If you have 20% equity in your home can mortgage lenders keep PMI insurance on loans because of late payments?
Written By: aaren on September 16, 2009
3 Comments
Related Posts
Tags: fixed rate private student loan consolidation, home equity loan lowest rate
Home Owner’s Protection Act
http://www.frbsf.org/publications/consumer/pmi.html#cancel
Late payments have nothing to do with it. If you have **22%** equity, and you can prove it with an appraisal, you can inform your lender that the period for PMI has finished and they should remove it immediately. They must comply, regardless of your payment status.
Most contracts have it set that if you are trying to end the PMI payments early that you must have a history of excellent payments. What I mean by "ending PMI early" is that you are trying to get a new appraisal done and use the equity of increased value in your home to end the PMI.
They usually define what excellent payments are considered. Generally though the standard is no payment more than 30 days past due in the last year and/or no payment more than 60 days past due in the last 2 years.
The previous answer does have a part of it right, if you are not trying to end the PMI early, but you have really paid down the debt to 78% of the original buy price then the lender must cancel PMI. It does not matter if you were late or not because this is federal law. The stipulation in the law here is that they are talking about original buy price, not current value today.
So if you bought a house for $200,000 you must pay down the debt to $156,000 to get PMI canceled automatically by the bank.
If your house has increased in value to $250,000 and you have been on time with payments (as listed in the mortgage papers you signed) then you can question for a reappraisal using one of the banks approved appraisers to get the PMI removed. If you have been late with payments then you must pay on time for the amount of time listed in the contract before you can request the PMI be removed.
Excellent Luck!