Legal Question in Real Estate Law in California

Pmi

I bought a house in 05 for $210k using an FHA-insured mortgage.

As there is no pre-payment penalty, we started making payments to the principal, we paid so far $35k trying to get rid of the PMI which costs $150 per month.

When I called the lender today to ask the ''pay-off'' for the PMI they said that the house needed to be appraised, as prices have gone down in my area. Actually my house is probably worth $160k now.

With that being said, the lender said that I will have to pay another $47k in order to get rid of PMI, as opposed to the $7k that I thought.

Is this fair/correct? Isn't the PMI supposed to be based on the original value of the house? Is there anything that I can do?

I mean, the contract is clear (I only read it today, otherwise I would not have made all those payments against the principal). It states:

PMI can be removed if:

1) Your principal balance is less or equal to 80% of the original value of the house;

2) You have a good payment history;

3) You are current with your payments;

4) You can provide a satisfactory document, at your expense, proving that the house has not gone down in value compared to the original value of the loan.

Anything that I can do?

Thanks in advance


Asked on 7/28/08, 7:09 pm

1 Answer from Attorneys
Lyle Johnson Bedi and Johnson Attorneys at Law

Re: Pmi

The provisions of the PMI you quoted state that the amount due on the loan must be 80% of the value of the home. The requirement of a current appraisal indicates that it is the current value of the home that is the factor that determines the point at which the PMI can be removed.

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Answered on 8/02/08, 2:51 pm


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