| PMI and Federal Regulations! |
When you purchased your home in the recent past, you may have been required
to purchase PMI. If your home has appreciated sufficiently, as many have, an
accurate appraisal may help you obtain a significant reduction in your monthly
payment by eliminating the private mortgage insurance premium. Below is an
excerpt from a related Federal Trade Commission publication along with a link to
web pages containing more information.
to purchase PMI. If your home has appreciated sufficiently, as many have, an
accurate appraisal may help you obtain a significant reduction in your monthly
payment by eliminating the private mortgage insurance premium. Below is an
excerpt from a related Federal Trade Commission publication along with a link to
web pages containing more information.
Link to Federal Trade Commission Pages
If you put less than 20 percent down on a home mortgage, lenders
often require you to have Private Mortgage Insurance (PMI). PMI
protects the lender if you default on the loan. 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 original property value, if
your mortgage payments are current.
One exception is if your loan is "high-risk." 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. Ask your
lender or mortgage servicer (a company that collects your payments)
for more information about these requirements.
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.
On a $100,000 loan with 10 percent down ($10,000), PMI might cost you
$40 a month. If you can cancel the PMI, you can save $480 a year and
many thousands of dollars over the loan. Check your annual escrow
account statement or call your lender to find out exactly how much
PMI is costing you each year.
Additional provisions in the law:
New borrowers covered by the law must be told - at closing and once a
year - about PMI termination and cancellation.
Mortgage servicers must provide a telephone number for all their
mortgage borrowers to call for information about termination and
cancellation of PMI.
Even though the law's termination and cancellation rights do not
cover loans that were signed before July 29, 1999, or loans with
lender-paid PMI signed on any date, lenders or mortgage servicers
must tell borrowers about the termination or cancellation rights they
may otherwise have under those loans (such as rights established by
the contract or state law).
Next Steps
Some states may have laws that apply to early termination or
cancellation of PMI - even if you signed your mortgage before July
29, 1999. Call your state consumer protection agency for more
information about your state's rules. Fannie Mae and Freddie Mac,
which buy home mortgages from lenders, also may have guidelines
affecting termination or cancellation of PMI on home mortgages signed
before July 29, 1999. Check with your lender or mortgage servicer, or
call Fannie Mae or Freddie Mac, for more information.
Contact your lender or mortgage servicer to learn whether you're
paying PMI. If you are, ask how and when it can be terminated or
canceled.
For More Information:
The FTC works for the consumer to prevent fraudulent, deceptive and
unfair business practices in the marketplace and to provide
information to help consumers spot, stop and avoid them. To file a
complaint or to get free information on consumer issues, visit
www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY:
1-866-653-4261. The FTC enters Internet, telemarketing, identity
theft and other fraud-related complaints into Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal
law enforcement agencies in the U.S. and abroad.
If you put less than 20 percent down on a home mortgage, lenders
often require you to have Private Mortgage Insurance (PMI). PMI
protects the lender if you default on the loan. 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 original property value, if
your mortgage payments are current.
One exception is if your loan is "high-risk." 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. Ask your
lender or mortgage servicer (a company that collects your payments)
for more information about these requirements.
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.
On a $100,000 loan with 10 percent down ($10,000), PMI might cost you
$40 a month. If you can cancel the PMI, you can save $480 a year and
many thousands of dollars over the loan. Check your annual escrow
account statement or call your lender to find out exactly how much
PMI is costing you each year.
Additional provisions in the law:
New borrowers covered by the law must be told - at closing and once a
year - about PMI termination and cancellation.
Mortgage servicers must provide a telephone number for all their
mortgage borrowers to call for information about termination and
cancellation of PMI.
Even though the law's termination and cancellation rights do not
cover loans that were signed before July 29, 1999, or loans with
lender-paid PMI signed on any date, lenders or mortgage servicers
must tell borrowers about the termination or cancellation rights they
may otherwise have under those loans (such as rights established by
the contract or state law).
Next Steps
Some states may have laws that apply to early termination or
cancellation of PMI - even if you signed your mortgage before July
29, 1999. Call your state consumer protection agency for more
information about your state's rules. Fannie Mae and Freddie Mac,
which buy home mortgages from lenders, also may have guidelines
affecting termination or cancellation of PMI on home mortgages signed
before July 29, 1999. Check with your lender or mortgage servicer, or
call Fannie Mae or Freddie Mac, for more information.
Contact your lender or mortgage servicer to learn whether you're
paying PMI. If you are, ask how and when it can be terminated or
canceled.
For More Information:
The FTC works for the consumer to prevent fraudulent, deceptive and
unfair business practices in the marketplace and to provide
information to help consumers spot, stop and avoid them. To file a
complaint or to get free information on consumer issues, visit
www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY:
1-866-653-4261. The FTC enters Internet, telemarketing, identity
theft and other fraud-related complaints into Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal
law enforcement agencies in the U.S. and abroad.
| KW Services, Inc. A Registered Virginia Appraisal Company Since 1992 fax - (877)-682-1031 voice - (804) - 690-7761 email - waydrews@virginiaresidentialappraiser.com |
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