home owners protection act (1998)

by Guest » Wed Dec 03, 2008 06:15 am
Guest

Hello..my question to you all would be-
does the home owners Protection act (1998) has any influence over my PMI? Does it really help lower my PMI cost?
brown_brooke

Total Comments: 16

Posted: Wed Dec 03, 2008 08:37 am Post Subject:

Hi,
This Act has a close significance for home mortgages. This act controls both automatic cancellation of PMI as well as cancellation from the borrower's end. Some of the home mortgages since 1999 are governed under this act (inclusive of refinances). Loans in connection with the lenders payments towards PMI and the VA loans are free from it.
ArindamSenIndies

Posted: Wed Dec 03, 2008 11:31 am Post Subject:

Hi..check if you're nearing a 22% home equity (upon the initial worth of your property). In that case PMI would be automatically canceled under this law. Also, remember that the mortgage payments have to be current and there should not be any high-risk concerning you.
Plasticmind

Posted: Wed Dec 03, 2008 11:34 am Post Subject:

That may be plastic but it's been my experience (four times) that you have to make the mortage holder aware of this...it was not 'automatic' for me ever.

Posted: Wed Dec 03, 2008 10:01 pm Post Subject:

Does it really help lower my PMI cost?


It doesn't lower the cost of your PMI.

Once you reach an 80% loan to value ratio your lender can no longer require you to carrier the PMI.
(77% for high risk borrowers)

See THIS LINKY.

But like Lori said, if you don't initiate this it will never happen and also you have to pay for a new appraisal, usually about $300.

Posted: Wed Dec 17, 2008 12:36 pm Post Subject:

..it was not 'automatic' for me ever.



Thanks for upgrading my knowledge..

Once you reach an 80% loan to value ratio your lender can no longer require you to carrier the PMI.


Do you suggest us to carry PMI under this situation? What could be the problems if we don't?

Posted: Wed Dec 17, 2008 12:53 pm Post Subject:

Do you suggest us to carry PMI under this situation? What could be the problems if we don't?

I'd suggest never carrying it, but you HAVE to it's not an option...it's insurance that if you default the martgage company get's their money, so it's no benefit to you because they still come after you...it is required in all mortages that are for over 80% of the value...

Posted: Mon Feb 15, 2010 09:01 pm Post Subject: pmi short sale

Why would I have to pay the PMI a large sum of money if the bank has agreed to a shortsale?

Posted: Mon Feb 15, 2010 11:28 pm Post Subject:

Why would I have to pay the PMI a large sum of money if the bank has agreed to a shortsale?

I don't know I give up...what did the bank and/or PMI carrier say was the reason? Were you behind on your payments? if so that would also make you behind on your PMI premiums...is it to catch it up so the policy is still enforce?

Posted: Fri Apr 15, 2011 04:22 pm Post Subject: PMI violators

The homeowners protection act says that once you only owe 80% of your home's APPRAISED value at THE TIME OF PURCHASE your can have it dropped and that it automatically drops and when you only owe 78% of the homes value (original value it was appraised for when you bought it) . I talked to an attorney but it has not been honored by my lender either and I have paid off my 22% of my loan and now greentree is saying I need a new appraisal-this is a scam and a lie on their part. I will never again finance through a motgage broker-only a credit union. the thing is my house appraised for over 13,000 what I bought it for at the time of purchase-I should've never even been charged a PMI in the first place. My lawyer agreed-I could've paid him a 2500 retainer and spent at least 6 yrs. in a civil case but the PMI collected would total only 3600.00 so I paid 20% down on principal and they're still denying me. It is is direct violation of my rights and we are being bullied by big business once again..........UNBELIEVABLE

Posted: Mon Apr 18, 2011 03:24 pm Post Subject:

My lawyer agreed-I could've paid him a 2500 retainer and spent at least 6 yrs. in a civil case



Well, that's just silly. The overwhelming majority of civil cases do not take 6 years to complete. It might take you 6 months to 1 year to get to trial, but only the most complex of all civil trials will take more than a few years from the time of filing. Even California, where the complaints 10-15 years ago used to be that it could take 5 years to get a trial date, has reformed the civil trial process, and most cases come before the court in a matter of a couple of months after filing, and most are expected to be fully adjudicated within 18 months of filing. But let's put all this aside.

PMI is probably the least understood of all "insurance" -- and it's a creation of the lending industry not the insurance industry. Most people don't realize that PMI is no protection for them at all. This is a lender's-only form of protection against default and foreclosure losses that they could easily accomplish by simply charging an extra 0.25% in interest on the loan -- and probably make more money by doing just that, since it would be a permanent addition to the loan.

