PMI removal via appraisal with Penny Mac (2024)

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I don't have experience with Penny Mac but I just went through this exact process about a month ago with Third Federal.

We bought the house in 2019 and had to wait 2 years before requesting the PMI to be removed. I requested it in August this year and we received a letter that it was denied because our loan hasn't been paid down to the %80 of purchase price and if we wanted to have an appriasal done that shows the value is %20 over what we owe then that would be permitted. We paid $500 for an appraisal through Third Federal since we felt it should appraise for enough. The request was pretty easy, in our denial letter there was a form to fill out requesting an appraisal and to enclose the money and return it. I was certainly worried the appraisal would come back low since it was being done through the bank though.

We needed our house to appraise for $198k or more and it came back at $205k so they dropped the PMI. Zillow has our home at around $230k. I'm sure zillow isn't the best way to compare but for comparison sake?

@tdm2580wrote:

Does anyone have any advice or experience working with Penny Mac to get PMI removed via appraisal? Our homes value has increased significantly since we purchased it in July of 2018. I requested PMI removal to start the process with Penny Mac, and it was declined becuase our LTV for original appraisal did not fall under 80%. I undersatnd that for this new appraisal, it will need to be paid by me and order by Penny Mac through their approved firm. That's where I am stalled. Penny Mac is giving me the run around on ordering this appraisal. Any advice is appreciated.

According to the Homeowners Protection Act, it does not look like Penny Mac is actually required to do anything. You may need to refinance your loan with another lender.

Here is the HPA:

https://www.federalreserve.gov/boarddocs/supmanual/cch/hpa.pdf

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.

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@Anonymouswrote:

I actually spoke with PennyMac earlier today regarding this topic. You may want to call and speak with them because it depends on your loan type. Mine is an FHA and I originally put down 3.5%, so my mortgage is required to carry PMI for the life of the loan. I would have to refinance and convert it to a conventional loan to drop PMI. If yours is an FHA loan, the person I spoke with stated that most FHA loans they service have to carry PMI for at least 11 years, the exact length is dependent on the amount you put down.

FHA is MIP and usually for the life of the loan... functionally MIP = PMI just the terminology is different.

Conventional sadly is a little disorganized in my experience as to when you can dump PMI, my own lender dumps it after a certain time period (on a 30 year fixed) or if the LTV gets to 78%. I don't have any real impetus even with the PMI to aggressively pay down my loan to get to that 78% line but if I were down around that and could save .25%, I'd consider it.

General point though, refinancing is always cash out of pocket or closing costs... do the math before trying to get rid of MIP even.

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@tdm2580wrote:

Good points here. My loan is not an FHA loan. The person that commented about their Third Federal experience was basically exactly the expeirence I was hoping for. Request an appraisal, pay for it, reep benefit of higher appraisal = no more PMI. But Penny Mac is so unresponsive. They also just screwed up my credit reporting quite a bit. Apparently my taxes went up $380 per month, and my homeowners insurance $80 per month, so my escrow account is now $10k+ in the negative. Penny Mac reported in December that instead of my balance being $405k as it shows on the Penny Mac Account dashboard (loan orignated in July 2018 for $426,000), they are now reporting my balance as $425k. So the $405k balance, plus the $10k in negative escrow, and $10k that represents the 3 payments deferred during Covid. No clue what this all means for potential refi.

@tdm2580wrote:

Good points here. My loan is not an FHA loan. The person that commented about their Third Federal experience was basically exactly the expeirence I was hoping for. Request an appraisal, pay for it, reep benefit of higher appraisal = no more PMI. But Penny Mac is so unresponsive. They also just screwed up my credit reporting quite a bit. Apparently my taxes went up $380 per month, and my homeowners insurance $80 per month, so my escrow account is now $10k+ in the negative. Penny Mac reported in December that instead of my balance being $405k as it shows on the Penny Mac Account dashboard (loan orignated in July 2018 for $426,000), they are now reporting my balance as $425k. So the $405k balance, plus the $10k in negative escrow, and $10k that represents the 3 payments deferred during Covid. No clue what this all means for potential refi.

All of the above are great reasons to refinance with a new lender. The refi will get the escrow account straightenedout and eliminatethe PMI. You may even avoid needing an appraisal with a property inspectionwaiver.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.

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