US BANK

[moneymaker]

Just inquired of US Bank as to getting rid of PMI. Canned response from them was if loan is less than 5 years old will need to have 75% LTV. Time to look for another lender I guess. I don’t think that was in the original paper work!

[livinincali]

[quote=moneymaker]Just inquired of US Bank as to getting rid of PMI. Canned response from them was if loan is less than 5 years old will need to have 75% equity. Time to look for another lender I guess. I don’t think that was in the original paper work![/quote]

75% equity or 75% Loan to value (LTV). 75% LTV makes some sense if you don’t refi with another bank. FHA is 78.0% LTV until the MIP goes away.

The days of taking out a second loan to avoid paying PMI on the primary are over as far as I know. You’ll probably have to refi at an 80% LTV based on the appraisal which may be slightly tough as some appraisers have been a little hesitant to increase values on this current upswing.

[bake]

What do you think your loan to value is? If you’ve had some appreciation and your LTV is less than 80% you may be able get rid of the pmi by simply refinancing.

[moneymaker]

Yes my bust I meant 75% loan to value. I suspect if prices keep going up I will be @ 80% in a few months, however it might take another year to be @ 75% or we could go into another dip before then. I suspect my gut feeling is I will refi into a 15 year just to get rid of the PMI, not with US bank however. Or if I feel real nasty I will push them to honor their contract with me.

[moneymaker]

I will put it out there that I think paying for mortgage insurance is the biggest rip off going. If the risk was put on the banks then they may not have been such extravagant lenders during the bubble days.
“Mortgage insurance began in the United States in the 1880s, and the first law on it was passed in New York in 1904. The industry grew in response to the 1920s real estate bubble and was “entirely bankrupted” after the Great Depression. The bankruptcy was related to the industry’s involvement in “mortgage pools”, an early practice similar to mortgage securitization. The federal government began insuring mortgages in 1934 through the Federal Housing Administration and Veteran’s Administration, but after the Great Depression no private mortgage insurance was authorized in the United States until 1956, when Wisconsin passed a law allowing the first post-Depression insurer, Mortgage Guaranty Insurance Corporation, to be chartered. This was followed by a California law in 1961 which would become the standard for other states’ mortgage insurance laws. Eventually the National Association of Insurance Commissioners created a model law.
In 1998 the Homeowners Protection Act of 1998 came into effect in 1999 as a federal law of the United States, which requires automatic termination of mortgage insurance in certain cases for homeowners when the loan-to-value on the home reaches 78%; prior to the law, homeowners had limited recourse to cancel and by one estimate, 250,000 homeowners were paying for unnecessary mortgage insurance. Similar state laws existed in eight states at the time of its passage; in 2000, a lawsuit by Eliot Spitzer resulted in refunds due to mortgage insurers lack of compliance with a 1984 New York state law which required insurers to stop charging homeowners after a certain point. These laws may continue to apply; for example, the New York law provides “broader protection”.
For Federal Housing Administration-insured loans, the cancellation requirements may be more difficult.”

[bearishgurl]

[quote=moneymaker]I will put it out there that I think paying for mortgage insurance is the biggest rip off going. If the risk was put on the banks then they may not have been such extravagant lenders during the bubble days.

-snip-[/quote]

MM, PMI has always been a FNMA requirement for mortgages of more than 80% LTV (not sure about Freddie Mac, since most of those mtgs pre-bubble were “in-house” Prime and Alt-A ARMs).

The only mortgage option today out of PMI is to put 20% down or get an FHA loan (w/now exorbitant MIP) or get a VA loan with 0 down and pay the funding fee and up-front points (if any) as sellers in this region typically no longer will.

Otherwise pay all cash. There is no free lunch.

It’s as it should be, IMHO.

[bearishgurl]

MM, correct me if I’m wrong, but I seem to remember somewhere that you bought your home in urban SD (92104?).

Sold comps in SD have been shooting up in the last six months or so. Certainly, your home is will now appraise for enough to obtain a 75% LTV mortgage, no? If it won’t, why don’t you work on the front landscape, including any cracked concrete and any deferred maintenance such as sanding and refinishing cedar/redwood built-ins and floors, etc. That’s what sells around there.

And if your garage is too small to park in and there is room to enlarge it, now is the time to do so. Even an antiquated garage with french doors only big enough for storage could be made into a 1.5 car …. big enough to park one vehicle in and have room for a MC or small workshop.

These things would help your house appraise THIS YEAR, so you could refi it w/o PMI, IMO.

