Get Countrywide To Remove Your PMI With An 80% LTV

Is Countrywide telling you your Loan-to-Value (LTV) ratio needs to have reached 75%, not 80%, in order to get the private mortgage insurance (PMI) removed? Throw the book at them: tell them they’re in violation of the Homeowners Protection Act of 1998. The law clearly states that PMI is to be removed after 80%:

Cancellation date.–The term “cancellation date” means…the date on which the principal balance of the mortgage…is first scheduled to reach 80 percent of the original value of the property securing the loan.

One reader (different from the guy we posted about before) says he was having trouble getting Countrywide to remove the PMI. They twice told him in writing that he needed a LTV of 75%. Then on the phone with them he mentioned the Homeowner’s Protection Act and then all of a sudden they were magically able to remove the PMI.

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  1. chiieddy says:

    This was a few years ago (well before the current troubles in cash flow that Countrywide is having), but they removed my PMI when my tax assessment came to them indicating I had more than 20% equity in the property without me even asking.

  2. sickofthis says:

    @chiieddy: That’s pretty good. Also note that the law cited requires cancellation of PMI when the loan balance is less than 80 percent of the original purchase price. It would not appear to require that a lender cancel PMI based on a new appraisal. Before we refi’d a couple of weeks ago, we were dealing with Suntrust, whose stated policies on this were all over the board.

  3. Starfury says:

    My wife and I saved like crazy to buy our place in 1994; we put 20% down so we didn’t have to deal with PMI.

  4. friendlynerd says:

    I assume this would work on Citimortgage? All their docs say 75% but I always thought that was wonky what with the law saying 80%

  5. chiieddy says:

    @tmccartney: Of course that said, I’m planning on > 20% for my next house. :)

  6. opsomath says:

    I read the HOPA as well and I thought there was a loophole for “high risk” loans. If you’re not “high risk” though, they are absolutely required to remove it.

    The standard thing to do on the part of the mortgage company is to require an appraisal or a Broker’s Price Opinion to remove PMI. However, the HOPA doesn’t explicitly authorize this, just says that the lender has the right to ask for evidence that the property hasn’t declined in value.Evidence of an unspecified nature.

    Also, the law says that the evidence must be of a type established in advance, presumably at signing. I am currently trying to get out of paying for a BPO on this basis. Anyone have any experience with this?

  7. AdamGurno says:

    Holy cow, that’s my Countrywide/Enron image! I created it a while ago for a different story on a different site. (They were looking for a “Combine the Countrywide and Enron” logo – they went with a someone else’s. And it was terrible. :)

    Proof-ish link: [gurno.com]

    I absolutely approve of the Consumerist using the image – frankly I’m psyched that someone liked it!

  8. zentec says:

    Right now, there is a lawyer reading this who has just salivated all over his briefs at the prospect of vast class action riches against Countrywide, Citi, et al. And they deserve it, because if the law says 80% and they claim 75% until you badger them, I’d say the consumer has been defrauded.

    Let loose the hounds. Oh, and yes, I intentionally said “briefs” that way.

  9. BP2012 says:

    I was also told by countrywide that since I am in my 2nd year of paying my mortgage and none have been late. I am not close to 80% but somewhere around 92%, they said they will take off my PMI this October 2008 based on my 2nd year paying the loan.

    I figured the HOPA does not have to explicitly state the 80%, it could be based on the mortgage servicer’s discretion.

  10. hellinmyeyes says:

    Any particular reason their logo resembles the Enron logo? Hmm…

  11. joeblevins says:

    My note from Wells Fargo says it must hit 80% of the original loan value. I can’t just get an apprasial to say my home is worth more. I guess especially now that so many apprasials were inflated so bad.

  12. Virginia Consumer says:

    Might be time for a lawyer. I have been part of a class action in the past involving PMI violations. A good real estate lawyer could advise you. I used one recently to help with a difficult buyer. A lawyer might help you recover your overpayment as well.

