The owner must pay for the assessment of cancellation of private mortgage based on the value?

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Situation: A client has a house with PMI, which rose sharply in value, the loan value is now below 80%, it can cancel the PMI by law. But the lender said it has an evaluation report and pay for it.

  1. Reply
    May 19, 2011 at 1:06 am

    What the lender says is 100% correct. An appraisal MUST be done and it MUST be paid for by the homeowner, not the bank. This is just like when you buy a house… the buyer has to pay for the appraisal (sometimes the seller will pay that expense for the buyer) before a loan is approved. Chances are, the lender will have an appraisal company they normally work with in your client’s area and that is who they’ll accept an appraisal from.

  2. Reply
    May 19, 2011 at 2:05 am

    do you think they are going to cancel with out an appraisal? no! the pmi protects them in case of defaulted loans. So yes the borrower must hire an appraiser and send it in with a letter requesting that the pmi be removed. The lender does not have to remove it but most will
    I am a mortgae banker in TN & KY

  3. Reply
    Jeromy W
    May 19, 2011 at 2:52 am

    With all the money that banks are losing right now due to the mortgage mess, do you really think they would take your word about the home value and pay for your appraisal? Unfortunately, the burden of proof falls upon you. I would contact the bank to see who will do the appraisal, meaning one of their appraisers or if you can find one. They will most likely want to see the appraisers license etc if he is not used by them so see how their procedure will work. It will probably cost you 350-450 to get this done and make sure it’s a full or urar appraisal. You don’t want an drive by or exterior appraisal here, good luck

  4. Reply
    May 19, 2011 at 3:31 am

    of course he has to pay for it.

    HE must validate the value increase. The lender does not care, s why would he pay.

    BTW they are not required to stop the PMI until 80% of the original value is paid. Most will include appreciated value, but they do not have to.

  5. Reply
    Expert Realtor
    May 19, 2011 at 3:40 am

    Uh…an appraisal isn’t necessary and I’ll tell you why.

    Banks drop PMI automatically when the loan to ORIGINAL APPRAISED VALUE falls at 80% or less.

    You can’t get a new appraisal, show the bank and get it dropped.

    There are TONS of people that have no clue as to how PMI gets dropped, and they discover that it’s not that easy.

    PS: AMERICAN is 100% correct.

  6. Reply
    Quicken Loans
    May 19, 2011 at 3:50 am

    If the homeowner reaches the 80% mark of the original value at the time the loan was obtained, it will be dropped automatically. If the homeowner came into a position whereas the value is higher than originally thought, but the loan isn’t paid down to the original value, they will have to have a new appraisal done to prove the new value.

    And in most cases, yes, the borrower will have to pay for the appraiser. But, in the long run, dropping the monthly PMI far outweighs the price of a single appraisal.

    Best of luck!

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