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Can't Remove PMI By Market Appreciation !

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Joined
Jan 16, 2002
Receive a call from property owner to remove PMI. Seems like a no-brainer. I interview owner on phone to make sure lender will accept appraisal, gets sales history, mortgage balance, etc.

Within a couple of weeks, property owner calls me and says lender (Wells Fargo) refuses to remove PMI based on the appraisal. I say, that's nonsense, property was appraised for more than they needed to remove PMI, what's the problem ? Owner says, lender told them they can only remove PMI by value increases attributed to adding improvements !
I explain that this flys in the face of the fact that the market has been appreciating. Owner says, Wells Fargo could care less, must show improvements, which in this case would have been $50,000.

At first I thought this was an isolated case caused by some idiot in the PMI department. Well' it just happened again with Indy Mac. What's up with these people ? Are you getting this same insanity ?
 
A

Anonymous

Guest
This sounds illegal to me, try contacting your state banking department.
 

Stone

Elite Member
Joined
Feb 1, 2002
Professional Status
Certified General Appraiser
State
Wisconsin
I believe if the loan is only a year or two (I forget the actual amount) years old, PMI removal cannot be based solely on appreciation. The owner can pay a chunk off, or they can improve the place. I simply add a paragraph or two in the addendum explaining what the owner has done. I always ask for this information from the owner. If the owner knows what it actually cost to do the improvements, I list it and comment on if the dollar amount seems appropriate for the market. If the owner does not know the costs, I use M&S, and sometimes do some extra research. It doesn't really add that much time to the process. Again, I keep it to one or two brief paragraphs. If they want more, I charge more.
 

Mike Simpson

Senior Member
Joined
Jan 30, 2002
What's up with these people indeed...same situation here (Left Coast) about a year ago. Almost identical!

That company's in second place in my opinion for abrasive, caustic behavior.

Quick PMI story: Had a nosy neighbor wonder over to a home I was inspecting--a REO. He asked a lot of questions regarding PMI. I gave him my time for free. He asked for my card--I obliged. He then asked me what my fee was for such service--I told him. This is where he got ugly; "I've got a problem paying someone X amount for an hours worth of work" he said in a disgusted voice.

It hit me wrong or I'm gettin old and cantankerous; "Ya know" I started, "that's the same amount I've been charging for the past 10 years, and I don't know which of your statements are stupider--that fact you've been paying PMI for the past 12 years or you believing I'm making X amount for an hours worth of work and you're not doin it yourself!"

I walked away hissin & spittin, and as I did I could see the smile on his employees face--"Gee so-n-so, I don't think he liked what ya had to say."

-Mike
 
Joined
Jan 16, 2002
P.S. clarification - these people have had their loans for more than 1 year.
Wells Fargo had loan 3 years, and Indy Mac since 6/01.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I tell em the time I spend measuring and observing their property is the fun and easy 10% of an appraisal. Kinda puts them into the la la zone when I go into a brief description of statistics and verification. Ends up turning them right off and they leave alone after that. (they think I'm a little crazy! :lol: )

When they offer to 'help' me measure - I laugh and tell them I charge extra for that!

PMI collection is a lot of money that none of them want to let go of. I didn't know about any 'rule' that a newer loan had to have physical improvements in order to remove PMI. What a farce!
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Advise your client to refinance with another lender. Interest rates are low and with enough equity no PMI is required.
 

Stone

Elite Member
Joined
Feb 1, 2002
Professional Status
Certified General Appraiser
State
Wisconsin
Joe - with those time frames, I don't know what the problem is.
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
Joe I had almost an identical situation with them last year. The homeowner called me first and raised hell. After a few questions I solved the problem. It turns out the borrower gave Wells the wrong form.....it seems they have one PMI drop form for appreciation and another for GLA/additions.....the borrower got it straight with them after a few calls, but no one ever apologized to me. Are we unappreciated or what?
 

aprazer

Junior Member
Joined
Feb 27, 2002
Professional Status
Certified Residential Appraiser
State
New York
I have done many PMI appraisals for Wells Fargo, and I think your homeowner spoke to the wrong clerk. They do however, require an addendum on all PMI reports to include a list of all improvements done since the passing of title. I think this may be the confusion. As far as the time clause, I think that is also incorrect. I recall doing one fairly recently in which the subject appreciated enough in about 8 months(it was definitely less than a year) to drop the PMI. There may be different restrictions on PMI insurance, but that one was for Wells Fargo.

The lenders do like to hold on dearly to PMI, as it is the easiest money they make. Ask to speak with the head clerk, or the borrower should indicate they will go elsewhere.
 
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