  13. Dibbler says:

    Chase is doing something almost as bad. I need to send in my letter, and have for the last year, but they won’t tell me where to send it. I can find all kinds of federally mandated information on it but no information as to where to send the letter and what exactly to say. I hate Chase…

  14. Jaysyn was banned for: http://consumerist.com/5032912/the-subprime-meltdown-will-be-nothing-compared-to-the-prime-meltdown#c7042646 says:

    @Dibbler:

    Sent it to their corporate office in a certified letter. That way when they don’t take the PMI off you can sue them for fraud.

  15. Bladefist says:

    For those with good credit, PMI is no longer an issue. You can easily put down 5%, and if you have great credit, they have programs where its 0 PMI. The catch? You’re rate is a little higher. However if you compare your 2 packages, you quickly see the no-pmi option is cheaper.

  16. opsomath says:

    @Dibbler: Yes indeedy, mine’s with Chase too. Coincidentally, I also hate them. They told me to send my letter to cancel (and a chunk of cash they have no right to) to:

    Chase Home Finance LLC
    3415 Vision Drive
    Columbus, OH 43219
    Attn: PMI Research

    The corporate drone to whom I have been sending mail at this address is one Julie Wade.

    EVERYONE who has been trying to get rid of their PMI needs to go read the actual law, it’s the first hit on Google if you look it up. When I first started trying to get mine taken off, they sent me the Fannie Mae guidelines to the HOPA saying that it was the actual HOPA. Needless to say, the Fannie Mae document is considerably more generous to the company.

  17. RagingBoehner says:

    Why not just get an 80/10/10 and avoid PMI altogether?

  18. opsomath says:

    @RagingBoehner: because we already have a loan with PMI, and it would cost us way more in fees and trouble to refinance?

  19. Darren W. says:

    FYI, from what I’ve read, the law states that YOU can have PMI removed at 80% if you request it, and the lender is required to remove it automatically once you get down to 75%. Of course, if you call to have it removed at 80, and they refuse, that’s clearly a lawsuit waiting to happen.

  20. Landru says:

    Whose homes are appreciating so that they have greater than 20% equity? And do banks insist on PMI when the value of the house is less then the amount of the mortgage?

  21. shadow735 says:

    Factors to not forget about current home value, payment history, and outstanding late charges and fees.
    I do PMI audits at 80% PMI is not deleted automatically the borrower has to request it.
    Most of these requests result in needing a current appraisal for the current market value of the property (especially now that home prices are falling) if that requirement is met the borrowers have to be current and have no late payments in the last year, then there can be no outstanding late charges or fees ont he account.
    These are the mortgage companies guidelines for where I work but I am pretty sure they would be the same elsewhere.

  22. shadow735 says:

    @Darren W.: in the audits I do PMI is supposed to be auto deleted at 78% (unless there are unpaid late fees or borrower has been late on pmt in last year.

  23. joeblevins says:

    Again, is the law PMI is removed when equity reaches 80% of original valuation at time of origination? Or can you just get an apprasial to show new value of home and if equity below 80% of that, then you can drop PMI?

  24. Shadowman615 says:

    @Landru: Beleive it or not, some people also gain equity over time by paying on the mortgage. At least theoretically.

  25. evilinkblot says:

    Ok, I had 80%, Countrywide told me I had to have 75%, so what remedy do I have?

    Also, they used to tell me it “wasn’t up to them” in regard to removing PMI. It was always presented to me like some outside agency was in charge.

  26. BP2012 says:

    @evilinkblot:

    You can ask who service the PMI, most of the time they will tell you who it is. You can call them directly and inquire if they can lower the fees of the cost of PMI.

    You would be surprised on what you can do with the information you have on hand.

    A friend of mine had his at 147 a month for PMI, he called PMI service directly and asked if he could have his PMI lowered. Ironically, they said that his credit is great and lowered it.

