DAILY REPUBLIC — Friday, November 4, 2022 3
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Private mortgage insurance a matter between bank, insurance company Q: First off, I’d like to tell you will need to contact your lender how much I enjoy reading your for any other questions.” When I column. I’ve learned a lot about asked my lender this same quesreal estate and the mortgage tion, they said my policy was process through it. We refinanced not canceled but just inactive our home loan with a new lender and had to be paid up to date to and closed last March. On our reinstate it. 2011 Annual Tax Statement I I know private mortgage Tim Jones noticed the amount paid for PMI insurance is for the benefit of was $0. Knowing that we do have PMI the lender but since it’s coming out of on our loan, I called the lender and they my pocket, shouldn’t I have the right informed me they would investigate to know if it’s being paid properly and and get back to me, which they never not ending up in someone else’s pocket? did. I called a few days later and they Have you ever heard of anyone else admitted it was an error on their part having this issue and if so, is it standard and they were still working to resolve practice for mortgage insurance compait. In the meantime, I went through my nies to request back payments before the monthly statements and noticed PMI policy can be reinstated? payments had never been deducted from A: Private mortgage insurance (PMI) our escrow account since the loan was is something millions of homeowners established. This, of course, caused an have and aren’t even aware of. overage in our account of over $2,800. While there are numerous variations Nearly two weeks later I get an on the theme, the purpose of PMI is to escrow analysis statement from the insure your mortgage company against lender showing the $2,800 overage any losses they would incur if you failed was to be deducted from my account to pay back your mortgage loan. as an anticipated payment. I called the Remember the AIG bailout? That was lender again and they informed me in large part because AIG was insurthe $2,800 was to be paid to the PMI ing mortgages that went bad, and the company to reinstate our policy. Turns company was going to go broke trying to out the policy was not processed corpay the insured banks’ claims. rectly at the close of our loan so it was Fortunately for them, though not for never finalized with the PMI company. I us taxpayers, they were simply too big to thought it was a little odd to have to pay fail. But that’s for someone else’s column. back premiums on coverage that never When you signed the paperwork to existed in the first place so I asked the close your loan, you agreed to make the lender if there was a way to know these insurance payments on the bank’s behalf. funds would actually be paid to the PMI Whether or not there was actually any company and not end up in someone’s loan coverage wasn’t, believe it or not, pocket and basically was told there is no any of your business. way for me to know because PMI compaThis process really isn’t any differnies only deal with the lenders. ent than the title insurance policy you I contacted the PMI company and also bought for the bank. You may not be was told the last payments they received aware of it, but you probably paid around were from my former lender back in $1,000 for your title company to give an February 2011 when my policy was caninsurance policy to the bank that guarceled and I have no current policy with anteed the status of title on your house. them. They did verify that my current However, it also offers you, as the homelender had just requested a reinstateowner, a lot of protection. ment on my policy and confirmed that The constant confusion with PMI is the lender had to pay the $2,800 to it would seem that you, the borrower, is “catch me up” and it was totally legitithe PMI company’s customer. You aren’t. mate. When I asked why payment had You’re just footing the bill. And that’s to be made on a policy that didn’t exist, they ended the conversation with, “You See Jones, Page 4
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