When to cancel PMI

I have had my mortgage with GMAC for over 4yrs now. After the first year, I wanted to remove the PMI by getting the house reappraised, but they told me that my mortgage is with Fannie Mea and it requires two years.

I patiently paid my PMI for the first two years, but the housing market was declining. According to GMAC, I had to be 80% LTV with a new appraisal without the property declining. If it had decline in value then they cannot terminate the PMI. I would have to make extra payments until it is 80% of the current mark value before they are willing to terminate the PMI.

According to HUD and Federal Reserve Bank, Homeowrotection Act of 1998 was created to protect consumers. These publications can be found directly on their web links above. I continued to make payments until I was at below 78% LTV of my original loan. After many calls and escalations, the net result was that they do have to comply with HPA because they comply with Fannie M RESPA policies, whatever that means.

They are taking advantage of consumers who do not know any better of what laws are out there to protect them. Every year, it is required by law that a consumer notice be sent out to the borrowers every year. The otice Concerning Cancellation Or Termination Of Private Mortgage Insura describes what PMI is and the two ways of cancellation.

When I called to reference this letter, they say that they have no record of it. The letter was sent directly from GMAC with all their mailing address and hotline, 877-785-3599, to request further information.

When I asked about the automatic termination, they said that my account does not have such a thing. According to the HPA of 1998 and the notice letter, it states that automatic termination of PMI will occur once the principal balance of the loan reaches 78% of the original value of the property or the first day of the amortized midpoint of the loan.

What are my options in getting GMAC to comply with HPA of 1998 to remove my PMI based on my original loan value and not based on the current market value of the property?

Do Google for "PMI HUD" and "PMI frbsf" to find the Homeowner's Protection Act of 1998 from HUD and Federal Reserve Bank.

The law is clear. The mortgage lender must automatically terminate PMI at a 78% LTV ratio of the Original Value of the loan / Original Value of the initial appraisal. High-Risk loans are at 77% LTV. You only benefit from a new appraisal, if you want to cancel early. If you're in an unsure situation where there's a possibility you may default on the loan before the LTV ratio is reached, then it would be wise to keep the PMI. Otherwise, cancel the PMI. But don't waste your money for a new appraisal if you have any indication the mortgage lender is going to refuse your request to cancel PMI early. - Personally, I need my head examined for going in debt with a home loan. If I knew then what I know now, I would've never done it. But, I wanted a ready-to-live-in home fast at the time, and that's exactly what I got.

Have you made a complaint to the office of the Banking Commissioner or the Office of the Currency Controller? They do actually get involved and it may help.

I am told by my mortgage company that I have to prove that the original value has not dropped according to the law to cancel, no matter what my LTV is or turns out to be (I'm currently at 75%). Stupid, but that is their interpretation of the law. They base it all on the original amortization schedule, rather than actual loan amounts.

In general, you can drop PMI once equity reaches 20%. You have to keep track of your payments and request cancellation of PMI immediately as it's a fairly expensive insurance that does not benefit you but the lender. The only thing in it for you is helping you buy a house with as little as a 3-5% down payment.

Last year, I went through my own appraiser, and GMAC refused to remove PMI even though my house appraised about 20% more than I paid for it, plus I had paid 20% off. They told me you HAVE to go through their appraiser! Bull Sh*t - the searches I have done on the web show that their appraisers are about 10-15% lower than the rest of the licensed appraisers! Of course, they got you any way they can. I am anxiously awaiting my May statement - when they told me it will automatically come off. Let's see!

I sent a letter to BAC to cancel my pmi and it is below the 80% ltv ratio. They sent me an appraiser to have my home appraised. I wrote a letter back to them stating that the fannie mae policy does not and can not supercede a federal law passed by congress. I just dont get how a local policy can supercede federal law. The homeowners protection act of 1998 is cut and dry. I am going to go to my county to take BAC to court. I have caselaw, I meet the requirements and I dont need my property to be appraised because I meet the lvt ratio.

I would love to get rid of my PMI, but we will pay thousands in the end for absolutely nothing. I've been toying with the idea of just walking away from this place and letting Bank of Scamerica deal with it. Since the PMI benefits them, what happens if I walk and the place goes in foreclosure? Are they paid by the investors of the PMI and I'm done with it?

Hi crackerjack,

If your property is foreclosed and if you still have the pmi, then the pmi company will pay off the deficient balance as resulting from the sale of the property.

exactrly the same story about citibank. they require appraisal if you not reached 50% ltv and only god knows what happens when you'll reack it, for me it looks unethical to ask client use only bank appraiser. sounds like illigal practice and who should protect small guys like us? count on me also.
p.s. now working on refinance my current mortgage. will not tolereate any escrow account or pmi anymore!

[email address deleted as per forum rules. thanks.]

Sounds like trend in banking business. In disclouser papers they say ORIGINAL LTV. It means ON THE TIME OF CLOSING. And it has nothing to do with new appraisal and new equity on my property. Also they told - PMI could be reviewed on the time of origignal amorization schedule. Even I paid upfront thousand of dollar to kill principal.
True to say - It was enough to call bank and they send me all papers. But still I was required to get BAKN appraisal. It makes me sick 'cause property in Brooklyn and not somewhere in Montana and it never declines here.

I also am having trouble getting GMAC to cancel my pmi. I'm at 78% of the LTV (calculated off sales price, which is less than the original appraised value)....

Any advice?!

Welcome MikeyMike,

I will suggest you to contact a real estate attorney and take his opinion in order to deal with this matter.

We have reached 80% and are not high risk, never been late on payments and they still insist we need a bpo, why??? They said Fannie mae is the ultimate decider on dropping the pmi without a bpo. Really frustrated!!! Don't want to fork out more money for a bpo,,,.......