Can't Remove PMI By Market Appreciation !

[jtrotta]

Frank A

subsidiary and/or satilite companys are created for the sole purpose of increasing the bottom line of the main player. Laws are like Rules, there meant ta be broken by some slick little creative (or not so creative-Enron) person. You should also be aware that the "fuzzy math" can play a role in PMI removal, don't think so, check out some other Lenders.

The scheme's come from both sides of the table, therefore the playing field is almost equal. And unless the value is truly NOT there, how is the homeowner trying to Defraud anyone 8O :?:

As fer the Risk factor, unless the deal is structured above 90% or above, the Risk becomes minimal; haven't you noticed that while your paying a so-called 6% Mortgage on a $60,000 deal over thirty years, that yer pay in after thirty years is approximately $360,000 8O - so who's at risk :roll: the homeowner, from a heartattack. So I guess we could say the Risk is not all that bad; oh yea, lets take the poor slob who looses his job after 10 years and same place, does the Bank say lets work out an agreement, cause you've been on time all these years and we'd hate ta see ya lose everything :x I think Not, their the first to file after 90 days and if they can steal some of yer other stuff, they most certainly will - yep their just wonderful.
And yes had some very good friends lose everything and tried several different ideas to help them out, Lender didn't want to hear about any of it. Real good, honest-hard working folk too.

So I guess it's whatever side of the table you sit on, that may become slippery & wet at various times in ones life.

8)

 

[FrankA]

jtrotta;

Not going to get into some long drawn out debate on this, was just point out some specifics backed by fact, not random musings or what the guy down the block said or that I heard from my sister in law or whatever.

The scheme's come from both sides of the table, therefore the playing field is almost equal. And unless the value is truly NOT there, how is the homeowner trying to Defraud anyone

The home owner obvioulsy is not out to defraud anyone, my repsonse was obviously directed at the people who buy a property for X and it magically appraised at Y and the bank used Y to figure the loan on and ended up loaning 100%+ on the collateral. It happened all the time.

Anyway, see it however you like, whatever turns your fan. This reminds me of why I and many other old timers of the board quit posting here, noboy wants to talk about the facts, or effect a change, just whine and complain about things using "facts" that are not indeed facts.

As fer the Risk factor, unless the deal is structured above 90% or above, the Risk becomes minimal; haven't you noticed that while your paying a so-called 6% Mortgage on a $60,000 deal over thirty years, that yer pay in after thirty years is approximately $360,000

Case in point, your quote above, unless you deem approximately to mean that $129,503 is approximately $360,000, your case holds no water as $129,503 is the total amount of payments, both interest and pricipal for the loan amount, rate and terms you stated, I'll send you the amortization schedule if you like. But I guess whatever "facts" suit you and make your argument are fine.

Thanks for sharing your thoughts. I'll go back to just readin posts occasionaly. Posting here is not for me as there is no way to clear up misconceptions when people refuse to use logic and fact to make their arguement.

 

[TC]

Frank,

Just the facts, Ma'm. Put down 10%, fully understood PMI, waited 2 years. In addition to paying less than market value and 2 years appreciation at roughly 5%/year, I also dumped 200 per month onto the principal. Didn't matter, they wanted to see physical improvements to the property. Yes, there are those appraisers and homeowners who want to circumvent the rules, not the case here.

TC

 

[FrankA]

TC,

I think you got jerked around and have a right to be angry. Good for you for being persistent. That's why the law below was put into effect. I'm not saying that every compnay, bank etc is honest and the need for this law proves it, but ot say it's all some grand scheme so the lender can profit is clearly not the case at the present time, was my main point. Not speaking to your case but without all the facts, as in have the payments been made ontime and a myriad of other legitimate variables, to simply make a blanket statement that a person was being cheated because the lender wouldn't drop the PMI is not true.

Glad you kept on them and got the PMI dropped.

Thanks and have a good one.

I. INTRODUCTION

“The Homeowners Protection Act of 1998,” a new federal law governing the cancellation of private mortgage insurance, affects all loans funded on July 29, 1999, and thereafter. The law provides borrowers with the right to request cancellation of PMI, and/or the right to automatic cancellation of private mortgage insurance (hereinafter referred to as “MI), once certain loan-to-value thresholds have been met. Additionally, the law requires certain disclosures must be provided at certain thresholds during the servicing of the loan. Generally, this privilege applies only to loans on one-unit dwellings, occupied as a primary residence.

 

[FrankA]

By the way, here is a link for all those who have PMI problems, it shows who the proper enforcement authorities are, gives a template for writing a "qualified written request" under Section 6 of the Real Estate Settlement Procedures Act (RESPA) etc. Hope this is of some use.

