Friday, April 29, 2011

Private Mortgage Insurance Making a Comeback

Private Mortgage Insurance has always had such a stigma, I have had numerous conversations with clients who were dead set against it and wouldn't consider PMI. Certainly the payments were higher but in some cases it would prove to be the savvy choice in the long run. As a newer loan officer I can remember calling up a wholesale account executive and she said to me "Why on earth would you want to have MI? That's just dumb!" It was then when I made the one of the greatest mistakes I could have ever made in any business... I doubted myself. I took what she said to heart and stopped having the conversations with my clients. I would put them into 80/20 loans and sold them on the blended rate compared to other products. FHA wasn't an option to many of us as smaller broker companies until after FHA bond requirements were lowered, the market had dried up, and loose underwriting became a thing of the past. Revisiting those clients' needs today had we gone with the MI I may have been able to better serve them under HARP. Not an easy pill to swallow but I know I am not alone in this boat and when the competition is force feeding not-so-great products it's hard to go against the grain, harder still when you are trying to establish yourself in shark infested waters. 

Having put my big girl panties on and moving up in the world of lending, I am rethinking that dialog about PMI as it IS a legitimate option. Especially now when comparing the new FHA premium to a single or split premium product. In addition, the competition is returning to the Mortgage Insurance market, couple that with online pricing engines and we have a simple way to shop MI rates to ensure clients really do have better options laid out for them.  Now, when discussing product options with borrowers I am not going to allow that doubt to get the better of me. In regards to the AE as we call them, I question why I let her get to me, she rarely returned my calls and she really wasn't very kind, but I thank her for the lesson in confidence. I have said it a few times here, it was even my tag line for a while... "Ignorance is bliss, hindsight is 20/20, but knowledge is power."


Disclaimer: Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  
If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.
You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites: