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My lender, US Bank, is refusing to terminate my PMI even though I am now below the 78% loan to value ratio. We've been perfect customers and have never missed a payment. Their reasoning is that they don't have to automatically terminate until my originally scheduled date I would have hit the 78% threshold, if making the regular minimum payments every month - not until May 2018. I've paid more than required each month and therefore have hit my date earlier. I have been paying this mortgage for 9 years at this point.

They have said the only way they will consider removing PMI is if I pay $150 for an appraisal and prove the original value has not declined. However, we know our property value has dropped at this point.

Any advice? It seems unbelievable that after being diligent customers for 9 years and paying more than required, we would be penalized and forced to continue paying PMI despite a loan to value ratio is now lower than 78 percent.

Canadian Luke
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Todd
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4 Answers4

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Yes. Other posts here have asked similar questions, the 78% is automatic based on the original amortization. To be clear - on the date you closed, you could have looked at the amortization table and seen that at year x month y it hits 78%. If, via early pre payments of principal, you hit it sooner, the appraisal is required.

JoeTaxpayer
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I was recently looking over the paperwork on my mortgage and it has a clause in it similar to what US Bank is telling you. On the date that the mortgage is scheduled to reach 78%, PMI is automatically dropped. If you reach that percentage earlier, you can request that it be dropped, but the bank has the option to require an appraisal (at your expense) to ensure that the home has not dropped in value.

In short, check your contract. Likely they are well within their rights to do that. Since you say the value has dropped, you are likely stuck (likely couldn't even refinance to get rid of PMI due to the value drop), but it may be worth going in to the nearest branch and talking to someone.

mikeazo
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4

This is quite understandable behavior on their part. By your own admission you probably don't meet the threshold. Is it any wonder they want the PMI to continue?

Loren Pechtel
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This is very confusing, however I think I understand it. If the buyer pays extra payments which accelerates the LTV to 80% or below before the scheduled date on the amortization chart, the lender can require an appraisal of the property to confirm property current market value. Unfortunately, an apprasal could cost the buyer $400 or more and the buyer must decide if it's worth paying that fee or just wait until the amortization date has reached the 78% value. Personally speaking this is BS but this is the way it is when you don't have 20% of the purchase price at the time of purchasing a house. .

Dray Moore
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