Thanks

 

[FrankA]

http://www.HUD.gov/offices/hsg/sfh/res/respapmi.cfm

 

[David C. Johnson]

<span style='color:darkblue'>FrankA,

I do not remember "your name" (i.e., FrankA) as being associated with unreasonable positions in posts. In this case, I would respectfully suggest that there is more you should know about the whole PMI situation -- both historically and currently. And I would hate to see you quit posting.

One of the things I hope to get around to before too long is to do another thread on PMI. But his thread has been helpful to me to see what others are encountering. Are you aware that some people, since the last few months, are paying, say, $400 a month for PMI? If someone has less than a 20% downpayment and less than a perfect credit score, that could be the story. These people are not informed of the right way to drop PMI -- the "new" legislation, "The Homeowners Protection Act of 1998" is a farce. It is currently set up such that many or most people will actually pay tens of thousands of dollars too much prior to its being dropped -- where even if there were a default, the PMI Company would not even hear about it because they are no longer contractually obligated to pony up anything after the first few years of a mortgage in a typical situation -- not to mention the fact that there would be normally be so much equity at such a point in the mortgage that it would be no issue anyway. They (the lending/PMI lobby) even craftily named the new absurd version of "owner requested" "PMI droppings" such that it Sounds Just Like what always has existed (for those who knew about it -- and also how to go about it -- a carefully kept secret) And Still Does Exist (as is being discussed in this thread) -- just so that they could confuse that issue with the what they have named "owner requested early release." Incredible subterfuge!!! It is almost impossible to even coherently explain the situation the way they have monkeyed up all the terms for the sole purpose of confusing the public to their advantage. Amazing!! Some other time from me on this issue and other PMI issues/concerns. But just some offhand comments on a few quotes from the thread:

Slacker writes:

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

Good job, Slacker! Well said.

So is this: No, at that point it gets real simple: They profit from the insurance. And I mean greatly!!! And it completely negates the RESPA stuff you cited, FrankA. And if we notice, PMI was not specifically mentioned there anyway. Fella, this country is in a big mess. I am very convinced that most people really have no idea at all what has been and what is going on. People and companies are getting away with incredible stuff -- it's now the status quo, and the PMI scam is a big one. In fact, it had to have had an educational role for Enron management. They saw the average US citizen "tricked" into paying PMI for the entire length of their loans!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! And no one said a damn thing!! Not Congress, not the Maes -- NO ONE. (Hell, and that was even at a time when the Maes were somewhat tame.) That is tantamount to robbery. You could send a child to Harvard for the amount overpaid by many thousands of homeowners across the country. But now it's much worse.

FrankA, I believe you wrote as follows:

"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."

Wrong. It's just never happened (or it would be the great exception). And no way it happens now. I will guarantee you that lenders are not telling people the correct way to drop PMI which is based on property value appreciation (again, as is being discussed in this thread). They may now conveniently mention the Wrong Way (in fact it is now law that the wrong way be mailed to them once a year) just to help hide the fact that there is an infinitely better way.

jtrotta,

True words of wisdom. I think I'm starting to like your postings more.

"...Subsidiary and/or satellite companies are created for the sole
purpose of increasing the bottom line of the main player. Laws
are like Rules, there meant ta be broken by some slick little
creative (or not so creative-Enron) person. You should also be
aware that the "fuzzy math" can play a role in PMI removal,
don't think so, check out some other Lenders."

There have "always" been "guidelines" recommended to lenders by the Maes. But guidelines are not even rules, let alone laws. The mortgage companies and servicers were able to do about whatever they wanted -- and generally they wanted to make money. Fannie Mae's guidelines and Freddie Mac's are somewhat different -- only one requires that there be such improvements for the earliest release (and often this is interpreted by them to mean additions to GLA), but the fact is lenders have been able to makeup their own "guidelines" -- including selling the loan afterwards to a new lender who (conveniently) may have No Guidelines At All such that someone could NEVER be released -- and you, the homeowner had no say whatsoever in the selling of the loan! Sound like a blatant violation of common contract law? Yep. You have no idea. But it was legal -- or at least no one could prove that it wasn't.

Folks, it is bad out there -- the lending industry may be about the worst of them all (I'd hate to think that even worse exists). By being aware of what is happening we can do more than just assist others around us, we may be able to help save the USA from internal collapse. (I know it sounds a little overly dramatic, but actually, I'm quite serious.) Things are bad and they are not improving right now. Ignorance is the killer.

Put reasonable regulations in place for all the lenders (and their PMI company subsidiaries) to abide by, and most of them happily will -- then they have a level playing field for all of them to compete in against each other. Otherwise, its Survival of the Sorriest -- those with the least ethics win. The least ethical make all the money while driving the rest out of business (or buy up the rest) -- alternatively, all of them become just as unethical just to survive, and that's what we have right now. It is like a pack of undisciplined children. They are often much happier with some discipline. Some do not like the fact that they can no longer go around breaking out all the windows in the building because that was a lot of fun, but if it's clearly not going to be tolerated, most of them get use to not doing it, and also some get use to having windows that are not boarded up.

