Legal Provisions about PMI?

[Clark Lee]

Hello, I have been paying PMI (Private Mortgage Insurance) for about 3 years now but now I realized that my payment only protects the lender. I would like to know about the legal provisions as regards this. Does any one have any idea? Thanks in advance!

[Fernando jsmith]

Well the PMI payments are supposed to be dropped from your mortgage when your LTV falls below 80% and as a homeowner you should be aware of Homeowners Protection Act of 1998. I would also suggest you to visit the site PMI Insurance |What is PMI | Private Mortgage Insurance which maintains a lot of information regarding PMI and I am sure you would be able to find the answers to all your queries regarding PMI and your protection out there! Happy Holidays!

[MSACCT]

When you borrower a loan amount(under one lien) that exceeds 80% of your appraised property value, you are required to pay PMI which does insure the lender, not the borrower. Its common across all lending/banking institutions. Its not illegal! From a lenders perspective, an 80% or higher loan to value ratio means that your house lacks the necessary collateral to ensure full payment of the loan balance in case of loan default. Usually, lenders try to quickly remove the foreclosed home off thier books through usage of auctions. Homes that are sold in auctions tend to be sold below market value, thus the lender doesn't usually receive the entire principle balance. That's where PMI comes into play. If you want to get rid of your PMI payment, I suggest speaking with your current lender about that option. They will re-appraise the house to determine if your new property value allows you to get rid of mortgage insurance. Your loan amount must be less than 80% of your house for them to remove PMI. Second option would be for you to refinance your existing lien into two loans. Keep your first lien equal to 80% and finance the remaining amount into a second mortgage. I worked in mortgage sales for 3 year and worked as a mortgage underwriter for 2 years.