    I tried to do the same with no success.

  27. synergy says:

    Good to know. Thanks.

  28. ARPRINCE says:

    @BP2012: So I guess your credit was shot…eh?

  29. shadow735 says:

    If your loan is at 80% and you need to call for PMI deletion. Most of the audits I have done a new appraisal needs to be done to determine the current value of the property. The value is then calculated against principle to determine the current LTV
    Also if you have had any late pmts in the last year (sometimes two years) you will not qualify for PMI deletion. If there are Outstanding late charges or other fees due on the loan this could also prevent PMi from being deleted.
    Some mort companies PMI is auto deleted at 78% and others at 75%, but the same qualification requirements are true a new appraisal needs to be done to determine the current value of the property. if you have had any late pmts in the last year (sometimes two years) you will not qualify for PMI deletion. If there are Outstanding late charges or other fees due on the loan this could also prevent PMI from being deleted

  30. friendlynerd says:

    @RagingBoehner:

    Because my time machine is broken and I already have a loan

  31. @Landru: Mine has. I’m not in a massively overheated market. We bought undermarket because the buyers originally put it on the market more than $20,000 over a reasonable selling price, so we bought it around $10,000 under in the end (for $116,500); we’ve been here about 3 years now, and two “comps” on my block have sold for $145,000 and $150,000ish (and my house is brick, not siding, and the windows and roof are newer, and it’s quite a bit bigger than one of the two that sold).

    A combination of, y’know, paying the mortgage and a reasonble, slow-and-steady increase in local home values, has put our equity well over 20% … but we’d had some problems with our lender and a dozen different stories on what we needed to do to get PMI deleted (and whether it was 20% of the original purchase value paid off, or 20% equity in the home period; they seemed unclear). We’ve just had our mortgage sold to a new lender, so I’m cautiously optimistic I’ll run into slightly less stupid this go-round. :)

  32. Radoman says:

    The law states pretty clearly: PMI must be removed automatically at 78% LTV, or at the homeowners request when LTV hits 80%. This is for standard (good payment history) 30 year fixed mortgages. I have heard that some states are even more strict about the percentages, requiring that PMI be removed even sooner.

    I was told that Countrywide just sent me the wrong letter, and that I should have received a letter stating 80% LTV was the magic number for PMI removal. (not 75% like in my PMI removal letter) I’ve never had a problem with Countrywide in the past, and in fact suggest them to friends. I want to believe this is just a mistake. I mean, no company wants to knowingly break the law. That’s a great way to go out of business.

    It seems to me as though the PMI law is just obscure enough that not many customer service reps are aware of all the rules, thus the original posters initial confusion. I also have been told conflicting versions of the rules by different CSRs.

    Countrywide: Please endeavor to make all PMI customer service reps aware of the Homeowners Protection Act in the future.

    I tried dealing with a TON of different loan agencies before I ended up with Countrywide. They were the ONLY company, from a list as long as your arm, that gave me a rate deserving of my credit score. Almost exactly what bankrate and myfico said to expect based on my credit score. This is the only issue I have ever had with this company, and it has worked out to my satisfaction. I will continue to do business with them.

    As in all matters of personal finance, be careful, and pay attention to the details.

  33. ColoradoShark says:

    @Bladefist: But is it cheaper in the long run? The higher interest rate to duck PMI stays forever (or until you refi) while the PMI should go away after awhile (if you nag enough).

    Which way do you wind up with more money in your pocket? This does pre-suppose you are staying in the house long enough to get past the PMI point.

  34. BP2012 says:

    @ARPRINCE:

    No, they said that I acquired the mortgage in 2006 and it wasnt enough to make a determination for the PMI change. I told them, “So it is not the credit score alone? But the duration of the mortgage?”

    They replied, “Yes, very much like how insurance works.”

    Thought it was interesting when she said that.

    My PMI servicer is Genworth Financial.

