Can't Remove PMI By Market Appreciation !

[Joe Birrell (NY)]

Bobby:

Just passed along your info on "forms" to property owner. It's amazing,
Wells Fargo can't figure this out themselves - they have a whole department devoted to PMI.

Thanks,

Ranting Joe

 

[TC]

Joe,

I had the same thing happen to me when I tried to remove my PMI. They finally relented and sent out a broker to do a BPO. Then told me that I would still have to wait 6 months until their new guidelines went into effect. I got so POed that I paid the mortgage down and demanded they drop the PMI. Every day I sent them a letter requesting that they sell my loan. They finally did. Then I received a request from them to do an appraisal review, sure, for 500 bucks. Never heard back. :lol:

TC

 

[slacker]

Joe,

I had the same thing happen to me when I tried to remove my PMI. They finally relented and sent out a broker to do a BPO. Then told me that I would still have to wait 6 months until their new guidelines went into effect.

TC

<span style='color:blue'>Kind of makes one wonder how many appraisers are being pressured to not hit the number for PMI eliminations. I was in TC's boat about 5 years ago. The bank said that they would have one of "their" appraisers come out. At the time I was a non-appraiser homeowner and I thought that was a little fishy.

Two weeks after the appraiser left I started taking appraisal classes. I couldn't believe someone was getting paid for what he did. I still don't beleive it. Sometimes.

PMI is easy money for these banks and they usually only let go of it after a lot of kicking and screaming. </span>

 

[FrankA]

Here are guidelines that many lenders use. Think you guys should think about the entire picture before bad mouthing the lender; why would any lender cancel the PMI insurance for a person who has proven that they can't make the payments ontime etc.

Also, the lender profits absolutely ZERO from the PMI. The PNI company of course plans to make a profit, but the lender by LAW can make no profit from PMI.

Don't take me wrong, I'm an appraiser as well, but if we as appraisers spent half as much time policing our own industry as biting the hand that feed us it would be a better business cliamte for all.

That's my 2 cents worth.

For loans funding on or after July 29, 1999, the following conditions must be met:
1) When the LTV reaches 80% (based on the original appraised value or the sales price,
whichever is less), the Mortgagor has the right to request cancellation of the Mortgage
Insurance. Mortgage Insurance may be cancelled if the Mortgagor meets the following
stipulations:
a) The Mortgagor submits a request to cancel the Mortgage Insurance to the Servicer.
B) The Mortgagor has a good payment history—no payments 60 or more days past due
within the last two years and no payments 30 or more days past due within the last year
of the cancellation date.
c) The Servicer has determined the value of the property has not declined below its
original value.

2) If the Servicer follows agency guidelines in addition to federal law, then the Mortgagor may also
cancel Mortgage Insurance if:
a) The LTV reaches 75% based on the current appraised value of the property, and
B) Two or more years, but less than five years, have passed since the origination date of
the loan.
3) Mortgage Insurance must be cancelled when the LTV reaches 78% (based on the original
appraised value or the sales price, whichever is less).
Exception: Mortgage Insurance need not be cancelled if the borrower’s loan is delinquent.
4) Mortgage Insurance must be cancelled—regardless of delinquency status—when the loan
reaches the mid-term of the amortization term.

 

[FrankA]

Also, give me some time and I'll quote you chapter and verse as to the section of law that prohibits the lender from making any money of PMI.

Thanks

 

[TC]

Frank,

I purchased my house for 50K less than previous owner, he was in a bind, already moved out of state and paying 2 mortgages. I lowballed and he agreed to his mortgage amount as the sale price. I did not request the appraiser for the loan, and he came in 30K over sales price. With a 15 year loan I was within 80% in 2 years. They still would not budge, wanted to see improvements to the property. The removal of PMI on my property should have been a slam dunk.

TC

 

[slacker]

Also, the lender profits absolutely ZERO from the PMI. The PMI company of course plans to make a profit, but the lender by LAW can make no profit from PMI.

Agreed, perhaps. But when the PMI is a subsidiary of the bank it gets a little more complicated.

I don't think the appraisers are slamming the lenders. It's Joe Homeowner that sees the PMI portion of the payment listed on the banks payment stub. In the homeowners mind they are paying the bank not the PMI Company.

And I would imagine that there is a business relationship to be considered between the bank and PMI.

I'm not say'n, Im just say'n.........

 

[FrankA]

RESPA covers the PMI issue, it would be considered a kickback if the lender profitted from requiring the borrower to have PMI, or if the lender profitted in any way by requiring the borrower to use a certain PMI company. See below from HUD website.

RESPA was enacted because Congress felt that consumers needed protection from "... unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country." Some of the practices Congress was concerned about are discussed below. Most professionals in the settlement business provide good service and do not engage in these practices.

Prohibited Fees. It is illegal under RESPA for anyone to pay or receive a fee, kickback or anything of value because they agree to refer settlement service business to a particular person or organization. For example, your mortgage lender may not pay your real estate broker $250 for referring you to the lender. It is also illegal for anyone to accept a fee or part of a fee for services if that person has not actually performed settlement services for the fee. For example, a lender may not add to a third party's fee, such as an appraisal fee, and keep the difference.

Permitted Payments. RESPA does not prevent title companies, mortgage brokers, appraisers, attorneys, settlement/closing agents and others, who actually perform a service in connection with the mortgage loan or the settlement, from being paid for the reasonable value of their work. If a participant in your settlement appears to be taking a fee without having done any work, you should advise that person or company of the RESPA referral fee prohibitions. You may also speak with your attorney or complain to a regulator listed in the Appendix to this Booklet.

Penalties. It is a crime for someone to pay or receive an illegal referral fee. The penalty can be a fine, imprisonment or both. You may be entitled to recover three times the amount of the charge for any settlement service by bringing a private lawsuit. If you are successful, the court may also award you court costs and your attorney's fees.

 

[FrankA]

I here you slacker and agree as I'm not sure who owns who either. Am just tired of everyone griping and wining about the lender. PMI wouldn't be required if the borrower put enough down, and for the lender to just arbitrarily cancel it is foolish. As long as everyone agrees not to moan and gripe about it when their investment portfolio tanks when the mortgage backed securities all go bad and there is no insurance coverage for the high ratio loans, I could care or less if there was no PMI. But to sit around and say, yeah, that darn lender is ripping me off and making all this money from the PMI insurance just shows peoples ignorance of the facts.

It's no different when the homeowner gripes about having to pay the @#$@# appraiser as the appraisal isn't necessary in his mind. Solution, don't have an appraisal BUT don't ===== and moan when the next bailout starts due to poor asset quality.

You can't have it both ways, but unfortunately, that's what the average person wants.

Thanks for considering my opinion.

 

[FrankA]

TC, I understand your frustration, but the lender disclosed the fact that the PMI could not be removed within 2 years before the loan closed. Why is this a rule, one reason is all of the crooks out there who come up with one scheme after another to defraud the lender. It used to be that the appraised value at purchase could be used to determine the LTV of your original loan in a situation like yours, but the dishonest among us made sure that they made their profits by using this to their advantage before the last big collapse hit.

So once again, the blame belongs with the dishonest people who, in concert with corrupt appraisers, took us all to the cleaners by over appraising properties at purchase.

Now a general rule has been made to put a stop to the practice, and it hurts people like you, but it's not the lenders fault. Also, regardless of the real value, the fact that you did not put 20% we'll say, of the purchase price down, represents ans increased risk to the lender.