PMI Removal

[Austin Martin]

Homeonwer calls and says they need to have an appraisal completed on their property so that the PMI can be removed.
Is the homeonwer the client?
Can the appraisal be completed on a non lending form (Gpar) ? Or, is the removal of PMI related to a mortgage finance transaction and thus, the appraisal as to be completed on the 1004?
Any help is appreciated

 

[USPAP Compliant]

In most cases the lender will have sent the borrower/home owner a letter which outlines the instructions of how the appraisal is to be obtained, where to be sent etc.. The most frequent letter I have seen just tells the borrower/home owner to obtain an appraisal from any state licensed/certified appraiser and send it to the lender or PMI company.

Tell them you need to see a copy of the letter for instructions. If the letter tells the borrower/home owner to obtain the appraisal, they would be the client since they are engaging you....but the lender would be an intended user.

Get paid UP FRONT.

 

[Austin Martin]

If the lender is an intended user then I am stuck using the 1004 form?

 

[TJSum]

USPAP Compliant is correct. Every one I have ever done, I required for the homeowner to get the SOW in writing from the lender. If they do not have this, then the lender might not accept your report if it does not meet their guidelines.

 

[USPAP Compliant]

No. Just address the intender user in an addendum. Some will say don't use the new 1004 that you should use the old 1004. No matter. Just include the lender as an additional intended user and spell out the intended use is for an opinion of value to be used by the lender to evaluate PMI issues. (Don't say "to remove PMI".)

Be prepared for the owner to be ticked if the opinion of value is not enough to get the PMI dropped. Cash that check....or get that cash!

 

[Austin Martin]

If the form is not an issue then I will use the Gpar. I suppose it is possible that the intended users could included both the lender and the insurance company correct? If the lender requires the new 1004 then I dont have a choice.

 

[AJL118]

The insurance company isn't a party to a PMI removal decision.

 

[Austin Martin]

They aren't? Why is that?

 

[TJSum]

Yes, the lender will tell you what form is necessary. I have even seen some state that an exterior only would be okay, but I refused to do that, always do a full appraisal for these assignments. It is 100% the decision of the lender to purchase insurance or not, not the insurance company.

Just a general warning for everyone, when you do these, what the lender is pretty much doing is replacing the mortgage insurance with your E & O policy. In the current climate of declining values, cover yourself ten times over in case the value declines in the future.

 

[Mike Boyd]

The insurance company isn't a party to a PMI removal decision.

I agree. It would be very unusual for the PMI company to be in title. Their contract is with the lender.....yours is with whoever ordered the appraisal.