  35. Radoman says:

    Standard practice is 2 years of no missed payments, followed by an appraisal. If your loan-to-value ratio is 80% or better, they legally have to remove PMI at yopur request.

    Also: Isn’t the PMI company a 3rd party? It seems as though they would be the ones to profit from these somewhat obscure rules more than anyone else.

    I mean Countrywide would gain a bit of liquid assets from the misconception of the imaginary 75% PMI removal number, but they don’t make any money at all by having you pay off your loan quicker than scheduled. In fact they would lose money. Not sure what’s going on here….

  36. opsomath says:

    @Radoman: If I’m reading the law right, they don’t have the right to refuse to remove pmi because of late payments in the past, although they can refuse to remove it once you’re current on payments.

  37. shadow735 says:

    @Radoman: I have been in the mortgage industry for 7+ years mortgage companies do not make any money off of escrow. PMI is an escrow impound PMI is to protect the investors/mortgage company.

    They dont get any interest off the money, all money collected goes towqrd tax, ins and other escrowed items.
    PMI is one of those as is Life insurance in some states.

  38. shadow735 says:

    @opsomath: You are not correct I do PMI audits one of the requirements is the loan must have 24 months of on time pmts, no late payments this goes for 80% and 78% ltv.
    if a loan reaches 78% ltv PMI is auto deleted unless there have been late payments two years previous to the date that the loan reaches 78%LTV

  39. shadow735 says:

    If PMI isnt deleted when it is supposed to be I cite the loan and provide my back up documentation that shows my finding which goes on a compliance report and somewhere down the line(I dont know where) someone gets dinged or fined or spanked (I am not sure what happens but it isnt a good mark)

  40. opsomath says:

    @shadow735: oh yeah, I see the “good payment history” requirement now…

    the law says that they don’t have to cancel if you’ve been 30 days past due in the 12 months before you hit 80%, or 60 days past due in the 24 months before you hit 80%.

    the time is calculated from the moment you hit 80%, not from your most recent payment or anything.

    and once you’ve reached 78%, they’re not allowed to refuse once you’re current in payments. Section 3(b)-1.

  41. Aphex242 says:

    @Radoman: Yeah I can say I used to work in Customer Service for CW and the PMI topic came up fairly frequently. I heard quite a few really bogus things being said to consumers at times, but I’m *positive* it was all based on ignorance of the rep. The PMI rules are fantastically complicated, particularly when you start looking at different loans and different investors.

    Ultimately we were trained to literally not address PMI issues directly, we submitted a request to the PMI audit group to evaluate the situation and send either a letter saying “Yep PMI’s removed and here’s why” or “Nope PMI’s not removed, but here’s what you can do if you want to get it removed.”

    I always hated not being able to give more specific information directly but honestly it’s really that complicated.

  42. TechnoDestructo says:

    @hellinmyeyes:

    Because that isn’t their logo, and it was intentionally made to look like the Enron logo.

  43. RTFMmate says:

    So what determines the value? The original loan value?

    I am just curious if I need to get an appraisal just to have PMI removed. I am hesistant to drop $300+ on an appraisal because from my calculations my principal remaining to original loan value is at a 21.9 pecent. So a monthly payment plus that $300 for extra principal would put me above 22%.

    Then I should be able to show the basics to however and get rid of the cost.

  44. iEddie says:

    Why can’t I stop laughing at this logo?

  45. chihpih says:

    I have an exotic mortgage thru Countrywide that I acquired in 10/2003. I got a 7 year ARM @ 5.25% which has been saving me money during my years since the acquisition.

    I had 15% down when I purchased my apartment due to higher then expected closing costs ($13k). After a about a year or so with prepayments I was approaching 80% LTV I asked Countrywide about removing it and they sent me a letter saying that I would need it to get appraised. I didnt want to get my apartment reappraised since at that time in 2004-2005 I was still renovating my apartment and would want an appraisal after renovations. After a few months I noticed that my PMI payment of ~$50/month has been removed. Maybe its as someone mentioned that my LTV reached 78% and it was automatically deleted.

