PMI placed back on my aunts mortgage after 12yrs of not having it

[socalguy]

Bank of america placed the PMI insurance back on my aunts loan after 12 years of not having it. She originally had PMI when she bought her house in 1992 for five years, but they removed it in 1997. All of a sudden they placed it back this April 2010 and are giving her the excuse that they were never suppose to remove it because FHA loans that originated prior to 2001 had to keep the PMI for the entire 30 years of the loan. Also now her escrow account is negative 3500 because they say they have to pay the past 94 months to the PMI insurance company.

Is this true has anyone experienced this, this even surprises the customer services reps that we are talking too at bank of america

Any Help

[Angels]

That’s crazy. It’s been over ten years and they are catching it now? After ten years of accepting payments without PMI I think they have accepted the new terms. If you look at the loan doc's it should spell out when she can or cannot take PMI off. She should also have paperwork showing when PMI has been removed and I would take that to a real estate attorney to review. She might have a strong case.

[wizzy26]

It seems like the banks are doing what ever they want now...its a time of crisis thats the best excuse to break the laws...human nature and the same reason we have looting when mayhem breaks out

[darlyj]

I wonder if it has something to do with the ratio of what the now-depreciated house value is to what she still owes on the note. I agree with wizzy too - even with all of the scrutiny that the banks are getting they still pull pretty much whatever they want simply because they can get away with it.

[Do_the_math]

I'm really curious about this. They shouldn't have removed the mortgage insurance in 1997, and perhaps the lender misinterpreted the Homeowners Protection Act. A better resolution would have been for the lender to simply refinance the loan.

Had the lender not terminated the FHA insurance, the borrower might have refinanced to remove the mortgage insurance during the market peak. I'd talk to an attorney on this, and I would also talk to the lender about a mitigating damages via a no cost refinance. Mortgage insurance on a 12 year old loan is pretty ridiculous- unless of course, the borrower is applying for a FHA-HAMP or other loss mitigation assistance. If not, the borrower should request the lender to simply cancel the FHA case, and hold the mortgage without FHA insurance.

Not an attorney, but please talk to one about detrimental reliance. Had the borrower not relied on the MI cancelation, the borrower would have likely refinanced to get rid of it. Since it was the lender's mistake, the lender should be liable. But again, I'm not an attorney.

[Buckus]

It sounds like the lender placed PMI, not the FHA insurance premium, back into the loan. The PMI usually last for something like ten years and protects the lender. This is separate insurance that the lender takes out apart from the FHA insurance premium. I'd talk to an attorney if it is indeed PMI and not FHA insurance.

Did I mention that on an FHA loan they screw you twice on insurance? Once for the FHA premium, and then the lender will make you pay for a separate PMI policy.

[Do_the_math]

Buckus, I've never heard of lenders forcing borrowers to pay private mortgage insurance on FHA loans. FHA loans require payment of an upfront premium and an annual premium.

Socalguy, do you have an update?

[goldie]

Bank of america placed the PMI insurance back on my aunts loan after 12 years of not having it. She originally had PMI when she bought her house in 1992 for five years, but they removed it in 1997. All of a sudden they placed it back this April 2010 and are giving her the excuse that they were never suppose to remove it because FHA loans that originated prior to 2001 had to keep the PMI for the entire 30 years of the loan. Also now her escrow account is negative 3500 because they say they have to pay the past 94 months to the PMI insurance company.

Is this true has anyone experienced this, this even surprises the customer services reps that we are talking too at bank of america

Any Help

Follow the suggestions of the other posters, but be sure to complain to the OCC (Office of the Controller of Currency). They have an online complaint submission form. I've complained about B of A several times and I believe the last complaint I submitted had something to do with the getting the wheels turning at B of A. If its a Fannie or Freddie complain to them too - although they are pretty useless and don't get back to anyone.