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Is this too much a coincidence???

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ShanetheMortgageMan
Super Contributor

Re: Is this too much a coincidence???

Bank can remove PMI whenever they want, but MUST remove it in accordance to the Homeowners Protection Act: http://www.frbsf.org/publications/consumer/pmi.html

 

How Do You Cancel or Terminate PMI?

Cancellation

Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Automatic Termination

Under HPA, mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan. If the loan is delinquent on the date of automatic termination, the lender must terminate the coverage as soon thereafter as the loan becomes current. Lenders must terminate the coverage within 30 days of cancellation or the automatic termination date, and are not permitted to require PMI premiums after this date. Any unearned premiums must be returned to you within 45 days of the cancellation or termination date.

For high risk loans, mortgage lenders or servicers are required to automatically cancel PMI coverage once the mortgage is paid down to 77 percent of the original value of the property, provided you are current on your loan.

Final Termination

Under HPA, if PMI has not been canceled or otherwise terminated, coverage must be removed when the loan reaches the midpoint of the amortization period. On a 30-year loan with 360 monthly payments, for example, the chronological midpoint would occur after 180 payments. This provision also requires that the borrower must be current on the payments required by the terms of the mortgage. Final termination must occur within 30 days of this date.

 

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 11 of 16
Anonymous
Not applicable

Re: Is this too much a coincidence???


@ShanetheMortgageMan wrote:

Bank can remove PMI whenever they want, but MUST remove it in accordance to the Homeowners Protection Act: http://www.frbsf.org/publications/consumer/pmi.html

 

How Do You Cancel or Terminate PMI?

Cancellation

Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Automatic Termination

Under HPA, mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan. If the loan is delinquent on the date of automatic termination, the lender must terminate the coverage as soon thereafter as the loan becomes current. Lenders must terminate the coverage within 30 days of cancellation or the automatic termination date, and are not permitted to require PMI premiums after this date. Any unearned premiums must be returned to you within 45 days of the cancellation or termination date.

For high risk loans, mortgage lenders or servicers are required to automatically cancel PMI coverage once the mortgage is paid down to 77 percent of the original value of the property, provided you are current on your loan.

Final Termination

Under HPA, if PMI has not been canceled or otherwise terminated, coverage must be removed when the loan reaches the midpoint of the amortization period. On a 30-year loan with 360 monthly payments, for example, the chronological midpoint would occur after 180 payments. This provision also requires that the borrower must be current on the payments required by the terms of the mortgage. Final termination must occur within 30 days of this date.

 


I have read this language before.  But, this is where the confusion seems to happen.  My lender has told me that if I choose, I can order and pay for a new appraisal at some point in the future (say, after doing some improvements or the market in my town has rebounded).  If the new appraised value decreases the LTV to 80%, I can request to cancel PMI.    It isn't strictly whether the loan is paid down to 80% of the original purchase price or the appraised value at time of purchase.

 

 

Message 12 of 16
Anonymous
Not applicable

Re: Is this too much a coincidence???

Been gone from here for a minute (I will post my story later) but I just put an offer in of 249K on a house that was listed at 240k in order to cover closing cost and my appraisal came back last week at......... 249K so no I never believe that it is a coincidence. FWIW it's a VA loan.

Message 13 of 16
ShanetheMortgageMan
Super Contributor

Re: Is this too much a coincidence???

DrW75, the mortgage lender can make whatever guidelines it wants to for PMI removal as long as it's no more stringent than the HPA sets forth, so in your situation they are allowing you to remove it sooner.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 14 of 16
Anonymous
Not applicable

Re: Is this too much a coincidence???

Are you using a broker or a local bank to purchase the home?  One of the most important factors in an appraisal is comp. sales in the last six months.  If using a broker, it is now illegal for the broker to even speak with the appraiser.  The days of an appraiser just putting up an appraisal amount that is needed is hard to do.  They have to back up the value of the home with many different factors. 

Message 15 of 16
Anonymous
Not applicable

Re: Is this too much a coincidence???

I'm working directly with the lender.

And yeah, she had the three comps needed, but the allocation of various values here and there to balance them out seems to me to be very arbitrary.   Such as "special features", which isn't defined anywhere and could mean anything.  My home was "average", while the compared home was "good" for a difference of $4k.  Same for site improvements . . . again, it seems very arbitrary; one comp didn't even have grass, and that was only a $3K downgrade (and I know landscaping costs a heck of a lot more than that).   And design/style . . . come on, really? And one of the comps, the highest valued home had less than half the acerage of mine and wasn't even adjusted at all for the smaller lot, whereas the other two, which were lower in value compared to my house, were bumped significantly up for the fact that their acerage was a bit lower that my home.

 

I guess it is all a mater of trust, and I'm just becoming too cynical.  Mostly, I was irritated that the abosultely fantastic lot didn't warrant a bigger bump.

By my math, matching the adjustment for the lower acerage that was done for a similar comp (which had a lower overall value due to its age), I come up with a value for my house that is nearly $12K higher than what I got on this appraisal.  That's a big difference and could ultimately amount to significant $ in PMI.

 

 

Message 16 of 16
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