Trying to get Citi to cancel my PMI

[Dmitriy]

I bought my condo in 2007. Because I could not put down 20% at the time, I have to pay PMI, but I have been steadily making additional principal payments, hoping to cancel my obligation to pay PMI faster.

I was under the impression that once I reach 22% equity or 78 LTV based on the original property value at closing, my PMI will be terminated automatically (assuming I am current on my payments and have good payment history, which I am). Citibank actually sent me a flyer at one time explaining PMI and how federal law has rules for automatic mandatory termination, and 22% was the magic number and my goal for the last five years.

I have recently reached the 22% equity mark, but my PMI has not been automatically terminated. When I asked Citi about it, I was told that I would have to wait until 2016. According to the initial amortization schedule, that is when the remaining balance on my loan reaches 77.88 LTV mark. Because I have been making additional principal payments, the current balance on my loan is already past this point. I am presently at 77.59 LTV which corresponds to May 2016 on the initial amortization schedule.

Citi insists that if I want to cancel PMI now, I have to do an appraisal and the appraisal has to show that the value of my property did not go down. This is a no-go because the value has obviously gone way down to where I owe approximately 160% of what my home is worth.

What can I do to cancel my PMI at this point?

Is CitiMortgage right to demand the appraisal?

Is CitiMortgage violating federal law by refusing to cancel my PMI when my equity exceeds 22% based on original value at closing and I am current on my payments?

Thank you so much for your time and advice!

[Cat Damiano]

HI Dmitriy,


Welcome to the forum and thank you for joining..........

Most lenders will require a formal appraisal of the property, at your expense, before they will approve a request to drop PMI. The formula for figuring out if the PMI is at the point of being able to be dropped starts out with an estimated current value of the property.

Estimated value minus mortgage balance = equity.
Equity divided by estimated value = percentage of equity.
If you come up with a figure of 0.20 (20 percent) or greater, and your estimate is accurate , there's a good chance you can drop PMI and save.

Unfortunately, the laws to drop PMI were written before this unprecedented economic crisis and haven't adjusted accordingly.

Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

[Dmitriy]

Thank you, Cat, for responding. Reading your link, this is exactly what I was referring to:

For home mortgages signed on or after July 29, 1999, your PMI must - with certain exceptions - be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current.

I was not aware of the "high-risk" exception that it mentions. Is there a specific definition for what is considered high risk, or would anything qualify? Like if I owe more than my condo is currently worth according to the market.

This is very frustrating because I relied on that 22% mark and have been putting all the extra funds I had into additional principal payments so I can cancel PMI and have more money going toward the principal.

Is there truly nothing I can do now but to continue to pay PMI for the next four years?

Will Citi change the rules again on me in four years and say we won't cancel your PMI unless the appraisal shows that your property value has not decreased?

The estimated value on my condo is $100K less than the balance on my loan, so I would not be able to drop PMI based on appraisal.

Any other suggestions are most welcome!

[Cat Damiano]

Unfortunately, anything at this point would be speculating as we didn't expect the housing market and property values to tank so badly either. You can try writing a QWR to formally ask at what point you would be able to drop the PMI so that you have it in writing.

HUD RESPA Sample Written Complaint to Lender Letter

[Dmitriy]

Thank you, Cat, I will try that. I do have a letter from Citi saying that the automatic cancellation of PMI on my loan is scheduled for March 2016, but it certainly does not hurt to confirm that it would indeed be automatically cancelled at that point, irrespective of what the property is worth.

Right now I am waiting for Citi's response to my letter pointing out that I have already passed the March 2016 point on the initial amortization schedule and asking that PMI be cancelled automatically on that basis.

Thank you for your help! Would love to hear from anyone else who is in a similar situation.

[Cat Damiano]

Well it also wouldn't hurt to reiterate that in the QWR as well and send it certified mail return receipt requested along with a signature. Also I have searched the forum and haven't seen a similar circumstance just yet.

[Dmitriy]

Thank you, Cat, I will do that!

[Cat Damiano]

Please keep us posted on how it goes as it will help others if they are having similar issues.

[Dmitriy]

Most definitely! I expect that it will take at least two weeks for Citi to get back to me on my last letter. I sent it regular first class mail on Tuesday, May 8th. Citi has not acknowledged the receipt yet. Last time it took 8 days from the time I sent the letter to receiving email acknowledgement from Citi, and it was exactly one week between the time Citi acknowledged receipt of my letter and the time I received a response from them.

You've been very helpful!!

[Dmitriy]

Just heard back from Citibank with a definition of the term "termination date":

"The term "termination date" means - (A) with respect to a fixed rate mortgage, the date on which the principal balance of the mortgage, based solely on the initial amortization schedule for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 78 percent of the original value of the property securing the loan."

Homeowner's Protection Act of 1998 (HPA), US Code 4902 (18)

Prior to this date, Citibank requires an appraisal confirming that the value of the property has not gone down, so looks like I am stuck.

[Cat Damiano]

HI Dmitriy,



Thank you for the update, I am sorry to hear that you will have to wait it out for now.

[chris824]

I'm in the same boat with Citimortgage.

I don't understand why they have to define 'Termination date' when the HPA of 1998 says it's based on the original Loan Value and the original Property Value. Seems like a pretty straightforward calculation to me.

Something about this seems illegal to me.