Radian Guaranty Inc. today launched a new mortgage insurance product that automatically cancels after five years.

The product, dubbed “Free After Five,” rewards borrowers with automatic cancellation of their monthly mortgage insurance payment and continues coverage for the lender until mortgage insurance is no longer needed.

“Our goal is to help lenders manage their risk while meeting the demands of the market,” said Roy J. Kasmar, president and COO of Radian Guaranty. “Home buyers are asking for mortgage products that are easy to use, and offer them added value. For borrowers with good credit, Free After Five is an excellent (mortgage insurance) option.”

The product comes partly in response to an increasing number of “piggyback” mortgage structures that combine different loans as a way to bypass traditional mortgage insurance, Kasmar said. About a quarter to a third of the mortgage insurance market has been impacted by such piggyback loan combinations, he said.

Research also has shown that consumers want a firm date when their mortgage insurance premium would go away, Kasmar said.

“We clearly think there’s a market for it,” Kasmar said.

For homeowners with good credit and a clean payment history, Free After Five aims to offer the ease and security of automatic mortgage insurance cancellation, in exchange for a slightly higher monthly payment. Coverage continues for the lender or servicer until the mortgage reaches 78 percent loan-to-value–at no cost to the borrower.

Radian Guaranty Inc. is the mortgage insurance subsidiary of Radian Group Inc. (NYSE: RDN), a global credit enhancement company headquartered in Philadelphia.


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