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