[moneymaker]

My house is fine BG, what irks me is that the bank has absolutely no risk at this point on my place. Right now it would easily sell for 20% more than I currently owe on it, and I mean like tomorrow I could sell it for that, so if the bank has a 20% buffer tell me how they are risking anything. I did just install a Pergola on my back patio and I’m going to paint it along with 4 andirondack chairs to match the trim of the house.

[SD Realtor]

As much as the conditions are great now, saying that the bank took no risk on your loan is a false statement. 5 years ago that was not the case. 5 years from now it may not be the case. Like it or not you signed a note that had several stipulations to it and in exchange for that note, you were lent a couple hundred thousand dollars. If you do not like the terms of the note then you should not have borrowed the money. Removal of PMI is not hard and has much more to do with comps then the pergola and matching chairs. I don’t mean to be harsh, just being honest.

[moneymaker]

I’m not saying that the bank didn’t take risk, because they did, and I did as well. What I’m saying is they have no risk now. Well if things keep going as they are I guess it will only be 2 more months to get from 80% to 75%, I guess I could have wasted that $250 on something else equally stupid like buying chairs and painting them with a new $50 wagner paint sprayer, little tip (Behr paint goes on sale next week @ Home Depot, $5 off per gallon).

[SK in CV]

[quote=moneymaker]I’m not saying that the bank didn’t take risk, because they did, and I did as well. What I’m saying is they have no risk now. Well if things keep going as they are I guess it will only be 2 more months to get from 80% to 75%, I guess I could have wasted that $250 on something else equally stupid like buying chairs and painting them with a new $50 wagner paint sprayer, little tip (Behr paint goes on sale next week @ Home Depot, $5 off per gallon).[/quote]

Of course they have risk. You could lose your job tomorrow and stop making payments. If they have to foreclose on your loan they WILL lose money, even if they collect every penny of interest and principle. Interest rates could suddenly rise and the value of that loan they’re holding could go down (and because US Bank is a warehouse lender, more likely than not they’re not just servicing your loan, they DO still own your loan too). Inventories could rise and prices level out or even fall, reducing your equity and their protection. So as long as you still owe them money, they still have risk.

There’s always talk here of landlords being picky about their tenants. Should a landlord, with a tenant that has a good history of paying, refund their tenants deposit because of that good history? I doubt a single person on this board would suggest that a landlord ever release that kind of security. But you’re suggesting that the lender that agreed to loan you money, based in part on you paying for PMI as additional security, release that similar security. Given the volatility in home prices over the last 6 years, they’d be downright foolish to do so, absent a requirement in the loan document.

That said, US Bank is a warehouse lender. As such, they have greater flexibility in how they apply policy, and they are not written in stone. They’ll likely require you to pay for an appraisal, but if you think you have sufficient equity, formally request that they cancel the PMI. It was a different era, but I have had warehouse lenders make exceptions to their standard policies.

[SD Realtor]

If you believe present day risk has anything to do with future risk then this is a waste of time. Pay for the appraisal and get rid of your pmi. It is not terribly difficult.

[earlyretirement]

[quote=bearishgurl][quote=moneymaker]I will put it out there that I think paying for mortgage insurance is the biggest rip off going. If the risk was put on the banks then they may not have been such extravagant lenders during the bubble days.

-snip-[/quote]

MM, PMI has always been a FNMA requirement for mortgages of more than 80% LTV (not sure about Freddie Mac, since most of those mtgs pre-bubble were “in-house” Prime and Alt-A ARMs).

The only mortgage option today out of PMI is to put 20% down or get an FHA loan (w/now exorbitant MIP) or get a VA loan with 0 down and pay the funding fee and up-front points (if any) as sellers in this region typically no longer will.

Otherwise pay all cash. There is no free lunch.

It’s as it should be, IMHO.[/quote]

[quote=SD Realtor]As much as the conditions are great now, saying that the bank took no risk on your loan is a false statement. 5 years ago that was not the case. 5 years from now it may not be the case. Like it or not you signed a note that had several stipulations to it and in exchange for that note, you were lent a couple hundred thousand dollars. If you do not like the terms of the note then you should not have borrowed the money. Removal of PMI is not hard and has much more to do with comps then the pergola and matching chairs. I don’t mean to be harsh, just being honest.[/quote]

[quote=SD Realtor]If you believe present day risk has anything to do with future risk then this is a waste of time. Pay for the appraisal and get rid of your pmi. It is not terribly difficult.[/quote]

I totally agree with both BG and SD Realtor here. There is always risks involved for the bank. No free lunch as BG mentioned.

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