PMI, it's conclusion, and the premium payments - Posted by soapymac

Posted by TRandle on June 05, 2000 at 22:49:19:

John,
Please keep me updated if you remember. If we could get a copy of the regs and happen to find that Countrywide’s rules are not in agreement, I would bet that cooperativeness would change drastically…

PMI, it’s conclusion, and the premium payments - Posted by soapymac

Posted by soapymac on June 04, 2000 at 14:04:29:

I was talking with a member of the finance committee at church today. He made mention, in passing, that he finally got enough equity in his home that he was able to prove the equity over 20%…which meant he no longer had to pay his PMI insurance fee. He also mentioned that the value of his home had increased over $60,000 since he purchased it in 1994 with a Fannie Mae mortgage.

This raises two questions in my mind:

First, if he no longer needs the PMI insurance…and no claim was made for his particular situation, is he entitled to any refund of that money? If so, how should he proceed?

Second, I am aware that PMI drops off once equity reaches greater than 20%. Who has the responsibility to monitor when that event occurs? The mortgage holder? My friend? Is there a way to proceed…since the value of his equity went over 20% some time ago, making the PMI unneeded?

My thinking is that because his equity went over 20%, then the PMI fee was mistakenly collected. How does he get that back?

Cordially,

Roy MacLean
"soapymac"

PS Any replies I will redirect to his email. His name is Bob, if you wants to address your mail to him. Thanx.

not according to Countrywide… - Posted by TRandle

Posted by TRandle on June 05, 2000 at 08:18:01:

I have a house we bought at about 80% LTV, so the loan was actually only about 72% LTV. I called to try and get the PMI removed. I was more than willing to pay for an appraisal since I’m getting hit for $80 a month. I was told that the docs say they don’t have to honor that request for 2 years. I still have yet to go and try to find that clause. Does anyone know if that’s true? Do I have to wait to hit 78% or 80% based on the loan amount and/or ride out the 2 year time period? Thanks…

Re: PMI, it’s conclusion, and the premium payments - Posted by cordero

Posted by cordero on June 04, 2000 at 19:59:03:

My experience PMI would agree with the other posts abouve. A person should read their loan papers to see exactly what the lender’s requirements are reguarding the cancellation of PMI. As far as I know a person wouldn’t be able to get a refund for any amounts paid to PMI. It is or has been the home owner’s responsibillity to cancell PMI and pay for any costs associated in the process, such as obtaining a new appraisal. Just remember, PMI isn’t designed in your favor. It is for the lenders benefit only. Some lenders don’t use PMI, they can find other ways to structure the loan in order to compensate any additional risk they are funding. PMI payments aren’t tax deductable either, so if a person gets a loan without PMI and maybe pays more in interest it could be better.
Any way, find out what the loan says and what the lender says and do what is required to cancell the PMI. You might also want to concider refinancing.

Re: PMI, it’s conclusion, and the premium payments - Posted by dewCO

Posted by dewCO on June 04, 2000 at 19:56:07:

Rick has some of it, maybe Harney’s article will have it all. The “new law” I believe only applies to loans made after 9/1/99. And the percentage is 78% not 80%, and I believe it is only “automatic” if the principle balance has been reduced to 78%, NOT including appreciation. And I never heard the whole story on whether or not they could charge a fee(I’m sure they can!) and require an appraisal. As usual one can always go to their lender and ask that it be removed and jump through their hoops. Some times in could be better to just refi and take a little cash out too, depending on how long folks are going to stay in it, etc, of course. There is lots to get clear about on this.

I don’t think it is the GREAT BIG GIFT that it is some times made out to sound like; probably had to compromise lots with bankers and such just to get this through Congress (which I believe took 2 or 3 yrs to do!).

There is a new federal law on PMI effective July, 1999. - Posted by Rick Vesole

Posted by Rick Vesole on June 04, 2000 at 19:09:22:

A new law helps homeowners save money.

Homeowners will soon get a break, as a new law goes
into effect on private mortgage insurance.

Lenders typically require home buyers to pay for private mortgage insurance, when the buyer puts down less than 20 percent on the house.

