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Lender Did Not Disclose PMI Till Closing Day

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okezieowen

Junior Member
What is the name of your state? Indiana

I will refer to the lending company as Lender and the lending officer as Betty.

I feel aggrieved and cheated after taking out a mortgage loan with Lender for the purchase of my first home. While I was searching for lenders to obtain a pre-approval letter, my realtor recommended Lender a good choice. She spoke quite highly of their competitive rates, their ongoing discounts and excellent customer service; I was sold. In February, I reached out to Betty -- who works at Lender -- to learn about the pre-approval letter process and the discounts they had. She told me Lender had an ongoing promotion, where the premium mortgage insurance (PMI) was waived for first-time home buyers, if they put a 5% down payment. This was the only reason I decided to discontinue shopping for lenders, as I thought no one could match that.

Fast forward to three months later, on April 26, my offer was accepted on a home and I started the mortgage application process in earnest. My offer stipulated that I was going to close on May 24. In the intervening weeks, I exchanged and signed a flurry documents with Betty including several disclosures. On each of the disclosure I signed, the breakdown of my payments indicated that I would not be paying any PMI.

On May 23, a day before my closing, I got an email from Betty saying the loan had been approved. She also revealed to me that I was not eligible for the waived PMI promotion because my visa had expired. This came as a shock to me, because in the entire time I had been corresponding with her, there was no mention of a valid visa being a requirement for the promotion. This is evidenced in the disclosures I signed which put my PMI at $0. I expressed my extreme displeasure at this turn of events and she said she was going to consult with management to get an exception. I hung onto her words, and went the following day into closing. At the closing table, she disclosed that I was going to have PMI tacked onto my monthly payments, and she brought a modified disclosure for me to sign. This took me aback. At this point, my lease in my apartment at the time was going to be up in a months, and I had to vacate it. This situation, coupled with Lender's blindsiding me put me between a rock and a hard place. My hands were tied and I went on with the sign for the mortgage.

My complaint here is Lender put PMI on the loan the day of closing and did not give you a three day right of rescission which is a lending violation. I felt pressured to close even though the conditions had changed from the disclosure to the closing and that immigration status was not a requirement prior to the day of closing. I have since gotten a valid visa (on October 1st) the PMI should no longer be required.

Is there anything I can do to get the PMI off my monthly payments?
 


adjusterjack

Senior Member
Is there anything I can do to get the PMI off my monthly payments?
Yes.

Pay down your loan to less than the 80% requirement for the removal of PMI.

Here's why there is nothing you can do about Betty's behavior.

My hands were tied and I went on with the sign for the mortgage.
Your alternative was to not sign, get up and walk out, cancel the purchase, extend your lease or find another apartment. Those were your choices. You did none of that. You accepted the deal.

Now you own your own home. Enjoy it and get on with your life.

PS: That you let your visa expire is on you. You had to know that there would be consequences from somewhere at the most inconvenient time.
 

LdiJ

Senior Member
Yes.

Pay down your loan to less than the 80% requirement for the removal of PMI.

Here's why there is nothing you can do about Betty's behavior.



Your alternative was to not sign, get up and walk out, cancel the purchase, extend your lease or find another apartment. Those were your choices. You did none of that. You accepted the deal.

Now you own your own home. Enjoy it and get on with your life.

PS: That you let your visa expire is on you. You had to know that there would be consequences from somewhere at the most inconvenient time.
I am not sure that paying down the loan will work. It appears that the OP is an immigrant with an expired visa. In that scenario a mortgage company would be a fool not to require PMI.
 

Taxing Matters

Overtaxed Member
I am not sure that paying down the loan will work. It appears that the OP is an immigrant with an expired visa. In that scenario a mortgage company would be a fool not to require PMI.
The federal Homeowner's Protection Act (HPA) requires that a lender remove the PMI if the borrower asks in writing and the loan principal balance is at 80% of the value of the home at purchase and a couple of other conditions are met and the lender must do it automatically when the loan principal balance hits 78% of the original value. See the HPA explanation provided by the federal Consumer Financial Protection Board (CFPB).
 

okezieowen

Junior Member
Hi guys,

I wanted to give an update on my original post. I sent an email to Betty's boss outlining my closing circumstance, as I had earlier posted on here; I also attached my new valid visa. The lending company has now agreed to remove the PMI from my monthly payments.

I am posting this update to encourage folks on here to do never back down from doing what feels right, even when it goes against reason. Thanks to everyone who took time to provide one form of advice or the other. I appreciate it.
 

quincy

Senior Member
Hi guys,

I wanted to give an update on my original post. I sent an email to Betty's boss outlining my closing circumstance, as I had earlier posted on here; I also attached my new valid visa. The lending company has now agreed to remove the PMI from my monthly payments.

I am posting this update to encourage folks on here to do never back down from doing what feels right, even when it goes against reason. Thanks to everyone who took time to provide one form of advice or the other. I appreciate it.
Thank you for the update. I am glad everything worked out well for you.
 

Zigner

Senior Member, Non-Attorney
Hi guys,

I wanted to give an update on my original post. I sent an email to Betty's boss outlining my closing circumstance, as I had earlier posted on here; I also attached my new valid visa. The lending company has now agreed to remove the PMI from my monthly payments.

I am posting this update to encourage folks on here to do never back down from doing what feels right, even when it goes against reason. Thanks to everyone who took time to provide one form of advice or the other. I appreciate it.
It's unfortunate that the lesson that you want to pass on to others isn't "make sure you have all your ducks in a row".
 

okezieowen

Junior Member
It's unfortunate that the lesson that you want to pass on to others isn't "make sure you have all your ducks in a row".
People who wander onto this site typically do so, because they did not "have their ducks in a row," and are now dealing with the consequences. I am more of a "where there is a will, there is a way" kinda guy, I'll leave the chastisement to you. :)
 

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