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!