Give buyers freedom to choose mortgage insurance

PMI in the post-crisis market

Last week, I indicated that most mortgage borrowers who need private mortgage insurance are not aware that they have options in the kind of premium plan they select. Almost all are directed into monthly premium plans. Yet for many borrowers, the total cost over the period the borrowers will have the mortgage will be higher on a monthly premium plan than on a single financed-premium plan. In every case, furthermore, the increase in payment will be larger on a monthly premium plan.

A market rigged against borrowers: Why aren’t borrowers offered the option? Because from the standpoint of the loan officer or mortgage broker dealing with the borrower, adding a complex decision to the process can only slow it down, and it adds nothing to their bottom line. In many cases, they can’t offer the option even if they want to because the lender discourages it.