I am a have kept up with my payments, but want to get a lower interest rate. This is soo frustrating because I feel I can’t do ANYTHING!
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WantToDoTheRightThing
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My mortgage servicing company is telling me that a current mortgage that has PMI requires the LTV ratio to be less than 95% to qualify for refi under Harp Phase II.
Example: I owe 94K and Zillow states that the property is worth 50K. I am at 190% LTV which meets the criteria to be over 80% LTV as stated in by the HARP Phase II guidelines. However, since I have PMI on my current loan there appears to be non-published requirement stating that they will only allow you to refi if you are no higher than 95% LTV. Isn’t this worse than the HARP Phase 1 at LTV of 125%.
This rule makes no sense. If I had a mortgage that did not have PMI I would not be upside down and could do a traditional refi.
I have never missed or been late with a single payment, I owe almost double what the property is worth, I have excellent credit and a good job but an interest rate at 7.5%. I am a person who wants to do the right thing but this is ridiculous. I now see why my friends are just walking away. Any suggestions?
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phil
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You can refi but you have to bring the 50k to the table to get the LTV to 95%. What a great plan huh? I am in the same situation, it is completly ridiculous.
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jb
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Same situation here. That is the most ridiculus idea. I am left with no option but walking away because I do not have 40 to 70 thousand dollars.
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HEIDI
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I HAVE A FREDDIE MAC LOAN WITH PMI DO I QUALIFY ? MY LENDER SAID NO I DONOT QUALIFY.
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