HARP and mortgage insurance


When HARP first rolled out a couple of years ago, homeowners with private mortgage insurance would not qualify for the program. Some changes were made along the way that allowed private mortgage insurance (known as “PMI”) to be transferred to the new loan originated through HARP.

But not all PMI loans are created equal. What about homeowners who went with Lender Paid Mortgage Insurance instead of a borrower (monthly) paid PMI?

It actually depends on the company providing the mortgage insurance coverage. Some mortgage insurance companies are reviewing files and considering transferring the coverage to the new HARP loan. Other mortgage insurance companies are not transferring their mortgage insurance policies at all regardless of the type (borrower paid versus lender paid).

It is helpful to know who provides your mortgage insurance. You can find this out by looking in a couple of places. First, try your monthly mortgage statement. If nothing is mentioned there, try your HUD-1 (settlement statement) you got at closing. Last resort, pull out that LARGE stack of papers the attorney gave you from closing. One of the documents you signed would have been a mortgage insurance disclosure. That may also tell you who is providing your private mortgage insurance.

Again, there is no guarantee the mortgage insurance can be transferred. Knowing who is providing the coverage would allow me to see if any of the lenders I work with would be able to get the PMI transferred to your new HARP loan. Regardless if it is borrower or lender paid mortgage insurance, there may be a source.

UPDATE as of 12/20/2011 – Over the past week, several of the lenders I work with have said they cannot refinance a loan using HARP if it has LPMI. For now, it seems that if your loan has monthly paid PMI, we can look to transfer it to the new loan. If it has LPMI, the potential refinance using HARP is on hold.

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