Mortgage co won't remove MIP

quasifishFebruary 14, 2007

We have a 5 year old FHA loan. We've prepaid the pricinpal to the point that the balance is now less than 75% of the original loan.

The mortgage company told me to submit the request for removal in writing, which we did. Today I got a letter back from the mortgage company stating that MIP cannot be removed from FHA loans under any circumstances. Our loan was closed after Jan 1, 2001 so qualifies for the removal at 5 years as long as the original loan value has decreased to 78%- it says it in the loan paperwork, and the same information is on HUDs website.

The loan company wouldn't allow me to talk to anyone in the PMI department at an earlier date, but this morning when I called, the customer service rep transfered me to the PMI department where I left a voicemail. Unfortunately there seems to be only 1 person in the PMI department so *IF* she even calls back, I'm going to have to deal with this same person who apparently doesn't know the first thing about FHA loans.

What do I do to get the MIP removed from the loan? I feel stuck and really POed. We don't really want to refi the loan, and shouldn't have to.

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FHA loans are 5 years and less than 80% LTV. NOT just original loan amount. so if your area has seen a property value decrease, then the company may be correct.

but i would fight it tooth and nail. you may have to pay for a new appraisal, but they should cave and drop it. if not, your only choice is to refi.

    Bookmark   February 14, 2007 at 2:23PM
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Actually, FHA LTV is based on the original loan value- I just called HUD to ask about this since I can't seem to get any action from the mortgage company. He said it is based on the loan or appraisal value (whichever is less) at the time the loan is funded and no future appraisal is needed to remove it.

He looked up the loan and agreed that the MIP can indeed be removed in April. He said if the mortgage company won't do it, then HUD will get involved at that point. I'm very impressed with HUD at the moment, very knowledgeable and helpful.

I'll keep you updated and definitely feel better now knowing that what I thought was fact, really is.

    Bookmark   February 14, 2007 at 3:15PM
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It does make one's day to learn that, in dealing with a substantial business corporation, where there was a certain disagreement - that one's point of view was vindicated (by higher powers, that is).

Good wishes for getting the issue straightened out - without too much hassle (and to you satisfaction, of course).

ole joyful

    Bookmark   February 15, 2007 at 1:47AM
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Hi! I am having the same exact problem as you.

I found out that the loan company (whatever bank you went through) needs to be contacted by the FHA saying you have reached 5yrs/75% ltv and that they do not need to collect MI anymore.
i was told that this will take 2 or 3 months. When i first called my bank I got some idiot that also stated I would have MI forever however I think they said this because the bank NEEDS to be told WHEN they don't need to collect this anymore and can't just stop collecting it when you reach the terms listed in your mortgage.
Anyways, I didn't realize it was the value of the house when we closed and that we couldn't alter that by submitting a new appraisal so it turns out we didn't hit 75% yet and I will have to wait untill next year maybe.
However we are still determining if we want to refinance because the name brand bank we went through is horrible to deal with and we want to go to a local credit union we prefer.

    Bookmark   February 15, 2007 at 9:40AM
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Joyful, that's the truth! I dare say I felt a little smug after talking with HUD :) I'm not proud of that, but it is nice to be vindicated.

Scryn, you may be right about the company needing to be told, rather than doing it themselves. HUD's information states that we are suppose to go to the mortgage company with that written request and then the mortgage company is to provide pertinent information to FHA who authorizes removal. It does seem like it might be easier to start on the FHA end of things and work backwards though.

Are you the one who posted recently about having enough equity, but being unable to drop MIP? If so, I thought of you yesterday, as the same HUD section I was looking at states that the homeowner can't use an appraisal as a means to drop MIP, that it has to be done by original loan value. I wish you lots of luck too. Dealing with any of these people is such a pain in the rear. I can't believe the lady from the mortgage company won't even call me back- that's just rude. The least she could do is call me back and tell me to take a long walk off a short pier, LOL.

I'm sending another letter to the mortgage company along with information from the HUD website. That's the last we will do, then come May 1, we will take it to HUD. We'll get it taken care of eventually!

Thank you all again!

    Bookmark   February 15, 2007 at 12:51PM
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Yup! that was me!
Really, they shouldn't say "loan to value" ratio if they don't really mean that! If my house is worth more now then the value is higher, don't you agree!
anyways, oh well. We will pay it off enough so we can get rid of the MI a year late. Not too bad.
Please post if you finally get the MI removed and how, I would like to know for when I go through it again next year!


    Bookmark   February 16, 2007 at 9:16AM
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    Bookmark   February 17, 2007 at 5:05PM
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Send the letter registered return receipt, usually gets more attention

    Bookmark   February 18, 2007 at 12:19AM
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Mona, that link you posted is very interesting. It pertains to PMI wich apparently differs slightly from MIP. What strikes me as most interesting about it is that law that mortgage companies have to have a phone # you can call about PMI- my mortgage company does not and the only times I've been able to get transferred to the PMI department is when I call up hissing mad, and then the woman won't return the call.

I ended up calling the mortgage company again, complained that I've hit a brick wall with the PMI department and that HUD is now threating to get involved if it isn't resolved by May (that got their attention). I managed to get the name of a supervisor not directly linked to the PMI department who will get the letter and can look over the information, which included literature from HUD regarding it. This is the last effort I will make before just letting HUD do whatever it is they will do.

    Bookmark   February 18, 2007 at 4:42PM
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In that FTC link I posted, it says "These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI."

I found this link which explains in more detail about PMI vs MIP, and that MIP lasts for the life of the loan.

    Bookmark   February 20, 2007 at 5:12PM
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Mona, apparently your link was written by my unknowledgeable PMI lady :) That's outdated info. Here is current information directly from HUD- on the off chance that you are interested

Here is a link that might be useful: MIP termination

    Bookmark   February 21, 2007 at 2:30PM
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