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#510419 - 03/08/06 11:19 PM Refund PMI?
BeanCounter Offline
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Joined: Feb 2006
Posts: 14
What is required as far as refunding to the borrower PMI paid beyond the 78% point of automatic termination? Ex: A borrower passes the 78% LTV a year ago....is it required to refund PMI paid that year?

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Lending Compliance
#510420 - 03/09/06 02:59 AM Re: Refund PMI?
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I'm not sure, but we need more info. before we can answer your question:

When was the loan closed. HOPA applies to loans made on/after 7/29/99.

Is the loan current?

Is it a "high risk account"?

Refer to the Homeowners Protection Act 1998 (Public Law 105-216).
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David Dickinson
http://www.bankerscompliance.com

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#510421 - 03/09/06 02:11 PM Re: Refund PMI?
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,849
Bloomington, IN
If your loan meets the closed after 7/29/99 affective date, then you need to review 4902(e)&(f). Based on the limited information I would say you will have to refund all unearned premiums collected after the termination date. But a lot will depend on your answers to David's questions.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#510422 - 03/09/06 03:11 PM Re: Refund PMI?
BeanCounter Offline
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Joined: Feb 2006
Posts: 14
Thank you for the response. Yes the loans were closed after 7/29/99, are current, and are not considered high risk. I have reviewed HOPA and I guess my big question is.....is the termination date the date that the loan reaches 78% LTV or the date the bank stops collecting PMI?

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#510423 - 03/09/06 05:43 PM Re: Refund PMI?
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,849
Bloomington, IN
The automatic termination date is the date the loan balance reached 78% based on the original value and amortization schedule. See 4901(18).
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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