  46. hondaspeder says:

    I received the same 75% LTV letter from Countrywide in regards to removing my PMI.

    My question is what is the LTV ratio need to be at if your not going off of the original sales price? Is it then 75% or is it still 80%?

    or if that didn’t make sense,

    If I am not using the original sales price of my home in calculating my LTV what by law is the percent needed? 75% or 80%? or is this something that country wide gets to decide, if so where is this generally stated?

  47. dnvrkid says:

    Unfortunately the HOPA Law left this loophole in the act for lenders that states – Value in the loan-to-value ratio is “original value.” The Act defines original value as the lesser of the property’s sale price or its appraised value when the mortgage was created. This means that PMI is not cancelled or terminated solely based on the property’s appreciation.

    It is at the lenders discretion if they want to use an appreciated value to remove PMI. If your lender chooses not to, your only recourse may be to refinance and use the appreciated value.

  48. CaesarPashnani says:

    Hello,

    I recently came across your great website, and was sitting here reading
    through your past posts. I was particularly interested in the posts regarding
    PMI cancellation/HPA/LTV requirements.

    I work with PMI cancellation at a major mortgage company. PMI cancellation
    criteria can be difficult to understand. But the answer is right in your
    quotation from the Homeowners Protection Act:

    Cancellation date.—The term “cancellation date” means…the date on which
    the principal balance of the mortgage…is first scheduled to reach 80
    percent of the original value of the property securing the loan.

    The key word in this quote is SCHEDULED. The auto-termination date of PMI
    is determined at loan origination and is based on a natural amortization
    schedule. Paying additional principal will not accelerate the
    auto-termination date.

    The HPA also reads that the borrower has the option to request PMI
    cancellation at 80% LTV. That does not mean it will be automatically
    cancelled, but early PMI cancellation is definitely possible. The big
    investors (Fannie Mae and Freddie Mac) will let you cancel with a 75%
    current LTV after two years of pay history. That will involve getting a
    current appraisal or BPO. Cancelling at original value usually requires a
    80% LTV, but you will still need a current appraisal to prove value. After
    5 years, you can cancel with a 80% LTV based on original or current value.
    Cancelling prior to two years of pay history with an original LTV greater
    than 80%……good luck. You have to provide proof of major home
    improvements since loan origination, meet stricter LTV requirements, and the
    increase in value must be due to the home improvements. The guidelines are
    usually vague and confusing.

    Note that the HPA only protects single family, owner occupied properties
    that closed after 7/29/99. FHA loans are also not covered. Cancelling PMI
    for these loans (FHA MIP) has even stricter guidelines than regular PMI
    cancellation.

    Mortgage companies do not create the guidelines for PMI cancellation. The
    guidelines come from the investors (Fannie, Freddie, private investors,
    etc). The investors (not the mortgage companies) are reaping the benefits
    from PMI – it protects them if the borrower goes into default. Which we all
    know is happening more and more these days….but that’s an entirely
    different animal. And the mortgage companies are not getting the money
    borrowers pay for PMI – they pay the premiums to PMI carriers – insurance
    companies for mortgages. The bigs ones are Genworth, PMI Group, RMIC, MGIC,
    Radian, and Triad (now defunct).

    Hope this helps. Let me know if you have any questions.

  49. Anonymous says:

    All of the “Homeowners Protection Act of 1998″ comments are great, but no one mentions how to enforce it. Countrywide simply states they are not subject to this law because they set their own rules. The 65/75% LTV still holds, as far as CW is concerned, plus you also have to send them a check for an appraisal (which has nothing to do with ORIGINAL LOAN VALUE).

    Without the ability to hire and pay for a lawyer, what good is a Federal law like this when it isn’t enforced?

    Are there any attorneys reading this who might be interested in a class action lawsuit?