PMI Removal Quick Guide

TYPES OF PMI REMOVAL

Automatic Removal

  • Customer is only required to maintain mortgage payments
  • MI will be automatically removed when the loan LTV reaches 78%
  • Based upon original amortization schedule – when the original amortization schedule shows the loan will reach 78% through normal monthly payments (no additional principal reduction payments taken into consideration)

Borrower-requested Removal

  • Customer must submit a verbal or written request for removal to SLS via mail or fax – Can be submitted via customer web account or via chat also.
  • Can consider principal reduction payments and, with limitations, increases in home value
  • Must have a new valuation (appraisal, BPA, AVM) completed to confirm no reduction in original property value and/or document the new value (Must be completed by SLS)

WHAT TYPE OF LOANS CAN MI BE REMOVED?

Conventional Loans – FNMA, FHLMC

  • Loans are eligible, with restrictions, under HPA and GSE regulations
  • Borrower can request verbally or in writing

FHA

  • Loans with a case number assigned after June 3, 2013 can NOT have MI removed
  • Loans originated before 1999 can NOT have MI removed
  • Borrower must request in writing

USDA

  • Can NOT be removed

 

BORROWER-REQUESTED MI REMOVAL – ORIGINAL VALUE

Two ways to have MI removed:

  1. Using ORIGINAL value (or sales price, whichever is lower
  2. Using CURRENT value (intending to use appreciation of property in evaluation)

Using ORIGINAL value: 

  • Loan must have an LTV of 80% or less
  • Normally accomplished through principal reduction payments or Recast
    o If a borrower is doing a Recast, MI removal is NOT part of that process
    o Customer MUST request MI removal separately from the Recast application
  • A valuation must be completed by SLS (at owners’ expense) to show that the ORIGINAL value has not decreased
  • Must have good pay history
    o No payment 30+ days late in last 12 months or since origination date if less than 12 months
    o No payment 60+ days late in last 24 months

BORROWER-REQUESTED MI REMOVAL – CURRENT VALUE

Using CURRENT value:

  • Loan must meet Seasoning requirements (time since origination)
    • At least 2 years seasoning
    •  If seasoning 2-5 years, must be at 75% or lower LTV
    •  If seasoning 5+ years, must be at 80% or lower LTV
  • Exception to seasoning requirement is if SIGNIFICANT improvements have been made (then must be 80% or lower LTV)
    • Significant improvements normally are major home remodeling (i.e fix and flip) or room additions and not replacing a roof or repainting the home
    • Improvements must be able to be documented via receipts or contracts
    • Appraiser must be able to attribute increase in value to the improvements
  • A valuation must be completed by SLS (at owners’ expense) to show the CURRENT value
  • Must have good pay history
    • No payment 30+ days late in last 12 months
    • No payment 60+ days late in last 24 months