Question:
I have been tricked into refinancing to a new loan that has PMI. My loan prior to refinancing did not carry a PMI but I had two loans, a first loan w/ 80% and the second loan w/ 20%. I decided to refinance to combine two loans into one. My mortgage broker told me that I was paying PITI.
None of the closing documents from the lender indicate or disclosed any PMI. THey used the word ‘Escrow’ instead of PMI. A month later I got a bill for my insurance and taxes. I called the mortgage broker and she told me that she was going to check and the letter did not make sense. She never contacted me. Her assistant called back and told me that it is not Escrow, rather it’s PMI.
I already lost the ability to compare loans but I also lost the 3 day period where I could have canceled the loan if I had known that it will carry a PMI. My loan interest rate is fixed and I recently receive a letter from the lender that my monthly payment is going up. When I called, even the customer service agent was confused and she thought I have an escrow account. I had explain to her everything. Then she took the time to review all my documents to find out the reason for the increase in monthly payment. After reviewing, she told me that I have a negative PMI account. That some type of money should have been collected upon closing to go the the PMI account and it was never collected. With that, I have a negative balance and they need to adjust the amount of PMI that I would have to pay monthly.
This explanation even reinforced to me that there was an intent or malicious act to hide the truth about the PMI on my account, both on my mortgage broker and at the same time the representative from the lender who should have reviewed the documents before closing. What are my options? This unscrupulous practice should not be tolerated in any way, shape or form.
Answer:
Even though the 3-day rescission period has expired, you can still rescind the loan if:
1. You did not refinance with the same lender who held the previous loans.
2. There was a Truth-in-Lending violation in the disclosures you received from the lender, such as non-disclosure of PMI.
3. The property is owner-occupied.
Most real estate attorneys will offer a free consultation to review your situation. If it turns out that your loan can be rescinded, you will receive back from the lender all interest you’ve paid to this point, as well as the loan fees you paid to obtain the loan; however, you will have to go through another refinance to replace the current lender with a new one.
