Thursday, January 3, 2013 - Article by: Barb Lanis - The Federal Savings Bank -
Why won't my Lender do a HARP refinance with LPMI?
The 2012 revised HARP refinance program (which we in the mortgage business affectionately call HARP 2.0), brought many positive enhancements for borrowers. Initially, the HARP program had limitations and left many borrowers out in the cold with no way to refinance.
Overall, it was a great program, but it became clear that further efforts needed to be made to enhance the program to include more borrowers.
The enhancements with HARP 2.0 as it relates to BPMI/LPMI are very straightforward:
Borrowers who currently have BPMI or LPMI can now refinance and have their mortgage insurance certificate transferred to their new loan - at the same premium rate of their previous loan.
Why won't my Lender do this type of HARP Refinance?
Although Fannie/Freddie now allows HARP refinances with BPMI and LPMI, there are many lenders that have made the business decision that they will not do them. Perhaps it's that tiny extra step to have the MI Certificate transferred to the new loan. Keep in mind that even though Fannie/Freddie allow for certain types of loans to qualify for HARP, it does not mean that they can compel lenders to do them.
What To Do and What You Need To Know if your Lender/Servicer will not refinance a loan with BPMI or LPMI
If you currently have BPMI, then the monthly premium amount will be the same as it was with the old loan. This is a good thing because current MI premiums are much higher than those from 5-6 ago!
If you currently have LPMI, the MI Certificate is simply transferred as it had already been paid in full with your last loan.
If you have the variation where you have LPMI, but your Lender/Servicer is paying it monthly on your behalf, you will now a have monthly mortgage insurance premium included in your payment. Again, it will be at the old (and lower) premium that you originally had. Generally, the amount is so minimal that it pales in comparison to the savings obtained by dropping the interest rate.
Reminder, make certain that you tell your Loan Officer up front that you have, or think you have, BPMI or LPMI on your current loan.
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