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Hi Fools!

PMI is that time-of-the-month when you freak and growl and hiss and spit at anyone who dares get in your way... because you're forced to throw valuable money down the drain to no benefit of your own!

Here's the HUD (Dept. of Housing and Urban Development) explanation of the PMI Act (not to be mistaken...), aka the Homeowner's Protection Act of 1998.

You'll notice that, although the new Act makes PMI cancellable, it's still entirely up to the lender's discretion and there is no body to enforce your cancellability... all the more reason to finance WITHOUT PMI by either coughing up the cash, or using a combo loan scenario.

From the HUD Website
pmi act information

On July 29, 1999, the new Homeowner's Protection Act of 1998, also known as the PMI Act, regarding the cancellation of PMI takes effect. Private Mortgage Insurance (PMI) is required by lenders when a loan is originated and closed without a 20 percent down payment. This insurance protects the lender from default losses in the event a loan becomes delinquent. The PMI Act will enable homeowners with new loans originated after July 29, 1999 and who meet specified requirements to have their PMI cancelled. If your loan was issued before July 29, 1999, CONTACT YOUR MORTGAGE LENDER FOR FURTHER INFORMATION ON CANCELLATION OF PMI.

The law provides 2 situations in which borrower paid PMI may be cancelled - it can be automatic or by request. Lender-paid PMI is excluded from these mandates, but requires an up front disclosure to the borrower about lender-paid PMI.

The 2 cancellation situations are:

Automatic. In general, when the homeowner's equity position reaches 22 percent of the original value of the property, the mortgage servicer must automatically cancel the PMI. The borrower must be current in making payments for automatic cancellation to apply.
Different requirements exist for "high risk mortgage loans, as defined by government-sponsored entities (i.e. Fannie Mae and Freddie Mac). CONTACT YOUR MORTGAGE LENDER IF YOU FIT THIS CATEGORY.

By Request. Homeowners can request cancellation of the PMI when their equity position reaches 20 percent of the original value of the property, if they meet certain criteria. (see below) CONTACT YOUR MORTGAGE LENDER FOR ITS CRITERIA LIST.
PLEASE BE ADVISED: HUD's Department of Consumer and Regulatory Affairs and the RESPA Division has no enforcement authority pertaining to the new PMI Act. Inquiries should be presented to your lender using the Qualified Written Request format. Under Section 6 of RESPA, lenders must acknowledge and take corrective action toward resolving questions that you raise in your Qualified Written Request.

To complain about a lender who does not comply with the PMI Act, please contact the appropriate federal regulator.


Federal Deposit Insurance Corporation (FDIC)
Compliance and Consumer Affairs Division
550 17th Street., NW
Washington, DC 20429
Toll free: 1-800-934-3342 FDIC handles questions about deposit insurance coverage and complaints about FDIC-insured state banks which are not members of the Federal Reserve System.

Office of Thrift Supervision (OTS)
Division of Consumer and Civil Rights
1700 G Street, NW
Washington, DC 20552
Toll free: 1-800-842-6929 OTS handles complaints about
Federal savings and loans and
Federal savings banks.

National Credit Union Administration (NCUA)
1175 Duke Street
Alexandria, VA 22314-3428
(703) 518-6330 The NCUA Shared Insurance Fund provides Federal insurance for nearly 13,000 credit unions.

Farm Credit Administration (FCA)
Office of Congressional and Public Affairs
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090 FCA regulates banks, associations, and related entities that comprise the Farm Credit System, including the Federal Agricultural Mortgage Corporation (Farmer Mac)

Comptroller of the Currency (OCC)
Compliance Management
250 E. Street, SW
Mail Stop 309
Washington, DC 20219
Toll free: 1-800-613-6743 OCC handles complaints and
regulates National Banks. (Usually have "National" in name or "N.A." after their names.)

The Federal Reserve Board
Division of Consumer and Community Affairs
20th and C Streets, NW
Mail Stop 801
Washington, DC 20551
(202) 452-3693 Handles complaints and regulates
state-chartered banks and trusts.
Administers Truth-in-Lending, Equal Credit Opportunity Act, and Fair Credit Reporting Act.


Most lenders have a loan "seasoning requirement," as part of their criteria, stipulating that the value of the property within a loan less than 24 months old will be determined by the lesser of;
1) The previous sale amount (or earlier appraisal if it was a refi,) or
2) The new appraisal.

This "24 month" figure HAS been waived or ignored by aggressive lenders in regions of the country with extremely rapid appreciation... specifically (that I'm aware of) in Southern Cal, Northern Cal (Bay Area), NY, and NJ.

Hope that helps alleviate your time-of-the-month!

Dave Donhoff
Lic. Mortgage Broker
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