Posted by Bear900/CA on 5/3/13 5:05am
Msg #468517

Toni - Checking back on your FHA MIP expiration question

RE: Msg #468019

Hi Toni,

Regarding your question, “So am I correct to assume that the PMI term is listed on the HUD/VA loan application?”

I previously gave you an answer as a fellow notary to help you and others steer away from answering the customer directly on this. I know you are aware of that. I will tell you why in a bit.

It doesn’t appear you got an answer yet or at least haven’t posted one.

I would therefore like to answer your question as a mortgage broker and for the benefit of all.

The answer is typically “yes”, but in this case “no”, but how would one know that?

The reason(s) I feel it’s not good to get into explaining this is because:

1. The LO was correct in telling the BO there is a minimum of 5 years (based on the older FHA terms), but he/she was incorrect in stating “or 80%. That’s not something we want to comment on. The correct amount is (was) 78%. So there are two benchmarks: a minimum of 5 years, AND 78% of the original loan amount.

That information alone is enough to get mixed up on and is not something we should get into.

So this is informational only, with a caveat:

1. Anyone can Google and discover that FHA MIP automatically expires at 78% and minimum of 5 years regardless of what the HUD/VA addendum says. That’s typically around 125 to 135 months. More like 11 years.

http://www.ehow.com/about_7387032_calculate-fha-monthly-mortgage-insurance.html

That will soon change though.

2. So why did that HUD/VA addendum show 360 months? The answer is hidden in the data input into the TIL section of the Loan Origination Software (LOS). How is it possible to explain that?

We can’t, since we (notaries) are not privy to it and we don't see it on the printed TIL.

Data input into the TIL within the LOS drives the numbers into the HUD/VA addendum. It allows the LO or processor to enter a cancellation point of 78% for FHA. If it isn’t entered, then the Addendum auto-fills to 360 months.

It’s really that simple. Yet, I still had to go into my LOS and play with it to see the cause. I have always entered 78%, but it was easy to change and get the wrong number of months.

That calculation is based on Calyx Point LOS, the most popular used software. A different LOS may have a different driving mechanism to calculate the months or to default to 360. So it’s not good to delve into this, especially since a lot of LO’s don’t process their loans and may not be aware of why that happened, though they should figure it out.

It would be fun to hear what this particular LO said to the customer since they only got it half right to start with.

Best!

Reply by ToniK on 5/3/13 6:03am
Msg #468522

Thanks for that. No I never got an answer. I the LOs I asked didn't give me an answer. They just blankly stated at me. Lol

But I'm gonna assume the BO got his answer. As I stated before, we did refer him to the LO.

That information you posted is good to know since I'll be pursuing my license in loan origination soon. Thanks so much!

Reply by Cherylann on 5/3/13 7:20am
Msg #468526

Bear900, question for ya: stepson is trying to close before the 6/3/13 change. Property values in our area are starting to rise again slowly. If he's able to pound down the LTV to around 75% or less in less than the 5 yr minimum, his best bet would be to refi asap, correct? Get out from under the MIP altogether. This is his first home purchase (at 40 yrs old), so no real track record on his credit aside from a car loan.

Reply by Bear900/CA on 5/3/13 10:42am
Msg #468550

Hi Cherylann,

I will try to give answer in PM. Otherwise, this is a Notary board.

General Disclaimer: My comments, public or private, are my own opinions and you should consult your own broker, banker or financial adviser. I do not solicit loans from this board, publicly or privately, or offer loan advice. No two loan scenarios are alike.

Side effects may include but are not limited to: Dry mouth, heartburn, irrational or moody behavior, thoughts of suicide. If these conditions last for more then 4 hours seek medical attention immediately!

Reply by Cherylann on 5/4/13 7:44am
Msg #468705

Bear, just to clarify ... I am a notary, have been a signing agent for years. Since your background sounds more extensive than mine, was looking for your opinion was all.