Will the bank call this loan due when dropping the PMI?

[Jim D.]

Asking for a friend (really). 

A friend of mine purchased an 4-plex about a year ago with a 5% down owner-occupied conventional loan (HomePossible). He purchase the property in his personal name, but after the purchase he created an LLC and put the property in there. He has done a lot of rehabbing, and between that and some new comps on the same street, it looks like he could pretty easily appraise at 80% LTV. He wants to have the bank re-appraise the value to try and drop the PMI.

Question: when the lender re-visits his file, how likely is it that they will notice/care that the title is now held by the LLC? I hear so much talk about the potential for loans getting called due when they're transferred to LLC's, but have never actually heard of it happening. 

Thanks in advance for your thoughts.

[Russell Brazil]

Id say the issue here is a little more shady than your typical transfer of a property into an LLC. He purchased it as an owner occupant....but moved it into the LLC soon after the purchase.  That to me looks like evidence of mortgage fraud.