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#1436113 - 08/30/10 03:48 PM Annual PMI notice
Many Hats Offline
Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
I was asked today what our procedure was for ensuring that we are proving annual PMI notices to applicable loans.

(Lump in throat). We haven't been.

Can someone share what kind of notice is reauired exactly/sample, etc.?

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Lending Compliance
#1436116 - 08/30/10 04:03 PM Re: Annual PMI notice [Re: Many Hats]
Cowboys Fan Offline
Power Poster
Joined: Dec 2002
Posts: 4,551
SC
Written notice to borrowers that tell them they have rights regarding cancellation / termination of PMI and the address & phone number they can use to contact bank to see if it can be cancelled. You can include the notice on the annual escrow statement or provide a separate statement.
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#1437294 - 09/01/10 02:18 AM Re: Annual PMI notice [Re: Cowboys Fan]
jlroberts Offline
Diamond Poster
jlroberts
Joined: Sep 2009
Posts: 1,554
Ohio
We include our notice with the escrow analysis. I found this in the BOL tools. http://www.bankersonline.com/tools/tools_compliance.html

[BANK NAME]
Important Information About Your Private Mortgage Insurance

Your mortgage loan with [Bank Name] required private mortgage insurance (PMI) at the time of your loan origination. The PMI requirement on this loan may be canceled if you qualify under the following criteria:

1. The private mortgage insurance may be canceled when:
a. The Outstanding Principal Balance has been paid down to an amount no greater than:
1. 80% of the original value based on your actual payment history, or on amortization schedules for your mortgage; or,
2. 80% of the current appraised value (determined by a new appraisal obtained by the customer, or BPO ordered by the lender, at the customers expense) provided five years have elapsed since the origination date of the mortgage;
b. For the above to apply, the loan payment history shows no payments 30 days or more past due within the preceding twelve months; and no payment 60 days or more past due in any 12 month period in the past 24 months.

2. Requests for release from the PMI requirement and cancellation of PMI insurance must be made in writing to:

Bank name
Bank address

3. If you are unsure whether or not you qualify for termination of your PMI, you may call us at (phone number) and ask for loan servicing for a determination.


Last edited by jlroberts; 09/01/10 02:21 AM.
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#1437332 - 09/01/10 12:46 PM Re: Annual PMI notice [Re: jlroberts]
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 45,745
Bloomington, IN
Notice for loans originated prior to 7/29/99 (we still have 4 or 5 believe it or not)

Notice Concerning Private Mortgage Insurance


Your mortgage loan has Private Mortgage Insurance (PMI). PMI protects lenders and others against financial loss when borrowers default. Charges for the insurance are added to your loan payments. Under some circumstances, you may be able to cancel PMI, either with the consent of the lender or in accordance with state law. For information about PMI cancellation, see the enclosed guidelines on how to cancel private mortgage insurance. If you have any questions please contact us at the address or telephone number listed below.

Since the conditions for canceling mortgage insurance for your loan is not statutory under federal law, they may be changed at any time (unless otherwise required by state law).


Notice for loans originated on or after 7/29/99

Private Mortgage Insurance Disclosure

Private Mortgage Insurance: Your mortgage loan requires Private Mortgage Insurance (PMI). PMI protects lenders and others against financial loss when borrowers default. Charges for this insurance are added to your loan payments. Under certain circumstances, federal law gives you the right to cancel PMI or requires that PMI automatically terminate. Cancellation or termination of PMI does not affect any obligation you may have to maintain other types of insurance.

Borrower Requested Cancellation of PMI: You have the right to request that PMI be canceled on or after either of these dates: (1) the date the principal balance of your loan is first scheduled to reach 80% of the original value of the property or (2) the date the principal balance actually reaches 80% of the original value of the property. PMI will only be canceled on these dates if (1) you submit a written request for cancellation; (2) you have a good payment history; and (3) we receive, if requested and at your expense, evidence that the value of the property has not declined below its original value and certification that there are no subordinate liens on the property. A “good payment history” means no payments 60 or more days past due within two years and no payments 30 or more days past due within one year of the cancellation date. “Original value” means the lesser of the contract sales price of the property or the appraised value of the property at the time the loan was closed.

Automatic Termination of PMI: If you are current on loan payments, PMI will automatically terminate on the date the principal balance of loan is first scheduled to reach 78% of the original value of the property. If you are not current on your payments as of that date, PMI will automatically terminate when you thereafter become current on your payments. In any event, PMI will not be required on your mortgage loan beyond the date that is the midpoint of the amortization period for the loan if you are current on your payments on that date.

To determine if you can cancel the PMI on your loan contact us at the address or telephone number listed below.


Cancellation criteria:


GUIDELINES FOR CANCELLING PRIVATE MORTGAGE INSURANCE (PMI)

You were required to obtain private mortgage insurance as a condition of obtaining your loan; you may cancel the private mortgage insurance if you meet certain conditions. Your request to cancel private mortgage insurance must be submitted in writing. There are several conditions under which you may qualify to cancel the private mortgage insurance. These conditions may change from time to time without prior notice, as the conditions are set by the secondary mortgage market agencies whose policies and procedures we follow. Please find listed four different categories that are reviewed when determining if PMI can be canceled. Your mortgage loan must meet the criteria in all four categories.

Cancellation Point

There are three options available:

1. Request based on Original Value – Your current loan to value must be 80% or less based on the original purchase price or appraised value, whichever was lower.
2. Request based on Current Value – Your current loan to value must be:
• 80% or less if five years or more have elapsed since the origination date of the mortgage OR
• 75% or less if two or more years, but less than five years have elapsed since the origination date of the mortgage.
3. Substantial Improvements – If substantial improvements to the mortgaged premised have increased the market value, we will allow cancellation of the private mortgage insurance at any time when the loan to value is 80% or less. For this purpose, the market value of the mortgage premises must be calculated using the current market value estimate in an appraisal that is prepared after the relevant improvements have been completed. The appraiser must state in the appraisal the specific nature, extent and cost of improvements made and the effect of the improvements on the estimated market value. The improvements must conform to local zoning and building codes.

Evidence of Value

You must warrant that the value of the mortgage premises, at a minimum, supports the loan to value ratio required to cancel the private mortgage insurance. The Peoples State Bank must order a current appraisal regardless if your request is based on original value or current value. You will be required to pay for the new appraisal.

Occupancy

You must still occupy the mortgaged premises as your primary residence or your second home.

Payment History

1. Request Based on Original Value – No minimum seasoning of the mortgage is required which means you can request cancellation at any time.
2. Request Based on Current Value – Your payment history must, as it applies to the age of the mortgage, show:

• No payments 30 or more days past due in the preceding* 12 months, and
• No payments 60 or more days past due in the preceding* 24 months.

* The reference to “preceding” period in the payment history requirements set forth above means the specified time period that immediately preceded the date on which we receive your requests to cancel private mortgage insurance.

Questions about canceling PMI? Contact our Mortgage Loan Department at the above address or telephone number.
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The opinions expressed are mine and they are not to be taken as legal advice.

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