As everyone is aware, we have the same problem in our profession -- ironically, it HAS been aggravated, if not caused by the lending industry's problem. The lender (through their loan officer) picks the appraiser that will make their deal work. And that is the appraiser who flourishes. I am aware that good appraisers cannot say much about it because they are at the mercy of the lenders. I am sure blackballing sure does happen. Be glad at least that some good lenders still exist. We need to protect them because the odds may be against their survival.

As difficult as it would be to do (i.e., get Congress to pass honest legislation), it really is a very simple issue. You are doing a great service to future generations by being aware of what is taking place right now. It is the ignorance in the population that is the killer. Have to get over that hurdle first, the rest will follow.

OK, done with the rant. :wink:

dcj</span>

 

[jtrotta]

Frank A

your just pointing to specifics is nice, and the $$$$$ was an exageration, but even if your right, at the over 100% of return on investment, the risk (which was my point of fact) is minimal.

and I wasn't saying every homeowner is 100% honest (that was your assumption) and those who use "magic" in their appraisals, will be limited in the near future.

Lastly, if you need specifics, ask your own attorney, if subsidiary companies of a larger branch are not created as a purpose to circumvent some loop holes. If there's a doubt, there is always a link of some type as to who created the company. The reason "shredders" were invented- as proven by political powers; various accounting firms; Etc..........

If your going to cast stones - remove the glass from yer winda's first

My intention was to add some input into the thread, I had & have no intention getting into Heavy specifics here, and as far as relating to;
"random musings" or what the guy down the block said (he's a lair); and I don't have a sister In Law or whatever"

Relax - Frank, I was just expressing an opinion or two.

8)

 

[FrankA]

My position is not unreasonable as it is backed by fact, but all persons are free to their opinions.

Directly from RESPA is below, the lender cannot own or have an interest in any affiliated provider without letting you know ahead of time and giving you the option to shop elsewhere. Also the lender is required to notify you when threshholds will be met that would allow cancelation fo your PMI. You see I actually read RESPA and related HUD guides to it. Those are the facts. I'm finished posting now. I am aware that there are probelms with all industries and not everyone is honest, but the blanket statements that zzz lender is making all the money and the poor consumer doesn't know and can't change it simply are not true. there are abuses in every industry, but your blanket statements are not backed up by facts.

J, the numbers are correct to the penny and if you think that is a 100% return on investment, I can refoer you to some business classes that deal with capital markets and cost of capital, ROI etc that would help a great deal. I have to hope that you are not a commercial appraiser as your understanding of the time value of money is scary.

I have to respectfully disagree with both of you. I'm done. Thanks guys, it was fun.


Disclosures before settlement/closing occurs

The terms "settlement" and "closing" can be and are used interchangeably.

An Affiliated Business Arrangement (AfBA) Disclosure is required whenever a settlement service provider involved in a RESPA covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest.

The referring party must give the AfBA disclosure to the consumer at or prior to the time of referral. The disclosure must describe the business arrangement that exists between the two providers and give the borrower an estimate of the second provider's charges.

Except in cases where a lender refers a borrower to an attorney, credit reporting agency or real estate appraiser to represent the lender's interest in the transaction, the referring party may not require the consumer to use the particular provider being referred.

Section 8: Kickbacks, Fee-Splitting, Unearned Fees

Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.

Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of RESPA are subject to criminal and civil penalties. In a criminal case a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year. In a private law suit a person who violates Section 8 may be liable to the person charged for the settlement service an amount equal to three times the amount of the charge paid for the service.

Initial Disclosure of Right to Cancel Private Mortgage Insurance for Fixed Rate Transactions

For Fixed Rate and Balloon loan transactions, HOEPA requires that the lender provide an initial disclosure of Right to Cancel Private Mortgage Insurance at the time of consummation (signing) of the loan.

For fixed rate and balloon loans, the law requires that the lender provide information on three specific events in the transaction:

1. The date that the loan reaches the 80% of the original value based on the amortization schedule. This represents when the borrower has the right to REQUEST cancellation.
2. The date that the loan reaches 78% of the original value based on the amortization schedule that represents when the lender MUST cancel MI if the borrower meets the following criteria:

a. Requests cancellation in writing;
b. Value of property is the same or greater than the original appraised value;
c. Has not been encumbered by a subordinate lien; and
d. Has a good payment record defined as:
i. No 30-day lates in past 12 months of loan, and
ii. No 60-day lates in past 24 months of loan and none in last 12 months of loan.

