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Old 01-28-2012, 02:38 PM   #11
KrisM
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Re: Cancellation of PMI?

Quote:
Originally Posted by jjordan View Post
Where are you getting the bolded? Is it a local/national law? I haven't heard that before.
Is part of the Homeowners Protection Act of 1999. Here's a document about it: http://www.federalreserve.gov/boardd...al/cch/hpa.pdf In that, it says

"A servicer must automatically terminate PMI for residential mortgage transactions on the earliest date that both
• The principal balance of the mortgage is first scheduled to reach 78percent of the original value of the secured property (based solely on the initial amortization schedule, in the case of a fixed-rate loan, or on the amortization schedules, in the case of an adjustable-rate loan, regardless of the outstanding balance) and
• The borrower is current on mortgage payments.

If PMI is terminated, the servicer may not require further payments or premiums of PMI more than thirty days after (1)the termination date or (2)the
date following the termination date on which the borrower becomes current on the payments, which-ever is sooner.

There is no provision in the automatic-termination section of the act, as there is in the borrower-requested PMI cancellation section, that protects the lender against declines in property value or subordinate liens. The automatic-termination provisions make no reference to good payment history (as prescribed in the borrower-requested provisions) but state only that the borrower must be current on mortgage payments."

So, yes, it has to be automatically cancelled at 78% of the original loan value.

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Old 01-28-2012, 03:05 PM   #12
nichey
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Re: Cancellation of PMI?

Quote:
Originally Posted by KrisM View Post
Is part of the Homeowners Protection Act of 1999. Here's a document about it: http://www.federalreserve.gov/boardd...al/cch/hpa.pdf In that, it says

"A servicer must automatically terminate PMI for residential mortgage transactions on the earliest date that both
The principal balance of the mortgage is first scheduled to reach 78percent of the original value of the secured property (based solely on the initial amortization schedule, in the case of a fixed-rate loan, or on the amortization schedules, in the case of an adjustable-rate loan, regardless of the outstanding balance) and
The borrower is current on mortgage payments.

If PMI is terminated, the servicer may not require further payments or premiums of PMI more than thirty days after (1)the termination date or (2)the
date following the termination date on which the borrower becomes current on the payments, which-ever is sooner.

There is no provision in the automatic-termination section of the act, as there is in the borrower-requested PMI cancellation section, that protects the lender against declines in property value or subordinate liens. The automatic-termination provisions make no reference to good payment history (as prescribed in the borrower-requested provisions) but state only that the borrower must be current on mortgage payments."

So, yes, it has to be automatically cancelled at 78% of the original loan value.
This should be clarified. It is automatically cancelled at date the original ammortization table reaches 78%. Unless I am incorrect about that? We have been making a lot of extra payments, so we are getting close to 78% but we still will not be able to drip PMI without an appraisal until that orignal Loan-to-value date. At least, that's how I understand it. If I'm wrong ( I hope I am) please correct me.
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Old 01-28-2012, 03:29 PM   #13
jjordan
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Re: Cancellation of PMI?

Quote:
Originally Posted by KrisM View Post
Is part of the Homeowners Protection Act of 1999. Here's a document about it: http://www.federalreserve.gov/boardd...al/cch/hpa.pdf In that, it says

"A servicer must automatically terminate PMI for residential mortgage transactions on the earliest date that both
The principal balance of the mortgage is first scheduled to reach 78percent of the original value of the secured property (based solely on the initial amortization schedule, in the case of a fixed-rate loan, or on the amortization schedules, in the case of an adjustable-rate loan, regardless of the outstanding balance) and
The borrower is current on mortgage payments.

If PMI is terminated, the servicer may not require further payments or premiums of PMI more than thirty days after (1)the termination date or (2)the
date following the termination date on which the borrower becomes current on the payments, which-ever is sooner.

There is no provision in the automatic-termination section of the act, as there is in the borrower-requested PMI cancellation section, that protects the lender against declines in property value or subordinate liens. The automatic-termination provisions make no reference to good payment history (as prescribed in the borrower-requested provisions) but state only that the borrower must be current on mortgage payments."

So, yes, it has to be automatically cancelled at 78% of the original loan value.
Quote:
Originally Posted by nichey View Post
This should be clarified. It is automatically cancelled at date the original ammortization table reaches 78%. Unless I am incorrect about that? We have been making a lot of extra payments, so we are getting close to 78% but we still will not be able to drip PMI without an appraisal until that orignal Loan-to-value date. At least, that's how I understand it. If I'm wrong ( I hope I am) please correct me.
To both of the above, yes, I agree with the second poster. I bolded the part of the law that is relevant - it is when the loan is scheduled to be at 78% LTV, not actually reaches 78% LT(original)V. So if you pay extra principle and get it down to 78% early (ie before the schedule), then the PMI does not automatically have to be canceled at that point.
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Old 01-28-2012, 04:18 PM   #14
KrisM
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Re: Cancellation of PMI?

Quote:
Originally Posted by nichey View Post
This should be clarified. It is automatically cancelled at date the original ammortization table reaches 78%. Unless I am incorrect about that? We have been making a lot of extra payments, so we are getting close to 78% but we still will not be able to drip PMI without an appraisal until that orignal Loan-to-value date. At least, that's how I understand it. If I'm wrong ( I hope I am) please correct me.
Yes, I do think you are right in that.

Another part in that link talks about borrower requested termination, and that is to be accepted at 80% of original loan, regardless of when it is scheduled, however, the borrower needs to show that the property has not declined in value. If you're at 80%, you should be able to show that.
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