Can I use the HARP program if I currently have mortgage insurance?
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.