I am a first time homeowner. I recently paid down my loan so that I had 80% LTV. As advised by my mortgage company, I sent a written request to cancel PMI and an appraisal was done. According to the report, the current value is significantly higher than the original value. However, I received a denial letter stating that the value of the property had declined. I immediately called the mortgage company and informed them of this discrepancy. They claimed that, because it's a Fannie Mae loan, I don't meeting the seasoning requirements and that I actually need 75% LTV and significant improvements to the home in order to cancel PMI. Isn't this the requirement for cancellation based on the current value, not the requirement for cancellation based on the original value? Not to mention that this reason for denial wasn't even checked off on the denial letter. (This is a conventional, conforming loan.) The customer service reps and supervisor with whom I spoke supposedly put in multiple requests to the escrow department (they have no direct line or email- convenient) to have this resolved. They have not once called me back. They refuse to cancel my PMI or even refund me for the appraisal (which they insisted go through their company). Am I misunderstanding the laws? I've read the Fannie Mae guidelines, HPA guidelines, the state code, and the US code explaining the impact of the HPA on state laws. I just sent a qualified written request demanding that the issue be resolved. Am I taking the right steps? Please help!
Well, within the first 5 years I believe it is, your LTV based on an appraisal has to be 75%, not 80%. Did you get the appraisal number? You’d have to successfully challenge the appraisal if you think it is low.
I had through the years taken out loans, refi'd loans, gotten OO and NOO mortgages. Requirements change time to time, and it's been a while since I have PMI removed.
The mortgage I had PMI removed was a more complicated case than yours, but might illustrate a few things. I purchased a pre-foreclosure, market value $125K, for $70K rehabbed it for $10K, tried to flip it, fell through. So I got a mortgage for $75K, but was required to go for PMI. Why? Because of seasoning requirements, they can only consider the sales contract, cost of rehab, totaling over $85K, not the market value. I even got a purchase contract for $127K, appraisal exceeding $120K. So according to their rules, they are giving me a $75K mortgage on a $85K property. Originally, I was going to take on a $90K mortgage, but the mortgage company said no, I cannot give me a mortgage for more than I put in.
Back then, the mortgage has to be less than 75% LTV before PMI can be removed.
This was the same mortgage company that consistently paid my taxes late, even though they took my monthly escrows on time. I did not know that I was charged fines and late fees till once I asked for a detail summary of my escrow account, and found they paid late charges and fines out of my escrow account. But this is another big long story.
I forgot what the seasoning requirement was, but it was well over 2 years, nearly 3, before I could have the PMI removed considering market value. But from day 1, I was able to prove a market value with purchase contract, appraisals, but still, their seasoning requirements prevailed. I couldn't refied, which I eventually did, and the cost of refi wasn't worth it originally.
I paid down to 80% LTV of the original value. I'm not trying to use the appraised value. The purpose of the appraisal was just to show that the value of the property has not declined, which it has not.
Originally posted by @Jennifer Wood :I paid down to 80% LTV of the original value. I'm not trying to use the appraised value. The purpose of the appraisal was just to show that the value of the property has not declined, which it has not.
But as was pointed out, the about owing has to be 75% LTV, or below, and in addition a certain amount of seasoning. At 80%, you still missed it by 5% even though the value didn't decline.