Countrywide Changing PMI Removal Rules?

[furnishedowner]

I have a house with a Fannie-Freddie loan sold to Countrywide. Now the mortgage is paid down below 80% of the original amount, so I called to get the PMI off.

They sent a form letter stating that their CURRENT rules were 70% of original loan must be paid off, plus there must be an appraisal done by their appraisal company. The cost of the appraisal was either $560 for urban area, or $610 for resort. We are neither.

I called the Countrywide PMI office in Texas to complain. They are now reviewing the file. CAN THEY CHANGE THE RULES LIKE THIS? What if they just decide to make the PMI PERMANENT UNTIL PAID OFF?! No way am I paying $600 for an appraisal!

Has anyone encountered this recently?
Furnishedowner

[BLL]

You sue in the SCC for the PMI premium each month. After a few months of default judgments, it will get removed.

[furnishedowner]

BLL,

Thanks, I knew you would have an answer. But what is the SCC?

Furnishedowner

[JakeRodgers]

Just a guess, SCC=small claims court?

[BLL]

Yes. Small Claims Court.

[furnishedowner]

I am still fighting Countrywide and getting nowhere. Am I the only one who is getting ripped off?

I have paid off the loan principal required to have PMI fall off, as per the loan docs that I signed when we bought the property. It's $46/month but they want me to keep paying until the TERM of the PMI runs out. That means I would be flushing an extra $3220 down the toilet in PMI premiums! Until the 10-year term runs out!

So, the FNMA/FHLMC docs are worthless, if the lender can then change the rules. This seems worthy of a class-action suit or something.

Countrywide just keeps sending form letters:

If the property is a one-family principal residence or a second home (owner-occupied) the LTV ratio must be 75% or less.

If the property is a 1-to-4-family investment property or a 2-to-4-family principal residence, the LTV must be 70% or less.

Now, the owner must also pay for an appraisal by an appraiser provided by Countrywide. The cost of the mandatory appraisal is  either $655 or $605.

THIS IS ALL OUTRAGEOUS! I bought the property with the understanding that PMI would be removed when the loan amount was below 80% LTV. I paid off extra principal so I could get PMI off. I am furious. How dare they change the rules. I have never paid late and just want what I was promised.

Does anyone care? Am I the only borrower who is getting screwed?

Furnishedowner

[justin0419]

Furnished,
We don't pay PMI, but your situation sounds awful.  On properties we've owned in the past w/ PMI, the lender has always said that you just have to pay it down to 80% and it will be taken off at our request.  Your stuff sounds fishy and it would be interesting to know if any other borrowers w/ that bank are going thru the same thing. 

[christopher w]

Furnished,

Do not waste your time with a CW appraisal. Landsafe is HANDS DOWN the worst national appraisal management company out there.  It will be a complete waste of your money.

[obiwan1250]

$605 to 655 for an appraisal?  Talk about highway robbery!  $350 - 400 is the going rate around my neck of the woods. 

At most, an appraisal is one day's work.  What a ripoff!

[furnishedowner]

I sent this problem in to the CNNMoney Helpline. Maybe thay can do something. Yes, it is outrageous. Reminds me of the credit card companies' business plan--now that you owe us some money, we will change the rules and fees so we get MORE money.

Furnishedowner
 

[gregandandrea]

Countrywide has been hard to deal with all the way around. I think it is because of the transition they are making due to the sell to boa. They have been impossible to get loan modifications through as well. 

[shubh]

I don’t see any valid reason for serving this type of notice as there are no such directions to the financing companies by the Govt. You should report the matter.

[furnishedowner]

shubh,

Who is it that I should report the matter to? I am still stymied on this.

I saw a segment on Howard, the money guy on CNN where a man in Florida had the same problem.  Howard told him to refinance. But to refinance a NON-OWNER occupied property just now, to get rid of PMI, seems expensive. I just want to get rid of PMI the way it was supposed to happen!

Could this be grounds for some attorney tackling a class-action consumer lawsuit?

Furnishedowner

[Equity]

I'm can't be much help but I am curious:
1) Do your loan papers specify the PMI criteria?
2) What would happen if you deducted the PMI amount from your monthly payment?

[BLL]

Why haven't you sued in small claims court? It will cost them more than the PMI to defend the suit. Most times they don't show up and you win by default.