If you have paid down at least 20% of your original mortgage balance (assuming no refinance), then your lender must respond to a borrowed-initiated request to terminate the PMI coverage -- it must do so on your written request. That does not require any form of appraisal to document, it's pure math -- original principal, $300,000, current principal, $240,000 or less . . . done deal.

The homeowners protection act says that once you only owe 80% of your home's APPRAISED value at THE TIME OF PURCHASE your can have it dropped and that it automatically drops and when you only owe 78% of the homes value (original value it was appraised for when you bought it)

and

my house appraised for over 13,000 what I bought it for at the time of purchase-I should've never even been charged a PMI in the first place.



This is, unfortunately, a common misconception and misstatement of the HPA. The Act does not state "Appraised Value", it states "Original Value" -- which is, by definition, the LESSER of the original appraised value or the original loan amount. A lender will obviously not loan more than the appraised amount (without cash to make up the difference), so the "original value" will almost always be based on the SMALLER loan amount, not the appraised value at the time of the loan.

Another common misconception: When my home's value is more than 20% greater than the loan balance, the PMI must be cancelled. NOT TRUE. There is NO provision in the HPA 1998 that forces the lender to cancel PMI sooner than (1) the date the mortgage was scheduled to reach 80% (or 78%) of the original principal according to the amortization schedule (2) the date the mortgage principal reaches 80% of original principal (earlier than the scheduled date when additional payments to principal are being made) or (3) the mid-point in the scheduled number of payments on the loan (180 payments in a 30-year loan).

The HPA permits a lender to consider an increase in a home's value, in combination with the declining principal balance, as the basis for cancelling the PMI, but it is not required to do so. Additionally, if a property has declined in value, the declining value can be considered against the "80% of original value" as a reason not to cancel the PMI, but not against 80% of the original loan principal.

If you are trying to escape PMI based on a combination of declining principal balance and increasing home equity due to appreciation in property value -- if allowed by the lender -- that can only be demonstrated by an appraisal paid for at the BORROWER'S EXPENSE, and using only an appraiser on the lender's list of approved appraisers.

Math is involved. EXAMPLE: Original loan principal $300,000, original appraised amount $330,000. Current loan principal $270,000. Current property value $330,000. Borrower thinks, "I've made it, 20% difference compared to original principal. But 80% LTV on $300,000 is $240,000 (and on $330,000, 80% LTV = $264,000). Does not qualify for cancellation of PMI before the amortization schedule reaches the 80% of $300,000 mark.

Also, the outstanding amount of second and third mortgages must be factored into the equation, and will prevent PMI from being cancelled. And borrowers who have had more than one payment late by 30-60 days within the 12 months prior to requested cancellation will not qualify for a cancellation of PMI, even if they have reached the 80% mark.

Only when a mortgage balance actually reaches 78% of original principal (77% for "high-risk borrowers") must the PMI be cancelled automatically. If the OP here has actually reached that point, and the lender has not cancelled the PMI, then the OP has a cause of action against the lender. So who cares how long it will take to get through the courts? The lender is in violation of the act, and the borrower will have to be indemnified -- that's a simple "SUMMARY JUDGMENT" on the basis of a loan statement and the amortization schedule submitted as evidence. No trial, because there is no defense. As Charlie Sheen would say, "WINNER!"

I have paid off my 22% of my loan

and

so I paid 20% down on principal and they're still denying me



Well, which one is it? If she put 20% down on the original mortgage, unless she was a "high-risk" borrower, she would never have been paying for PMI.

But if the OP thinks she has reached 78% on the basis of an increase in property value + a decrease in principal, she may not actually be there, and even so, the lender does not have to agree. The law is reasonably clear on this. For more information see the links below (both sources are the Federal Reserve):

http://www.frbsf.org/publications/consumer/pmi.html

www.federalreserve.gov/boarddocs/supmanual/cch/hpa.pdf

It is is direct violation of my rights



If your lawyer believed this, he would not have offered to take your case for $2500, he would have named you as the lead plaintiff in a federal class action lawsuit, and waited to collect millions of dollars from the judgment that surely would have followed.

Now what's "unbelievable"?

Finally,

I will never again finance through a motgage broker-only a credit union.



Guess what? Credit unions also require PMI -- if the loan is going to be packaged off to FNMA or GNMA, as it very well might be.

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