Wholesaler Launches LPMI Product

Wholesale lender RightStart Mortgage, Pasadena, Calif., has launched a new lender-paid mortgage insurance product in response to rising Federal Housing Administration MI costs.

“Our customers have been looking for alternative products to place their lower-downpayment customers, and compared to FHA, the savings with our program are significant,” David Williams, VP, RightStart, told this publication when asked about the catalyst for the move.

A $285,000 wholesale LPMI loan can lower a borrower’s monthly payments by as much as $200, for a savings of more than $28,000 over 10 years compared to an FHA loan, according to RightStart.

The product is available on conforming, owner-occupied home loans with a maximum $300,000 purchase price, a 5% downpayment and a minimum 750 Fair Isaac & Co. credit score. The company does business in 10 states.

The pending qualified mortgage rule’s exemption for LPMI from the 3% points and fees test loans must stay within to receive certain legal protections also was a consideration, Williams said when asked about this.

“We feel there are several advantages with offering LPMI. For example, not only will it not be counted in the 3% rule for QM, but it also helps with new, tighter debt-to-income requirements. However, QM was only one factor behind rolling out this product,” he says.