The mortgage insurer PMI Group Inc. said Thursday that borrowers who refinance would be allowed to keep their existing PMI policies even if their original loans were not owned or guaranteed by Fannie Mae or Freddie Mac.
The Walnut Creek, Calif., company also said coverage will be extended to new, refinanced loans even if a property's value has fallen since the original loan was insured.
Mortgage insurers have been under pressure from staggering claims costs. Extending insurance to a new loan could reduce default risk and "facilitate refinances for more borrowers caught in the housing crisis," PMI said in a press release.
The insurer said borrowers' coverage percentage and premium rates will remain the same and it will not charge fees to modify existing insurance certificates.
To qualify, borrowers must be current on their existing mortgage, and the refinancing should either reduce the payment, extend the term of the loan or move the borrower into a more stable product.