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Quick mortgage insurance lesson anyone?

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Regular Contributor

Re: Quick mortgage insurance lesson anyone?

Update: so I met with the lender yesterday and did not get any answers that make any sense. I requested the desktop underwriter findings and was given a copy of my credit report. So I requested the du findings again and still have not received a copy as of yet.... even though I was told they would be sent via email. I also spoke with the underwriter and asked if there was anything in her opinion that was cause for a problem getting my loan funded or for not qualifying for the best mi rate available. Response was there is nothing wrong in her experience or opinion. I believe the LO is trying to bait and switch me into a loan with permanent mi.... and I do not know why. After explaining that I am not interested in flipping the file FHA, I received a change in circumstance document with an update to FHA... **bleep**? 

 

I want to meet with the branch manager, LO, and underwriter to address the issues and get full disclosure (documented proof) that the mortgage insurance price has indeed increased to ridiculous amounts and why, but am afraid that, there may be some retaliatory efforts on the part of the LO. Any suggestions on how to handle? I am less than two weeks from closing and cannot move the deal or push for more time as I have to move and don't wish to be homeless.... extremely angry that this is happening right now.

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 11 of 16
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Community Leader
Super Contributor

Re: Quick mortgage insurance lesson anyone?

Sorry to hear that is how things went down.  The DU findings should be able to be sent to you within minutes, all it requires is the LO to print them to a .pdf document and email them to you.  I just literally re-ran DU a few times with a client over the phone and emailed the results within 15 minutes, while still on the phone

 

No one there doesn't want to do your loan, if it's fundable then they definitely want to close it (otherwise no one gets paid).  So meeting with them won't make them jeopardize the loan or retaliate against you.  Even with an extremely upset customer, they'll still do everything they can to close the loan as quickly as possible - they know consumers are more apt to post a review (file a complaint with corporate, etc.) if they have a negative experience vs. a positive one, so I can't imagine they'd do anything to purposely make you upset.

 

With a 724 score, $303,500 loan amount, and 5% down, the monthly PMI should be .73%, or $184.63/mo... you multiply the loan amout by the PMI rate and divide by 12. (link to Radian's BPMI chart).

 

Odd that they'd switch your loan to FHA without you accepting the change from conventional to FHA.  I don't think this is a bait & switched situation, just sounds like there is a lot of fumbling going on (perhaps they got an Approve/Eligible from DU, but then once the PMI company reviewed it they determined that the LO or underwriter messed up with the numbers and the DTI was too high or something that made you no longer get an Approve/Eligible).

 

Meeting with the LO, manager & underwriter all at once may be difficult, that is 3 different people with 3 different schedules and underwriters typically don't meet with anyone but their own staff (they are paid to underwrite, not paid to meet with customers).  I'm a little surprised the underwriter was willing to speak with you at all since most companies forbid the underwriter to communciate with the borrower.  If I was you, I'd type out exactly what you want to say to the manager (be reasonable), then call him/her up and say your monologue.  The branch manager can get you anything needed, i.e. the DU findings, a response from the PMI company (although that may have been a verbal response, if so, then there'd be nothing in writing from the PMI company).

 

Hope you are able to get your answers.

Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Orange County, CA and lending in all 50 states
Message 12 of 16
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Regular Contributor

Re: Quick mortgage insurance lesson anyone?

Thank you Shane for being a good voice of reason. I will stand down on the group meeting, but I will be reaching out to the manager of my LO, to request a copy of my submitted file to review every component until we figure where things went wrong. I am not looking to piss anyone off and hope that the LO can be understanding with regard to my concern and request to speak with the manager as I know it can upset folks when you skip-levels to resolve issues..

 

I don't want to lose this house and have to start this entire process all over again. As for bait and switch, FHA is not a mortgage option working in my favor as I would be tossing 5300 out the window and taking a MI payment that never goes away. Even if I took the the higher PMI on the conventional loan, my MI could be gone in 2 years. so from a cost benefit analysis conventional wins hands down, and even though I told the LO, FHA is not an option, she turned right around and pushed the change of circumstance for flipping to FHA.... total crap in my opinion and I wish I could get another LO to finish it up.  Anyway at this point I am simply vocalizing frustration. In the end I hope things can be resolved quickly, so I can laugh about this one day.

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 13 of 16
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Community Leader
Super Contributor

Re: Quick mortgage insurance lesson anyone?

You are welcome.

 

I am not sure how you are figuring the PMI on a conventional loan will be gone in 2 years.  The only time that PMI is required to be dropped off is at the scheduled date at where it would reach 78-80% (depending on the circumstances) of the value of the home when you obtained the loan (on a purchase, the "value" is the lower of the purchase price or appraised value).  See http://www.consumerfinance.gov/askcfpb/202/when-can-i-remove-private-mortgage-pmi-insurance-from-my-... for details.  You can petition it to be removed prior to that point, but there is no guarantee or requirement for the lender to remove it prior to then (although typically they will if you meet their requirements).

 

The upfront MIP on FHA is a bugger, but you can accept a slightly higher rate in trade for the lender to give you a credit, which can be used to pay the upfront MIP.  FHA rates are lower than conventional rates, so you can probably get the same (or a little lower) rate on an FHA loan vs. conventional and pay the upfront MIP that way, then you just have to deal with the annual MI.  Not the best solution to the situation, but just something that makes FHA more palatable.

Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Orange County, CA and lending in all 50 states
Message 14 of 16
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Regular Contributor

Re: Quick mortgage insurance lesson anyone?

Agreed Shane, and knowing nothing is guaranteed, but I am sort of betting on the home being the first phase in the community, with 5 more phases planned along with my income and low debt being able to drop15 to 20k yearly extra on the principal, to get to the 78% needed to request removal of the PMI... the way I see it and I could definitely be wrong here, but 20k in appreciation by year two plus 20k buy down year 1 and year 2 on principal (lump sum payment) plus standard mortgage payments over 24 months, should get it done. 

 

Since going under contract the homes in the community have all ready increased by approx 30k and my goal is to pay the house off in 15 years anyway

 

assuming my plan works conventional MI payments of 369x24 months = 8856 minus the 5300 FHA MIP I would throw away = 3500 in additional conventional mortgage insurance, which sucks big time, but I would be paying  for the opportunity of being able to cancel MI without the need to refi, since Its highly unlikely i get a better refi rate in the next 2-3 years. Much better prospect tha 72k over the life of a FHA loan not counting the better FHA rate.

 

know nothing in life is perfect as the house has to appraise, but yearly I can drop another 15-20k on principal so three years tops. The only way I lose is if the value declines. 

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 15 of 16
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Regular Contributor

Re: Quick mortgage insurance lesson anyone?

Hopefully the last update: received a call from the LOtoday and it appears that I have now miraculously received an approved/eligible. So it looks like things are moving once more in the right direction. Thanks all for your valued input!

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 16 of 16
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