DEC 19, 2013 12:20pm ET

Freedom Mortgage Borrowers Can Use National MI


Freedom Mortgage has added National MI to its roster of approved private mortgage insurers.

Most borrowers are not aware that while itís customary for lenders to select the mortgage insurance provider, a borrower can select the underwriter of his or her choice, as long as that insurer is approved to do business with the lender, Freedomís press release says.

The lender has increased the number of approved mortgage insurance providers to five of the seven active companies in an effort to help more low-downpayment borrowers qualify for mortgages in the current purchase-driven market.

National MI is the first nonlegacy underwriter Freedom has approved. The other approved providers are the legacy carriers MGIC, Radian, United Guaranty and Genworth.

The switch to a purchase market and the expectant growth in low-downpayment mortgages is an opportunity for the private mortgage insurance business to pick up business, says Bradley Shuster, president and CEO of National MI. The private MI companies are also expected to benefit from the increase in the Federal Housing Administrationís mortgage insurance premium.

However, the recent increase in the guarantee fee paid to Fannie Mae and Freddie Mac have pushed pricing on conforming loans higher than on jumbo loans and that could affect demand for private mortgage insurance. During the boom era, one of the attractiveness of nonconforming loans was that most products did not require the borrower to get private mortgage insurance.

National MI recently announced it has amended its rescission policy where it will now offer lenders relief after only 12 months.

Typically the industry standard is for rescission relief to be offered after 36 months, although on nondelegated loans it could be offered sooner.

Unlike other underwriters, National MI underwrites all loans it insures, no matter if they come in through the delegated or nondelegated channel.

Therefore under its old master policy, it could offer rescission relief after 18 months. This change takes an additional six months out of the time table.

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