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Collecting PMI w/o PMI Insurance Company

If the bank charges PMI and doesn't have a PMI insurance company that it has to pay can the bank truly collect the PMI? For example, if the bank had loans that didn't sell on the secondary market, and the insurance gets cancelled, can the bank still collect for the PMI?

by Randy Carey:

That would totally be a UDAAP waiting to happen.


by Dan Persfull:

Not to mention the HOPA violations.

(a)In general Not later than 30 days after the date of cancellation or termination of a private mortgage insurance requirement in accordance with this chapter, the servicer shall notify the mortgagor in writing—
(1)that the private mortgage insurance has terminated and that the mortgagor no longer has private mortgage insurance; and
(2)that no further premiums, payments, or other fees shall be due or payable by the mortgagor in connection with the private mortgage insurance.

(f)Return of unearned premiums
(1)In general
Not later than 45 days after the termination or cancellation of a private mortgage insurance requirement under this section, all unearned premiums for private mortgage insurance shall be returned to the mortgagor by the servicer.

(2)Transfer of funds to servicer
Not later than 30 days after notification by the servicer of termination or cancellation of private mortgage insurance under this chapter with respect to a mortgagor, a mortgage insurer that is in possession of any unearned premiums of that mortgagor shall transfer to the servicer of the subject mortgage an amount equal to the amount of the unearned premiums for repayment in accordance with paragraph (1).


by Richard Insley:

Isn't this also a Section 8 problem? If fees are collected but no MI is available, then the fees are unearned.

First published on 03/23/2020

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