Industry NewsMortgage

Refi initiative dials back PMI requirement

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Private mortgage insurers are welcoming a ruling by the regulator of Fannie Mae and Freddie Mac that it expects the companies to keep existing private mortgage insurance policies in place when refinancing loans under the Obama administration's new foreclosure prevention initiative. But the ruling also said borrowers who didn't need private mortgage insurance when taking out their original loan will not be required to obtain insurance when refinancing -- even if their loan-to-value ratio has climbed above 80 percent. The foreclosure prevention initiative, announced Wednesday, calls for Fannie and Freddie to refinance 4 million to 5 million loans the companies already own or guarantee, on properties with loan-to-value ratios of up to 105 percent. The initiative is aimed at homeowners who are current on their mortgages, but who might have trouble refinancing into a lower-cost loan because their loan-to-value ratio is greater than 80 percent. Fannie and Freddie usually requi...