Having Mortgage Trouble? Contact Your Mortgage Insurerby Tim Manni
Frustration is mounting among struggling homeowners who haven’t been able to take advantage of Washington’s refi or loan modification programs. Whether their lender isn’t returning their phone calls, is swamped with similar requests, or isn’t participating, homeowners are desperate for new solutions to help them achieve a more affordable mortgage.
Aleksandra Todorova of SmartMoney.com says there may be another source to turn to for help. Private mortgage insurance (PMI) companies may be able to help struggling homeowners get back on track with their mortgage payments:
Walnut Creek, Calif.-based PMI Group, for example, now offers no-interest loans to help certain borrowers catch up on defaulted mortgage payments. Genworth Financial offers a job-loss protection feature in its policies that pays up to $2,000 per month towards the mortgage payment of a homeowner for six months after losing their job. And if a homeowner qualifies for a loan modification under the government’s Making Home Affordable program, but can’t get their loan servicer to help, Genworth may step in to process the paperwork and streamline it to the servicer for approval.
Homeowners who have Genworth’s private mortgage insurance may find it easier to get help for a loan modification or refinancing under the government’s Making Home Affordable program. Genworth is proactively reaching out to homeowners who may qualify for the program, offering to help them complete the necessary paperwork and send it to the servicer for approval.
Like homeowners, mortgage insurance companies have “skin in the game” and stand to lose money if a borrower fails. Mortgage insurance is required for all borrowers who put less than 20% down on their home. The insurance protects lenders against losses of anywhere between 12% and 35%.
As is the case with other programs, this assistance isn’t being offered to everyone. For example, Genworth’s job-loss protection feature isn’t available to those who bought a home before June 2006. A spokesperson for Radian, a mortgage insurance company, says as unemployment levels rises, so does the costs of running such programs — so look out for restrictions and qualifications to grow more stringent as these types of programs gain in popularity.
While gaining assistance through a mortgage insurer may not work out for every struggling home owner, it’s certainly another avenue to explore if you are having trouble holding onto your home.