The insurance protects the lender if the buyer defaults on the mortgage. This can cost hundreds of dollars per year. However, some lenders continue to charge the
homeowner even after the owner’s equity rises above 20 percent.

The Homeowners Protection Act of 1998 changes that. Lenders will now have to inform homeowners when they have 20 percent equity, and cancel the insurance at
the homeowner’s request. Lenders are required to stop charging for the insurance when equity reaches 22 percent.

The law only affects mortgages closed after July 29, 1999. Homeowners with older mortgages aren’t protected. Still, Fannie Mae and Freddie Mac will make this
policy for all mortgages it holds.

Re: PMI, it’s conclusion, and the premium payments - Posted by Rob FL

Posted by Rob FL on June 04, 2000 at 18:51:24:

Kenneth Harney, a real estate newspaper columnist, had a great article about this subject in my newspaper today. In searching the web, I found the article for you. Here is the URL:

http://www.sunspot.net/content/realestate/story?section=classified-realestate&pagename=story&storyid=1150340221976

Re: PMI, it’s conclusion, and the premium payments - Posted by phil fernandez

Posted by phil fernandez on June 04, 2000 at 15:37:43:

Hi Soapy,

My experience with PMI goes as follows. Normally I buy with owner financing or make all cash offers using equity lines of credit. However in Nov. 1998 a HUD property came up that I couldn’t resist. The fair market value was $90,000, HUD offered it for $40,000. Every once in awhile HUD messes up. I bought the house and had to live in it as my personal residence for one year. No problem. I knew it would be gone by the time it became an extended listing. So I offered $40,150 and got the house.

Went to the bank for financing and only wanted to put 5% down. Deal closed and I moved into the house. The appraisal comes in a little under $90,000, but the bank says I have to pay the PMI monthly payment for a year. The mortgage amount was $38,142. No argueing was going to convince them otherwise.

My LTV was around 42%, way below the 80% LTV threshold.Finally after about 7 months I convinced the bank to cancel the PMI. I got no refund for the 7 months that I paid the PMI on the house with a LTV at 42%. And furthermore I had to ask the bank to take the PMI off

So in conclusion I believe that you have to contact the bank with documentation, perhaps a new appraisal for the PMI to be dropped and they will not refund you PMI payments already made even when it is evident that during a previous period the loan to value was below the 80% LTV level.

At least that’s my take.

Re: not according to Countrywide… - Posted by JohnB_NJ

Posted by JohnB_NJ on June 05, 2000 at 19:43:09:

I have 5 loans with Countrywide and all of them have close to 30% equity or better. I inquired last year about removing PMI. I was told that I had to have 30% equity since these are NOO homes. I was also told that I have to have the PMI for two year no matter what.
I too tried to find the "clause in my loan docs) and I found nothing.
Funny thing was that 2 of my loans required only 20% equity so I questioned why the others needed 30%. I was told that each loan was funded by a different “investor”. And that each funder had different equity and time requirements. UGH!
I will keep at it. I will be calling COuntywide again real soon.
OH, BTW, Wells Fargo might be purchasing Countrywide. They just purchased Norwest.

I will keep you posted as to how I make out with the PMI issue.

good luck

-JohnB_NJ

Re: not according to Countrywide… - Posted by phil fernandez

Posted by phil fernandez on June 05, 2000 at 09:22:48:

Tim,

My local bank said the PMI had to be in place for a year regardless. I finally convinced them to take it off after 7 months.

PMI info… - Posted by Anthony - OH

Posted by Anthony - OH on June 04, 2000 at 18:19:42:

  1. PMI can only be reduced, renegotiated, or removed with a new mortgage or with a request when you have 20% equity.(per Banker)

  2. I have refinanced with the only benefit (short term) being reduction in PMI. (from $70/month to $7/month)

  3. They told me that the bank must remove the PMI upon request. (if you have 20% equity) I was also told that the federal government was requiring mortgage holders to inform the property owner “close” to the time they should have 20%.

  4. I’ve heard of a number of Mortgage companies being sued because they were holding too much in escrow (for insurance, taxes, etc.)

What I was wondering though is if the PMI amount IS SUPPOSED to change as you gain more equity in the property? Anybody have a lawyer with access to Lexis to research the cases concerning PMI premium recovery?

Thanks