Posted by ToniK on 5/1/13 11:11am
Msg #468019

PMI

So last night at 930pm at a signing. BO asked about PMI on his FHA. He asked when can he terminate PMI as his LO told him its only for 5 yrs min or 80%LTV. Well there was no document in the package talking about PMI or termination. So I referred him to the HUD/VA loan application where it states his premium, upfront cost and terms. Well it said 360 months. BO was livid, I told him he should contact LO to clarify the actual terms of his PMI. But we called the hiring company just for his piece of mind and they said the same thing, talk to LO. Well as you know LO wasn't available.

So am I correct to assume that the PMI terms is listed on the HUD/VA loan application?

Reply by Luckydog on 5/1/13 11:14am
Msg #468023

Not really, the terms have changed and you should never answer those questions. After the closing, you always refer them to their LO or title. Most cases it is 5 years now, and then have to get a new appraisal and see what his LTV is. There are exceptions, and we are not qualified to determine that.

Reply by sueharke on 5/1/13 11:21am
Msg #468032

Source:"http://themortgagereports.com/12374/new-fha-mortgage-insurance-premiums-downpayment-minimums-for-spring-2013"


New FHA MIP Cancelation Policy Begins June 3, 2013

The Federal Housing Administration also made a second MIP-related announcement -- the agency is reversing its policy which allows FHA-backed homeowners to cancel mortgage insurance premiums once the outstanding principal balance of an FHA loan reaches 78 percent of the original balance.

Going forward, the FHA will disallow the removal of MIP throughout the life of a loan, if the loan's starting loan balance is higher than 90% of its appraised value. This is true for purchases and refinances.

For loans in which the loan-to-value begins at 90 percent or less, mortgage insurance premiums must be paid for 11 years. This change goes into effect June 3, 2013

Reply by ToniK on 5/1/13 11:24am
Msg #468037

Ok now that explains why one loan I had said 11 yrs and the BO said his LO told him only 5 yrs. well he was signing docs saying 11. I guess LOs do and saying anything to folks.

Reply by HisHughness on 5/1/13 2:43pm
Msg #468108

Thanks, Sue. I needed to know that. n/m

Reply by ToniK on 5/1/13 11:22am
Msg #468034

I'm not determining anything. I'm showing him what's stated on the loan application. And I do keep up on the latest news & regulations of the mortgage industry.

Reply by A S Johnson on 5/1/13 11:16am
Msg #468025

PMI is now for the life of the loan as a Federal measure to make Fannie Mae, Freddy Mae more stable.

Reply by Linda_H/FL on 5/1/13 11:20am
Msg #468030

That's what I thought, Sid...it's a new regulation

but it's now for the life of the loan.

Reply by ToniK on 5/1/13 11:21am
Msg #468031

Yes I read that. And I'm under the assumption that's the law now.

I'm used to seeing PMI docs in the package which explains the terms on its own sheet and who the insurance company is. But this guy was adamant about his LO telling him only 5 yrs. but when looking at the loan application it says 360 months and that's what I referred him to and to talk with his LO about the terms. At least he can reference a document.

Reply by snowflake/PA on 5/1/13 11:21am
Msg #468033

Had a purchase closing this week and the LO said PMI will be finished once purchasers have 20% equity in the home.

Reply by Luckydog on 5/1/13 11:27am
Msg #468042

Learn something new...I didn't know if was the life of the loan now as of June 3. Thanks for the info. Most realtors and LO are still on the old school a few years ago, and not keeping up with the changes, or even the 5 year policy with qualified LTV.
It looks like the only way to drop it will be to refi later on. Wake up call on how this industry changes. Next it will be discontinuing the tax write off for interest paid at end of the year.

Reply by desktopfull on 5/1/13 11:35am
Msg #468056

Had one not close last week due to the $109.38 PMI payment due for the life of the loan when the LO told borrower it would only be for five years. Not to mention the upfront fee of $2478.38. The total PMI money came to $41,855.18 going to the government to insure you will make your mortgage payment. And the government talks about Predatory Lender's? The total interest being paid on the loan was $72,800.69. Borrower said that the PMI wiped out any savings that they would receive for the refi and they were adding $6,000 in closing costs to the loan. Needless to say they told the lender and FHA to shove it!

