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December 3, 2008
PMI Rejected
Hello,
We are in the process of closing, have near 800 credit scores, received approval for our mortgage, and just now found out that we were rejected for PMI (we were told that the company did not like our appraisal, which came in at accepted offer price, for some reason). Our mortgage broker is now looking for another company that will approve us, but my question is whether anyone has been rejected by one PMI company and then approved by another? We are already putting down 15% so we would need an additional 5%. Is our best bet to dig around and see if we can get a gift for the additional 5% or is it likely that we can get approved by another PMI company?
Comments
I think your problem is that 20% down is, and used to be (before the craziness) the standard. Less than that, you'll have problems.
Posted by: dt at December 3, 2008 8:41 PM
I would speak with each and every PMI company out there.
Some companies off the top of my head are
PMI
GE
MGIC
Radian
They are being very tough now but some don't have the same areas redlined as declining markets.
Posted by: Adam Dahill at December 3, 2008 9:48 PM
dt, 20% was not a standard, it was preferred but certainly not a standard. There is a reason for PMI and the reason was that you never had 20% down, that is where the PMI kicks in. I just don't understand why you got rejected. I would stress it so much and go to another company. Your credits are obviously great so keep looking.
Posted by: karo25 at December 4, 2008 9:18 AM
It doesnt have anything to do with the credit score. Certain zip codes have been redlined and automatically have a 5% reduction. The PMI company doesnt like the appraisal and probably came up with their own value for the property and they are basing the LTV on that value along with a 5% reduction for declining market.
Email me the appraisal if you would like and I'll run it my my staff to see if its acceptable.
adahill@approvedfunding.com
Posted by: Adam Dahill at December 4, 2008 12:35 PM
My wife and just closed on a house with 10% down. The first bank ultimately rejected us because the PMI wouldn't come through. They only accepted PMI from 3 particular companies.
The second bank accepted PMI from a broader range of companies and ultimately found one that would accept us. My advice is to start working on the gift and prepare to request an extension, just in case. It's dicey.
That said, are you SURE you want to buy NOW? Having done it, I feel OK but it's an unsettling feeling with people telling us all the time how prices are going to plummet. What if they're right? And there's talk of a 4.5% interest rate coming up for purchasers (not refinancers).
Posted by: cottontop at December 4, 2008 10:38 PM
Cottontop, where did you read about this 4.5% interest rate? All I've read was talk of the Feds PUSHING down mortgage rates but the article did not give a number. Thanks.
Posted by: helppls at December 4, 2008 11:27 PM
the problem most likely has more to do with mortgage insurance companies' solvency and losses from the housing crisis rather than your credit. PMI, Radian, MGIC, Genworth stock prices are basically priced at lottery ticket values (i.e. for bankruptcy reorg.) Maybe they really didn't like your appraisal, but given how its hard to see them in business without a bailout i'd say questionable / convenient excuse.
You just need to find someone open for business, and thus you see the catch 22 in getting a loan with less than 20% down. You may have to ask every one who is in business. You didn't mention if its a single family or condo/op - if its a house try Republic (RMIC)
Here's the 4.5% chatter i think Cottontop was expressing:
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/03/AR2008120302889_pf.html
Posted by: invisible at December 5, 2008 12:29 AM
There are still options out there, 1st I would be shocked if you don't get MI for an 85 Loan to Value. If you can't for some reason their are still lenders out their that do LPMI (Lender Paid Mortgage Insurance) however the rate is higher. If you need help email me with any questions
Larry Blusewicz
Worldwide Financial Resources
lblusewicz@e-mailfr.com
Posted by: WFRLarry at December 9, 2008 8:06 PM
Please give me more info about your loan Jumbo? Conforming? where are you buying and is it new construction condo temp loan limits?
Posted by: Brian Scott Cohen at December 10, 2008 9:32 PM
Cottontop,
Thanks for the response on your experience, that is helpful. We have decided to push back closing till we have the 20% (and are fortunate in that the seller does not appear in a rush to close either). We are also keeping an eye on the chatter around the 4.5% interest rate. That would be an incredible silver lining (though I agree - now is a very scary time to be purchasing).
Thanks to all for your feedback!
Posted by: spyre98 at December 15, 2008 2:02 PM
spyre98:
good post on this at urbandigs to start the new year.
http://www.urbandigs.com/2009/01/mortgages_market_update_0109.html
His take is that it's 20%+ or FHA, or the highway.....basically as far as options.
4.5% is still going to take a while, treasuries have gone down and hit 2% but the spread to MBS is increasing so the overall mortgage rates haven't made as much headway.
Posted by: invisible at January 3, 2009 2:28 AM
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