The rule is that once your LTV goes below 78% percent of the current home value, you can get the PMI removed. Consumer advocates tried to get it so it would automatically be removed by the lender, but they lenders argued that it was too much work, and they would have no idea what the current value of the homes would be. Truthfully, the lender gets a piece of the PMI premium paid each month and hopes you forget you have it and continue paying it for the life of the loan. So after years of struggle, they compromised. The lender now has to remind the borrower each year that they are  paying PMI insurance, but it is the borrower's responsibly to get it removed. The basic guidelines are as follows:

• An appraisal showing the current value must be provided and paid for by the borrower.
• The loan- to- value must be under 78% percent.
• Each lender has their own guidelines, but at least 12 to -24 timely payments must have been made.
• There can be not be one any late payments.
• There can be no secondary loans (HELOC) bringing the combined LTV over 80% percent.

With home values lower now than they were in the previous 5 years, it is more difficult to meet the criteria to remove the PMI. In addition, the lenders will be more reluctant to allow it and will find ways to keep the PMI going. For instance, one late payment in the last 24 months and the borrower blew it. As the rules are not federal but State specific, each state is a little different in guidance. In addition, each lender has its own process to remove the PMI. Therefore, the borrower will have a bit of a runaround to find the right department to deal with. There will also be some fees and time involved, but it is worth the savings in the end. Sounds easy, but it is a real pain in the neck!

Dale Robyn Siegel

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