Very rude awakening by mortgage lender - home valuation - should I dispute? (Phoenix: short sales, to rent)

[khuntrevor]

Originally Posted by Potential_Landlord

How much does it cost to build your average Arizona - quality house right now in cost per SF? - This should give us a realistic idea of where home prices are headed once the surplus units (distressed or not) are worked thru the system. Then the new build should set again the price.

120 per square foot+.

[trishguard]

Originally Posted by Potential_Landlord

We bought our house in December 2009 during the first-time homebuyer frenzy for 180k in North Phoenix. Meanwhile, we paid down our mortgage to about 140k and I thought in my naivite I apply to eliminate PMI payments. So much for that - the lender came back to us with a valuation of 140k which puts us officially under water. They sent us a bunch of comps of just sold properties and currently on the market properties, a so called "BPO". Do you think a >20% drop over the last 17 months is realistic? Should I dispute? - I am almost freaking out. I thought the worst was over in 2009 but yet it is not.

To me it sounds like they are being unethical. The Federal Reserve Bank of San Francisco: Economic Research, Educational Resources, Community Development, Consumer and Banking Information

Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less.

[Potential_Landlord]

Originally Posted by blondmom

so the lender is estimating that you no longer have 20% equity in your home...and is asking for PMI? i didn't realize they could do that.

does verbiage in the original mortgage allow for that? i guess i never read my contract that closely.

of course i would dispute, tell them if they charge you any more...they can end up foreclosing on you (i think i'd try that option)

Hi thanks for your question. It was actually me who asked to end PMI payments as the loan balance fell below 80% of the original purchase price.

[Potential_Landlord]

Originally Posted by khuntrevor

120 per square foot+.

KHUNTREVOR: If this is a realistic value (and I believe it is), then that means once the excess supply is gone and we have a balanced market and growing with new builts again, then you will pay for a 2000 sf home 240k plus lot plus yard development, so it will easily be 300k. Do we think this is a realistic target going forward?

[khuntrevor]

Landlord, I think higher rents will be the turnaround in value trends here in the Valley. Replacement costs will play a role, too. I just had to insure my 18,500 home for 58,000, and the other guys said 72,000. It is only 400 SF. What's amazing is I have great neighbors. We're certainly not soccer moms or anything like that, but we did watch the Preakness together, after wagering this morning.

[AZ bound]

Originally Posted by khuntrevor

120 per square foot+.

This is way too high

[Jkgourmet]

Potential landlord (the OP) - I can undestand your frustration.

I've never purchased a home with PMI so I can't comment based on any valid knowledge or experience. But look back at the post from Trishguard on this thread. If she is correct, you've got a very clear path to getting rid of the PMI.

I am pointing this out ONLY to make sure this potentially valuable information didn't get lost in the thread. Hope it helps. And if Trishguard is right and you successfully get rid of your PMI, thank her and come back to educate the rest of us.

[Rick Lee]

The only thing that matters to the lender wrt to PMI after the closing is loan to value, not loan to purchase price.

[trishguard]

Originally Posted by Rick Lee

The only thing that matters to the lender wrt to PMI after the closing is loan to value, not loan to purchase price.

Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

I suggest the op call the Federal Trade Commission (see link above) and their state's Consumer Protection department and see if they can assist him/her.

[Potential_Landlord]

Originally Posted by Rick Lee

The only thing that matters to the lender wrt to PMI after the closing is loan to value, not loan to purchase price.

Rick, that is my understanding as well, unfortunately. They will not cancel PMI until LTV drops below 80 as long as the original purchase price to loan balance is below 80% which is already the case.