Countrywide Changing PMI Removal Rules?

[Dave T]

The Homeowners Protection Act of 1998 - which became effective in 1999 - establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI.

For home mortgages signed on or after July 29, 1999, your PMI must - with certain exceptions - be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current. Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the appreciated property value, if your mortgage payments are current.  If the basis of your request for PMI removal is that the loan is now less than 78% of the property's original purchase price AND if the loan has at least 24 months seasoning, then the PMI should be removed automatically under the provisions of the Homeowners Protection Act of 1998. 

One exception to automatic removal is if your loan is "high-risk" (sub-prime).  Another is if you have not been current on your payments within the year prior to the time for termination or cancellation.  A third is if you have other liens on your property. For these loans, your PMI may continue.

If you signed your mortgage before July 29, 1999, you can ask to have the PMI cancelled once you exceed 20 percent equity in your home. But federal law does not require your lender or mortgage servicer to cancel the insurance.

You said your loan was sold to Fannie or Freddie.  I suspect that CW is your loan servicer, but Fannie Mae or Freddie Mac holds your note. Fannie Mae and Freddie Mac also have guidelines affecting termination or cancellation of PMI on home mortgages signed before July 29, 1999.  If your mortgage was originated before July 1999, I suspect the rules you are being cited are Fannie/Freddie rules and not CW rules.

If your loan is at least 24 months old, you have had no late pays, and if your equity is at least 22% of the original property value, then just ask CW to send you their standard form to request PMI cancellation.  Fill out the form and send it in.  If the note holder requires a current appraisal to ensure that the property value has not declined since the loan was originated, it will be at your expense.  In most cases, the appraiser will be a local appraiser and the appraisal fee will be consistent with the prevailing rate for your area.

Since CountryWide is owned by Bank of America, maybe a local BoA loan representitive will be able to assist you.

[furnishedowner]

Very helpful responses...

BLL, I haven't filed in Small Claims Court here because I have had 2 bad experiences there. Both judges here seemed vindictive and clueless, and really couldn't have cared less about both cases. My gut feeling is that they would say," This doesn't belong in Smalls Claims, take it up with your lender. Next!"

Equity, The loan papers specified the exact amount that would have to be paid off in monthly payments over 10 years. But I paid off that amount in 4 years. If I didn't pay the full loan amount, I would start getting late payment notices, etc. I don't think they would do any thing other than dun me and damage my credit.

Dave T, Does the Homeowners' Protection Act cover the single family rental home, or just owner-occupied? We signed the mortgage in Dec. 2004 and closed in Jan. 2005. All payments are current and were timely, with the extra principal being paid as well. We now have 22% equity based on the original property value. There are no other liens. It was a full-documentation loan.

I have requested now several times, in writing and by telephone, that PMI be removed. They continue to send me a demand for an additional  $6200+ to get the loan to 70% LTV plus they demand that I order an appraisal for $655 or so from their Landsafe Appraisal outfit.

I am next going to appeal to Bank of America and quote the Homeowner's Protection Act. Thank you for your comprehensive advice.

Furnishedowner

[fightingPMI]

As Dave mentioned, they can't change the rules because the Homeowner's Protection Act of 1998 sets the rules.  I am going through the same PMI fight with Countrywide/now Bank of America.  I quoted the HPA to them this morning and I was told they don't have to delete the PMI when you pay to 22% equity, they have to delete it when your original amortization schedule says you would hit 22% if you only paid your regular payments.  I didn't do that, I paid extra principal just to get to 22%.  The way I understand the HPA, what they said is not true.  So this is what I did next.... the Comptroller of the Currency is the regulator of national banks like BofA, and you can file a complaint here:  http://www.helpwithmybank.gov/.  There are also some FAQs, etc. 

To stir the pot further, my understanding is that Countrwide's PMI was paid to an insurance subsidiary of Countrwide called Balboa.  So they are insuring themselves and profiting from the PMI premiums we pay.  At least that's how it appears based on what I know of how the company is structured. 

[furnishedowner]

fightingPMI,

Nice to hear from you about where to file a complaint. I knew I couldn't be the only one who was trying to slay that dragon.

I hope to tackle it next week. Damn, I'm mad.

Furnishedowner

[Amish56]

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.

[Amish56]

Landsafe is HANDS DOWN the worst national appraisal management company out there.  It will be a complete waste of your money.

[furnishedowner]

Amish,
Yes, I don't want to pay for an appraisal at all. When I calculate the amount to be paid into PMI over 10 years I am angry that I didn't just borrow that additional 10% in some other fashion, like a fixed rate credit card, when I bought the house.

The house was only $68,800. An additional 10% downpayment would have been $6,880. Instead they want me to pay 120 payments of $46.44. Which is $5,573 plus $665 appraisal!

So I will be paying $6238 for the privilege of NOT having come up with $6880! That $6238 for Private Mortgage Insurance (PMI) to protect the lender against my default is just MONEY FLUSHED DOWN THE TOILET!

I am going to keep hammering to get this changed. If I can't, then it is a heck of a good lesson for me. Those good lessons cost. I am furious that I am being ripped off. Me and lots of other homeowners.

Furnishedowner

[Abraham679]

small claims court?

[furnishedowner]

Maybe. I haven't had good luck with the judges here.

Furnishedowner

[javo31]

Good luck with country wide I have them also they are the worth in the business. Now Bank of America is taking over all of their note's maybe you will have a better chance now.