I need some help with understanding PMI.


Our annual PMI disclosure states:

Automatic termination of PMI-
If you are current on your loan payments, PMI will automatically terminate on the date the principal balance of your loan is first scheduled to reach 78% of the original value of the property. If you are not current on your loan 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.

My questions-
1) Is the "first scheduled to reach 78%" based on the actual payments, including principal reduction, or is it always the date we'd disclosed on the original ammortization schedule?

2) Explain what it means by "midpoint of the amortization period".

3) Would anyone have a sample termination letter they'd be willing to share?

Sorry.....ignorant about PMI. I suspect our termination letter is produced by our mortgage software so would not be able to share it.

The initial disclosure of PMI Termination is based on the Amortization schedule. Your software that prepares your TIL will also disclose the payment where PMI is Terminated (or should). If for whatever reason PMI is being collected, as example at the end of 15 year on a 30 year loan, it is required to be terminated.
You Loan Operating System should provide the required letter.

IMHO

I found out from our mortgage insurance company that when we notify them of the termination date, they will refund the borrower directly for any unearned premiums paid.

We are still notifying our customer that PMI is no longer required and has been terminated and they're payment amount has changed. Our loan operating system does not provide a letter so we're creating one ourselves and hoping it flies with examiners

I've been using the following letter since the inception of HOPA.

Borrower’s Name
Co-Borrower’s Name
Street Address
City, State, Zip


Date:

Loan Number:

Property Address: Street Address
City, State, Zip

Notice of Termination of Private Mortgage Insurance


Please note that private mortgage insurance (PMI) is no longer required for your mortgage loan. Accordingly, this insurance has terminated and no further premiums, payments or other fees for PMI are due. PMI is not the same as property/casualty insurance – such as homeowner’s or flood insurance – which protect you against damage to your property. Termination of PMI does not affect any obligations you may have to maintain other types of insurance.

If you have any questions please contact us at the address or telephone number listed below.

Just to be clear, we are basing automatic termination at 78% LTV strictly by the amortization schedule regardless of early principal payments. With the help of Dan, we drafted our own letter and will know what to do next time PMI is to be automatically terminated.

Thanks BOL friends!

In your disclosure you cannot anticipate what borrower will do, so you can only base it on what you know now.