Reply by ToniK on 5/1/13 11:27am
Msg #468040

You know..no one answered the actual question yet!!! n/m

Reply by Luckydog on 5/1/13 11:28am
Msg #468046

Re: You know..no one answered the actual question yet!!!

Your answer is for you NOT to determine this for him. You are not qualified or put the docs together. He needs to call his LO.

Reply by desktopfull on 5/1/13 11:42am
Msg #468060

They've removed the page from the packages. They need to

read the PMI contract which states how long the PMI is for the loan. All the ones I've done since April 1st. are for the length of the loan.

Reply by Linda_H/FL on 5/1/13 11:54am
Msg #468065

Won't that info be on the TIL, too? n/m

Reply by desktopfull on 5/1/13 11:56am
Msg #468070

It just lists the payment and no drop off date. n/m

Reply by ToniK on 5/1/13 11:56am
Msg #468068

Re: They've removed the page from the packages. They need to

But what I'm asking is, doesn't the HUD/VA loan app say the terms too. That's what I showed the guy.

Reply by desktopfull on 5/1/13 12:02pm
Msg #468073

It's a separate PMI agreement that they sign.

But it's never been next to the HUD/VA loan app papers that the sign.

Reply by ReneeK_MI on 5/1/13 12:02pm
Msg #468074

Answers

The horse's mouth: http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf

It is possible to still be closing certain Streamlines under the old 5-year annual premium - the change to 11 years OR life of the loan affects loans whose FHA Case numbers were pulled on/after April 1st. Since processing a loan takes a couple months (or more?), and the FHA Case numbers are pulled at the beginning, we could see these come to close for a while yet.

HOWEVER - I, too, have seen the PMI shown for the life of the loan on the FHA Addendum AND had the L/O assure the Borrower it would only be for 5 years (on a Streamline). That is definitely NOT a discrepancy I want to be in the middle of.

What I have not been able to find out is what takes precedence - the term as set on the FHA Addendum, or the actual FHA requirements.

Reply by sueharke on 5/1/13 12:27pm
Msg #468078

Re: Answers

The terms of the contract for each FHA loan may differ as the time spread between old and new rules go away/take effect. So, the best way to think about is that whatever the BO agrees to by signing the documents determines how long he or she will be expected to pay PMI.

Our favorite saying of "call your LO" is the best statement to handle these issues until the all the fog clears away.

Reply by Bear900/CA on 5/1/13 1:24pm
Msg #468090

I also put the PMI changes here: Msg #462633

We have all run into similar situations and the best way out is NOT to speculate but refer to the correct source. That's usually the LO unless the signing is in jeopardy and then the SS needs to be informed. If the LO's contact information is not handy the customer surely has it.

If it's a refi, you can talk them into signing and use the three day RTC to verify the accuracy of the docs with the appropriate party(s). I have saved many a signing with this and have never had one cancel.

I would not have tried to clarify or give an explanation for the amount of PMI any more then I would explain why the rate of the loan. It is what it is. I have had customers quote me the property tax percentage for the area looking for me to verify it. No can do. It's best to stick to the basic information on the note, HUD and TIL and what's easily identifiable.

Reply by ToniK on 5/1/13 2:58pm
Msg #468122

There was no RTC. Its a 2nd home. I get what you are saying but all I did was point to what was on the HUD/VA loan app. Im not deciphering nor try to explain. All I did tell him was according to the HUD/VA loan app your term states 360 months. Now what his LO told him is something he needs to clarify...all Im asking is pointing out the info on the HUD/VA Loan...you know what, Im just going to ask a few LO's on that loan app to get a simple yes/no of the MIP term.

Reply by sigtogo/OR on 5/1/13 8:29pm
Msg #468177

Toni-hoping you share what you learn n/m

Reply by MikeC/TX on 5/1/13 6:54pm
Msg #468157

Someone's confusing PMI and MPI.

PMI is for conventional mortgages, and can usually be terminated after the LTV reaches a certain percentage. MPI is for FHA loans and can't be avoided. Which was it?

Reply by ReneeK_MI on 5/2/13 9:39am
Msg #468242

I'll see you that and raise you one! lol

I did say PMI and I was wrong - Primary Mtg Ins is for conventional loans, and you are right.

On the flip side - FHA loans have Mtg Ins Premiums (MIP), not MPI.

I don't mind telling ya - you are such a wealth of information, that despite my many long years, I seriously doubted myself on the MIP/MPI just because YOU said it. =)