Who Really Knows Private Mortgage Insurance Law?

Discussion in 'After Hours Lounge (Off Topic)' started by James Edward, Sep 26, 2003.

  1. James Edward

    James Edward Supporting Actor

    Joined:
    May 1, 2000
    Messages:
    855
    Likes Received:
    0
    I have paid off more than 20% of my mortgage, and have requested that PMI be dropped on my mortgage. My bank-Chase, sent me a letter stating that I should send them $150.00 so they can obtain a 'Broker's Price Opinion' on my property.

    They make clear that this is not an appraisal, simply a drive-by done by a real estate agent to make sure that my property has not declined in value.

    PMI rules seem to be written very vaguely, so as to facilitate squeezing me for another $150.00. Keep in mind, had I not called, they would continue to collect PMI indefinitely.

    Your thoughts please...
     
  2. Philip Hamm

    Philip Hamm Lead Actor

    Joined:
    Jan 23, 1999
    Messages:
    6,873
    Likes Received:
    2
    PMI rules are screwy and they differ by lender. I remember when I bought my first house, it increased in value dramatically in the year after I bought it. One day in the mail I got a letter saying that I didn't have to pay PMI anymore and to look at my next statement for the change. Next statement came - surprise! - it was lower! I didn't have to do anything! From what I've heard my experience is somewhat unusual, but by no means unheard of.

    My advice - do whatever it takes!
     
  3. DaveHo

    DaveHo Supporting Actor

    Joined:
    Dec 11, 2001
    Messages:
    605
    Likes Received:
    0
    I paid about the same for a BPO when I requested my PMI be dropped. If you don't request to have it dropped, I think they can legally collect PMI till you have 33% equity. For the BPO, he came in took 1 or 2 shots of each room, and a couple rough notes. Took about 20 minutes or so.

    -Dave
     
  4. MikeAlletto

    MikeAlletto Cinematographer

    Joined:
    Mar 11, 2000
    Messages:
    2,369
    Likes Received:
    0
    My mortgage is held with Wells Fargo. This is what they say:

     
  5. Denward

    Denward Supporting Actor

    Joined:
    Feb 26, 2001
    Messages:
    552
    Likes Received:
    0
    I think the key is not whether you've paid off 20% of your loan, but whether or not you have 20% equity. Since equity is the home value minus mortgage balance, if home value decreases, equity decreases. If I were the bank, it seems prudent to verify that the home value has not decreased.

    This can work in the homeowner's favor, too. If you had originally put down $10,000 on a $100,000 home, you'd have to pay PMI because you only have 10% equity. If a year later the home value increases to $115,000, your equity is now $25,000 (21.7%), even though you've paid off very little of your loan. At that point, if an appraisal agreed with the $115,000, you could stop paying PMI.
     
  6. Lee L

    Lee L Supporting Actor

    Joined:
    Oct 26, 2000
    Messages:
    868
    Likes Received:
    0
    Funny, our mortgage is with Chase and out of the blue they sent us a letter saying they were stopping our PMI. It seemed a just a little early so we called and they checked and stopped it. No Appraisals, no fees, they even gave us a refund for half a month of PMI.
     
  7. James Edward

    James Edward Supporting Actor

    Joined:
    May 1, 2000
    Messages:
    855
    Likes Received:
    0
    You really know how to hurt a guy Lee...
     
  8. Bob Graz

    Bob Graz Supporting Actor

    Joined:
    Sep 26, 2002
    Messages:
    798
    Likes Received:
    0
    James,

    If you've paid off 20% of your mortgage and you know that your house value has stayed flat or has gone up, I'd challenge them on the $150. Especially if you have been a good customer and have a good payment history. You may in the end have to pay the $150. but I'd try very hard not to.
     
  9. Jose Arellano

    Joined:
    Aug 23, 2001
    Messages:
    44
    Likes Received:
    0
    What Mike Alletto said is correct. If you are trying to drop PMI because you are basing it off new tax appraisal values, or what you think the value is, of course they will go check it. They shouldn't ask for this drive-by appraisal if the LTV on your original note has decreased to 80%. In other words, if you paid $95K on a $100K sales price/appraised value when you bought it, they have to drop it at $80K if you request it.

    If you paid the $95K on a $100K sales price, which they base the LTV off of, but the home was appraised at $120K when it was bought, you will need to have this appraisal done to remove it after a year on the property. They never use the appraised value to set the LTV on a new sale, always the sales price.

    They shouldn't ask you for this $150 in the first scenario above, but they probably should and will in the second scenario, where they don't have the information to begin with from when the loan originated. Email me if you have any questions. I work at a mortgage company.

    Lenny Arellano

    P.S. They ARE required to automatically drop it 78%, so if you are below 80%, but close to the 78%, the $150 might be more than what you would pay in PMI anyway.
     
  10. James Edward

    James Edward Supporting Actor

    Joined:
    May 1, 2000
    Messages:
    855
    Likes Received:
    0
    I'm basing all my figures on the original loan amount and price. I'm not trying to use a new appraisal or any other means.

    Whose house has declined in value in the past nine years? I'd venture to say I could burn my house to the ground, and the current value of the land itself exceeds my mortgage amount. It just seems to be an unfair business practice. [​IMG]
     

Share This Page