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We built our house in 11/03 for $125000. Back on 11/05 we requested to drop PMI. We went through the bank's "required" appraiser, who then appraised it at $161000. Bank then stated our balance had to be at/below $120750 (75% LTV) because it was between years 2-5 of the loan. Just last month (just beyond our 5 years which the required balance changed to 80% LTV) we asked that our PMI be dropped. The balance on the loan was now 121000. They again refused because we were late the last few months (but we had never been late prior to this time for 5 years!) The reason we were late was because the taxes & ins went up on our property, which is all bundled in our monthly payment, bringing it over $1000/mo. Our actual mortgage pymnt is only about $675, easily affordable. We have an ARM but the rates are very good even when topped out; we're at 4.75% now. Is there anything we can do to get them to drop the PMI? Our bank requires that if we drop PMI, they will also drop the taxes & hazard, which is fine with us because the bank always pays it at the last minute, requiring a bigger payment (county gives discount for early payment). These "extras" are what's killing us...not the actual mortgage. Every time we talk with the bank, they are not helpful and just keeping read their script to us. If it makes any difference, the loan is through a credit union.
Why would you expect a bank to drop the insurance that protects them if you default when you're currently late on payments? That is the first sign of trouble. I don't think you have much choice other than make your payments on time for a year or so and try again.
We're not currently defaulted...we had 2 instances where we were late by only a few days and considering we were always on time or early for 5 years...that should say something on our behalf, especially since we've met our LTV stipulated by their contract!
It's almost seems as if the system bets on your making late payments to rape you for the entire length of your mortgage! It doesn't surprise me in the least that there's so many forclosures right now, since once you fall just the tiniest bit behind, they make sure you stay there.
I'm not looking for someone to give me snide remarks. Just something helpful please. Like I said...we can afford the mortgage...it's the increasing extras (PMI, hazard, taxes) in the monthly payment that is causing trouble. We can pay the hazard & taxes up front every year, using tax returns for that...but when the bank charges you $200 extra every month just so that they can feel "safe" about giving us a mortgage...I just seems like a legalized mob organization. "Give us $200 every month and we'll make you safe." HAHAHAHA!
we were always on time or early for 5 years...that should say something on our behalf
Actually, consider the U.S. economy in general right now, and the U.S. mortgage market in particular. That's how your lender is looking at things. Everyone in the world was paying "on time or early" for the past 5 years or so. NOW, everyone is defaulting and moving out of homes that are going into foreclosure.
Not "everyone", of course, but do you see the lender's point of view? Your late payments are RECENT and are huge red flags to the lender, warning them that you, too, look as though you will soon be defaulting on your mortgage.
You can't talk them out of this one. Only payment on time for probably a year will show them that you are not defaulting. Sorry, but that's how the business, and the current U.S. economy, works.
It definitely isn't fair that we've met our LTV obligation and yet 2 payments out of 60+ (3%) gives them the right to keep "mobbing" us. At least when I was a renter I had rights.
I can't help but rant on this....it makes me so mad that my tax money goes to bail out these crooks while there are people out there that really need it and have been deceived by poor business practices can't even get a piece of lint.
Refinance the balance and roll the closing costs into the new loan. See if you can get refi. the late payments may or may not affect you. Most mortgages do not report late payments until they are 30 days. If you were only a few days late, they should not be on your credit report. Your credit union is keeping closer tabs and has internal information. Ask around, rates are down and you may get a good rate and no PMI.
There are late payments, and then there are late payments. When you say late, do you mean after the 1st, or after the 15th? Or 30 days late? Oddly enough, I cannot find anywhere in the Consumer Protection Act of 1998 the definition of "late payment." What I can find is if there is a late payment, that alone can validate the denial to remove the mortgage insurance.
If you put less than 20 percent down on a home mortgage, lenders often require you to have Private Mortgage Insurance (PMI). PMI protects the lender if you default on the loan. The Homeowners Protection Act of 1998 - which became effective in 1999 - establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI.
For home mortgages signed on or after July 29, 1999, your PMI must - with certain exceptions - be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current. Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current.
One exception is if your loan is "high-risk," and issued as a high risk loan to begin with (Alt A). Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue. Ask your lender or mortgage servicer (a company that collects your payments) for more information about these requirements.
If you signed your mortgage before July 29, 1999, you can ask to have the PMI canceled once you exceed 20 percent equity in your home. But federal law does not require your lender or mortgage servicer to cancel the insurance.
Additional provisions in the law
New borrowers covered by the law must be told - at closing and once a year - about PMI termination and cancellation.
Mortgage servicers must provide a telephone number for all their mortgage borrowers to call for information about termination and cancellation of PMI.
Even though the law's termination and cancellation rights do not cover loans that were signed before July 29, 1999, or loans with lender-paid PMI signed on any date, lenders or mortgage servicers must tell borrowers about the termination or cancellation rights they may otherwise have under those loans (such as rights established by the contract or state law).
Next Steps
Some states may have laws that apply to early termination or cancellation of PMI - even if you signed your mortgage before July 29, 1999. Call your state consumer protection agency for more information about your state's rules. Fannie Mae and Freddie Mac, which buy home mortgages from lenders, also may have guidelines affecting termination or cancellation of PMI on home mortgages signed before July 29, 1999. Check with your lender or mortgage servicer, or call Fannie Mae or Freddie Mac, for more information.
Contact your lender or mortgage servicer to learn whether you're paying PMI. If you are, ask how and when it can be terminated or canceled.
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaintwww.ftc.govor call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
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And not to be snide in remarks, but more of a voice of the way it is, values are down. There is a very real possibility, actually a probability, the value and loan to value ratios are no longer there. The majority of the industry considers a loan late after the 15th, so if there have been late fees paid in the past year (or still owed) and I were making the decision to cancel PMI, I would not cancel your policy, especially in today's environment. Remember, not all loans are eligible to have PMI removed, so make sure what they were considering before was from guidelines and not as a courtesy.
And, in fairness to my fellow posters, snide comments are nothing more than frustration. It's become increasingly obvious the bailout of the various banking institutions are being funded by the posters on this board, ie the tax payers. So, when someone hears about a late payment and removal of the insurance that minimizes the same financial institution's losses, they (and myself right along with them) tend to get a wee bit vocal.
Question out of curiosity? What happens if someone decides to just pay their mortgage and insurance and leave out the PMI?
After 15 days, you will get charged a late fee for only making a partial payment. After 30 days, reported to the credit bureaus.
You can't go to a store and only pay part of the bill and walk out. Its the same type of thing here. You can't disagree on principle and just pay your bill minus the mortgage insurance.
The bank will either not accept the payment at all, or consider it partial payment.
About your only option would be to refinance, it will cost several thousand dollars, but evaluate your breakeven point. If the mi is $100 per month, and it costs $3000, you have a 30 month breakeven point.
Since you are upset about this, and rightfully so, you should refi just to spite this lender and stop them from making money off you.
But whatever you do, do not just send the mortgage payment, pay the total due whether you agree or disagree, you dont want to destroy your credit.
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