Private Mortgage Insurance

Overview

The Correspondent is responsible to purchase a commitment/policy from an agency approved private mortgage insurer prior to the mortgage loan closing for all loans requiring private mortgage insurance (PMI).

PennyMac realizes that some MI companies may limit what they accept and may add specific credit requirements. However, for loans being underwritten using the lender's delegated status, PennyMac expects our lenders to be aware of the specific limitations of their own MI providers and ensure that their loan is properly insured by an approved provider of MI up to the amount required based on the product.

The Correspondent must forward a Change of Servicer notification to the PMI Company once PennyMac has purchased the loan, if the Correspondent’s name appears in the mortgagee clause.

Proper Disclosure of MI Premium

PennyMac relies on the Correspondent’s representations and warranties that, as of the date a mortgage loan is purchased, private mortgage insurance has been secured and any upfront premiums for private mortgage insurance have been paid.

If private mortgage insurance cost has not been properly disclosed to the borrowers, the Correspondent is responsible for correcting the error at no charge to the borrower. The issuance of a new TIL on a closed loan is not an option.

PennyMac may order the correct mortgage insurance coverage amount and invoice the Correspondent for the actual cost if necessary.

Captive Re-Insurance

All private mortgage insurance policies must be eligible for reinsurance by PennyMac or its affiliates.

Acceptable MI Types:

  • Borrower Paid Monthly
  • Borrower Paid Single Premium
  • Financed: Gross LTV cannot exceed PennyMac's program maximum
  • Split Premium
  • Lender Paid Single Premium
  • Reduced coverage


Unacceptable MI Types:

  • Lender Paid Monthly
  • Lender Paid Annual
  • Borrower Paid Annual
  • Any MI type not listed as acceptable