Radian Expands 'Free’ Program

WESTON, FL-Radian Guaranty is expanding the market for its popular "Free After Five" mortgage insurance product.

The program, which rewards borrowers with good payment histories, was first aimed at lenders holding their loans in portfolio, particularly credit unions and community banks. Now, the Philadelphia-based insurer has set its sights on those purchasing loans from those institutions.

"We're talking to national lenders" in hopes of getting them to accept the program, Radian vice president Anthony Bruschi said here at the American Bankers Association's Real Estate Lending Conference, where the company was an exhibitor.

So far, according to Bruschi, only Sun Trust has signed on. But the company is "hoping for wider acceptance and a national market."

The program, which automatically terminates MI coverage for borrowers who have paid on time for 60 months, was first aimed at credit unions. Then, late last year, the target market was extended to community banks.

According to Bruschi, some 60 such banks have already signed up.

The program, which the Radian executive says has the approval of the government-sponsored enterprises, including the Federal Home Loan Banks, offers benefits for both lenders and borrowers.

Borrowers are rewarded with automatic MI termination and correspondingly lower monthly payments after five years of on-time payments without the need for a new appraisal. Typically, it would take 12 to 13 years for a borrower with a 95% loan-to-value mortgage to pay down the loan to the automatic 78% LTV cancellation point required by law. Besides being able to offer an innovative mortgage insurance product lenders benefit because coverage continues even though the payment is terminated.

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