HARP loans with Triad PMI represent a very small percentage of the PMI loans, but they are also one of the most difficult to close. Triad was a company who provided PMI but unfortunately, closed and no longer is in business. Like RMIC and PMI co., Triad wasn’t able to sustain the losses after the events that took place in the housing market over the last few years.
PMI companies that close still have a servicing department to help service the existing loans with insurance. They’re never as easy to work with as the companies in business, but they do remain functional.
One of the most difficult scenarios HARP homeowners face is when they have a Lender Paid Mortgage Insurance (LPMI) policy that is being paid monthly or annually by the servicing lender (single-paid policies are easier to work with). This is because the servicer has an agreement to pay the policy as part of the monthly payment received from the borrower. If the loan is refinanced, the new servicer must handle the payments for the new PMI. This causes confusion and convolutes the process.
The new solution for monthly or annually paid PMI is to convert the PMI to a monthly paid PMI loan, which charges the homeowner the cost. Yes, that’s right, the homeowner is actually taking on PMI where their current loan did not have this charge. The reason – in the current loan market, the rate reduction is very often worth the cost. You’ll have to review the projected monthly MI and compare it to the rate reduction.
Here is where there can be a problem – if it does make sense to refinance, the PMI company has to be willing to convert the policy. At this moment, Triad is one of the few companies who is not offering this option, effectively hamstringing the homeowner.
A reader of my blog has been emailing me with details of his scenario. I suggested he stay in constant contact with Triad to see if an option would become available and I’m happy to announce that it appears Triad has plans to offer this option to their clients around the end of August this year (2012).
I haven’t seen an official announcement. Let’s see if there is follow-through.
For details on how to transfer your Triad PMI policy to a new lender, here’s the link: