need appraisal to remove PMI on mortgage, sound right ?

Question

I have a fannie mae loan, and have paid down more than 20% of the original value of the home.
I called up ditech and they said I need to pay $300 to get an appraisal before they would remove the PMI(private mortgage insurance). I thought this was done automatically when you payoff 20% of the original value of the home.
Does this sound right ?

Answer 1

That is correct, the mortgage company will not remove that unless you have an appraisal. Technically speaking, the home could have gone down in value since you bought it, and you may not have a 20% equity in the home. The $300 sounds reasonable too. Check with ditech for a list of approved appraisers so that you have an appraisal that they will except.

Answer 2

Even fukinluck is wrong here. Yes his point is correct ONLY FOR HUD BACKED LOANS--FHA LOANS. This does not mean Fannie Mae backed loans. Whoever holds the servicing rights to your loan (Countrywide, Wells Fargo, National City Etc.) can set their own rules as far as removing PMI. In most cases an appraisal is required. Sometimes it is based off of the original purchase price, sometimes the current value, it all depends on the company. If they are telling you that you need an appraisal, then typically your only recourse is to refi with another company. Their specific rules are disclosed in your closing documents, as well as on most of their websites.

Answer 3

Every answer on here so far is wrong.

Read the link: http://www.hud.gov/offices/hsg/sfh/res/respapmi.cfm

To drop automatically, you must pay it down to 78% of the original value. If you're at 78%, they CANNOT require an appraisal. Again, this is only against the ORIGINAL VALUE or purchase price.

Paying it down to 80%, they can require an appraisal.

Read the link, and be sure to click on the "qualified written request" button, and see exactly what you need to send them.

It sounds like you may need to pay just a little more down. And this all is based on the assumption that your loan was taken out AFTER 7/29/99. I don't know if Ditech even existed back then.

I'd recommend sending a copy of this HUD webpage along with your qualified written request, once you are certain you are at 78% of your purchase price. (Please note, if your appraisal came in higher than your purchase price, the purchase price is the "original value".)

Screw Ditech. Get the laws and shove them in their face. And always make sure your written requests are done via certified mail with return receipt, and keep copies of everything until you are satisfied. The link also shows you who to contact about enforcement should it have to get that far.

Good luck.

Answer 4

You might need a new appraisal to make sure the your homes value has not changed. For example-- If you have made alot of improvements then the value may have increased which would mean that you may still have a way to go to get to that 20%.

Answer 5

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RE :Need appraisal to remove PMI on mortgage, sound right ?
I have a fannie mae loan, and have paid down more than 20% of the original value of the home.
I called up ditech and they said I need to pay $300 to get an appraisal before they would remove the PMI(private mortgage insurance). I thought this was done automatically when you payoff 20% of the original value of the home.
Does this sound right ?
Follow 7 answers

Answer 6

its 20 percent of the fair market value.....which is based on current appraised value per comparable sales of similar properties in the same area.

Answer 7

It is not done automatically, the bank is never gonna make you stop paying that if they don't have to. It is your responsibility to have it removed, and it is your cost to have the appraisal done. They are not scamming you, its just the way it is.
Good luck
RE Agent,
Remax

Answer 8

Find what it says in your closing documents. I don't know exactly what the specific rules/laws are, but it will be outlined in the contract you signed at closing. See if you can find that big envelope way in the back of your closet - the one with the stack of papers you signed at closing.