3 Ways Borrowers Can Get Rid of PMI Insurance

By
Education & Training with ApartmentToolKit.com

Rules for Dropping Mortgage Insurance

What you and your clients should know!

 

Yep, there’s a disclosure for that!  But what do the PMI termination rules really mean to the average person?

 CFPB Rules for Dropping Conventional Mortgage Insurance – Effective  August 2015

 Borrower-requested termination:

 

  1. Borrower must initiate request in writing to loan servicer
  2. Borrower must have an LTV ratio of no greater than 80%
  3. Borrower may make principal payments that advance the principal balance to 80% of original value
  4. Borrower must be current on loan and may not have any 30-day late payments in past 12 months or payments that were 60 or more days past due in the 12-month period beginning 24 months before the later of the cancellation date or the date the borrower requests cancellation
  5. Servicer can request evidence that the borrower’s equity is not subject to a subordinate lien
  6. The servicer can require the borrower to provide evidence that the value of the property has not declined below the original value
  7. Servicer may require the borrower to pay for an appraisal to determine that current value has not declined below original value

           

Automatic Termination:

 

  1. PMI must be automatically cancelled on the termination date.  Termination date is defined as the date on which the principal balance is first scheduled to reach a 78% LTV of the original value regardless of outstanding balance for that mortgage on that scheduled date
  2. Borrower may not be delinquent on termination date; if delinquent, PMI must be terminated on the first day of the month beginning after the date that the borrower becomes current
  3. When these conditions are met, PMI must be terminated even if property has declined below original value
  4. Servicers MAY NOT require an appraisal as a condition of automatic termination
  5. Borrower MAY NOT make principal reductions to expedite automatic termination; this approach must be done only on a borrower-requested termination

 

Final Termination:

 

  1. When PMI is not terminated under a borrower-requested termination or an automatic termination, the Homeowners’ Protection Act provides that PMI coverage cannot be imposed beyond the first day of the month following the date that is the midpoint of the amortization period of the loan, if the borrower is current on the loan on such date.

"The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you by MortgageCurrentcy.com.  Interpretations are not guaranteed but we attempt to make them easy to understand and help you sell more real estate.  Check with your local and state authorities to ensure that you meet all requirements and disclosures."

 

Copyright   © Reprinted with permission   MortgageCurrentcy.com

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
216,817
Denise Watkins
Tristar Realty, INC - Upper Marlboro, MD
Realtor Serving DC and MD

This is great information for homeowners.

Sep 29, 2015 04:36 AM #1
Rainmaker
803,167
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Karen - Thanks for sharing this information. It is important for any borrowers who have PMI to know how and when it can be canceled.

Sep 29, 2015 05:48 AM #2
Rainmaker
2,911,622
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Karen - Thanks for the very valuable tips about borrowers can get rid of PMI insurance.

Sep 29, 2015 06:54 AM #3
Rainmaker
107,107
Karen Deis
ApartmentToolKit.com - Minneapolis, MN
When In-house training is not enough!

Thanks for your comments--something to highlight and send and email to your past clients who closed conventional loans within the last few years. 

 

Sep 30, 2015 12:59 AM #4
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
107,107

Karen Deis

When In-house training is not enough!
Ask me a question
*
*
*
*
Spam prevention

Additional Information