Wholesaler Launches LPMI Product


Wholesale lender RightStart Mortgage, Pasadena, Calif., has launched a new lender-paid mortgage insurance product in response to rising Federal Housing Administration MI costs

Our customers have been looking for alternative products to place their lower-downpayment customers, and compared to FHA, the savings with our program are significant, David Williams, VP, RightStart, told this publication when asked about the catalyst for the move.

A $285,000 wholesale LPMI loan can lower a borrowers monthly payments by as much as $200, for a savings of more than $28,000 over 10 years compared to an FHA loan, according to RightStart.

The product is available on conforming, owner-occupied home loans with a maximum $300,000 purchase price, a 5% downpayment and a minimum 750 Fair Isaac Co. credit score. The company does business in 10 states.

The pending qualified mortgage rules exemption for LPMI from the 3% points and fees test loans must stay within to receive certain legal protections also was a consideration, Williams said when asked about this.

We feel there are several advantages with offering LPMI. For example, not only will it not be counted in the 3% rule for QM, but it also helps with new, tighter debt-to-income requirements. However, QM was only one factor behind rolling out this product, he says.

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