Isn’t a mortgage company supposed to automatically remove PMI when LTV hits 78%?

UPDATED: Oct 1, 2022

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Isn’t a mortgage company supposed to automatically remove PMI when LTV hits 78%?

We purchased our house several years ago but didn’t quite have 20% to put down. Over the course of time we have made extra payments and, when I last checked, our account said our LTV was 74.5. I read online that PMI was supposed to be automatically removed at 78% but nothing of the sort has happened. I sent a message to them requesting that it be removed and that I would like to be reimbursed for the overage. They replied that I would get a letter with their decision. This was about 6 weeks ago with no response. I’m not sure what they would need to decide, since my understanding was that this was supposed to be automatically removed. Is this accurate or am I mistaken?

Asked on June 4, 2019 under Insurance Law, Kansas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

The PMI is supposed to removed when the loan, if paid at the indicated rate or schedule (i.e. no over- or surplus payments) reaches 78%. If you made extra payments, you have have it the greater than 78% mark ahead of schedule, which is why is was not automatically removed. However, since you have met the mark, it should be removed now, upon demand, assuming that you have a good credit history, have been on time for the last 24 months, and the value of home has held steady. Make another written demand, sent some way you can prove delivery, stating the current value of your home, your good credit history (you may want to get an Experion, etc. report), the past 24 months of payment history, and the current LTV, and stating that if they do not remove the PMI, you will take legal action. Given them a few weeks--lenders  are bureacracies, and don't act quickly--and if they still don't remove it, you can bring a legal action against them for a court order that they remove it.

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