3. The statement that the MI will automatically be canceled if the loan has reached the half-life of the amortization period. For balloon loans, the loan would more than likely never reach the half-life of the amortization period because loans are usually amortized for 30 years but due and payable in 10 years or less. Half-life would be 15 years on a 30-year amortization, therefore half-life cancellation would never occur.

 

[David C. Johnson]

FrankA (If you are still among us),

You position is understandable, not unreasonable. Sorry.

Thanks for taking the time to print for us your posting above.

Do you think that some highly paid lawyers are clever? I do. You have just reprinted the text of at least one such lawyer -- but probably a whole firm or two of them. Let me demonstrate what I mean:

You write as follows:

"...Also the lender is required to notify you when thresholds
will be met that would allow cancellation of your PMI. You
see I actually read RESPA and related HUD guides to it.
Those are the facts."

Let me ask you this: How would they know when all the "thresholds" have been met? Because of the amortization schedule? Exactly. You have just delivered the text for exactly what we have been saying/writing. They could not possibly know when The Most Important Threshold has been met because that would take an appraisal to determine -- and as you know, they do not do appraisals every year on these properties. The most important threshold to the financially responsible homeowner is when increased property value (due to all causes) gives them a 20% or better equity position in their property. To make a more commercial-type appraisal analogy, the homeowner is in the equity position, and the lender is in the debt position. The homeowner's position is dynamic and dependent on many factors, while the lender's position is static and predictable. It is the owner who is to enjoy the benefits of property value appreciation, from all forms, not the lender. The regulations you have recited proves that the homeowner is not being told all of the facts. The most important fact is being intentionally left out. If you go by "the disclosure" (boy, what a name) provided and mandated by law, you get ripped a new one. In this thread appraisers have been talking about one or two years to get out of PMI sometimes, you have been describing FIFTEEN YEARS!!! with the "New Legislation." How about information on the old way? They do not want you to know about the right way which still exists! Very clever of them. But it gets better. Much better...

Do you see how little difference there is between their new "automatic" and the "owner requested" versions of PMI elimination? What, about a year to get from 80% to 78%? (And by the way, where the hell did this 78% come from?! You were only supposed to have to get to 80% before the legislation, right? I can sure tell you how that 78% got into the picture, but it might be a little dificult for most to believe, so I won't.)

Can you see why they added in this "owner requested" option at all? It was added for the reason that was discussed in my post. Subterfuge! It was added so that when a homeowner says to their lender:

Homeowner:

Now, wait a minute Mr. Lender, I'm not talking about being force to keep this ridiculous insurance until the mid point of my damn 30-year mortgage, that is absurd!! That's for chumps. I am talking about dropping it like I did several years ago with my old house. Being in the insurance industry like I am, I was one of the few who were aware of the nationwide scam going on, so I had my property appraised and then dropped it immediately -- well, kinda immediately -- I was only scammed out of the cost, say, of a new cadillac, or so. But then I found and read my very first issue of the "Bankers Secret Newsletter." I am an insider now ! So tell me the right way to get out of this fraud, OK?

Mortgage Servicer:

Oh, you have not heard of the New Legislation I take it? Things have changed. But, there sure is a provision like you described where you can still get out early -- a full year early.

Homeowner:

What!!? You just have to be joking!! You are saying that with the new "early release program" I still have to pay 14 years which is over 10 years too long?

Mortgage Servicer:

Well, that's the new law, Mr. Homeowner. Things have changed. Here, I'll give you a copy. Or you can go to a thread on AppraisersForum and find it yourself. It is the Homeowners Protection Act where you are protected from having too much cash in your pocket -- for YEARS longer than before!!

Homeowner:

@&&%#@*&% !!!!!!!!!

________________________

The scam use to be that some unaware homeowners (like many an appraisers' parents or grandparents right here on this forum) use to pay it unnecessarily for 30 years. Now few do any more. But, now many many more people are due to pay it unnecessarily for 15 years!! So the numbers work out real well for the lenders or PMI companies, which ever it is, if there is any real difference.

You also wrote as follows:

"...Directly from RESPA is below, the lender cannot own
or have an interest in any affiliated provider without letting
you know ahead of time and giving you the option to shop
elsewhere."

So, if this applies to PMI companies, and they adhere to this regulation, what difference would it make to someowe at closing? It's my understanding that the few existing PMI companies all have similar pricing structures. No joke. Check and see.

FrankA, it was meant to be confusing. Do you think you are smarter than a whole firm of highly paid lawyers that have as their objective to write legislation to fool the average consumer (and also more than a few legislators!). Maybe you are. I am not. I know what I know from having taken a specific interest in the PMI situation years ago. I could send you a VHS tape of the 1998 Congressional Hearings. No joke.

dcj
_____________________

PS. Here's an interesting piece on another PMI issue mentioned:

]http://www.azlending.com/index.html/suppor...tail/5/ http://www.azlending.com/index.html/support/news_detail/5/[/color