Real Estate Home Mortgages/lpmi


QUESTION: My loan closed with no mention of pi lpmi or bmi on may 31 2009. On June 1 Fannie Mae took out lpmi and never informed me. Doesn't that violate the homeowners protection act?

ANSWER: Stuart,

June 1 of what year?


---------- FOLLOW-UP ----------

QUESTION: The next day, June 1 2009


Portfolio lenders used to build the lpmi cost into the offered interest rate, with no other costs to the borrower. Prior to 2010 such an arrangement did not require a disclosure, but the new Good Faith Estimate and Truth in Lending disclosures do require a separate disclosure to the borrower.

As to the Homeowners Protection Act, I have to be careful here. As a layman, I am prohibited by the owners of this website from offering anything that comes close to giving a legal advise. That being said, here is what I think:

Let's say that the cost of the lpmi was an increase in the rate of 0.75%, and let's further assume that the rate offered people who did not require lpmi was 6.00%. For you, then, the rate was 6.75%. If the lender showed 6.75% on the Truth in Lending form, they most probably complied with the disclosure requirement of the time. If, on the other hand, they disclosed 6.00% but then proceeded to charge you 6.75%, they have certainly violated quite a few laws.

Best wishes,

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Eric Forster


Did your last mortgage broker or lender trick you into a messy situation which could cost you your home? I've been close to 30 years in the mortgage industry, and I've seen it all. Believe me, it is not pretty. As the owner of a mortgage company I am called frequently to testify as an expert witness in mortgage fraud cases and other cases where lenders did not fully disclose the terms of the loans they were offering to the borrowers. I have seen fraud being committed by borrowers - and by lenders. It's a tough world out there. And by the way - you are invited to visit my website,


More than 25 years in loan production and underwriting in Southern California.

Mortgage Bankers of America (Southern California Chapter)

Former columnist for AOL Financial Center and the author of a mortgage primer.

MBA (Finance)

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