Grandma is Giving Me a House

Q: My grandmother has expressed her desire to transfer her property to myself. I was thinking the easiest route would be a quitclaim deed. Not to sure. Please advise as to what we should file so that this is done correctly. Thanks.

A: To transfer a property the correct way, the transfer must be insured by a title insurance policy. Call your local title company and ask them to handle this intra-family transfer. The one-time premium for the policy is based on the value of the property.

Aside from that, there could be some income-tax issues here, due to the size of the gift. You may want to discuss the tax ramifications with an accountant or a tax attorney.

The Lender Won’t Terminate My PMI

Q: I am being denied automatic termination of my PMI, with the reason being that, “i made additional payments to reduce my balance ahead of time, thus i am not qualified for automatic termination of my PMI.” My loan information shows my LTV at 76%, and a Scheduled 78% LTV date of 07/01/09. Is that right? Please advise. Thank You.

A: It sounds silly, but the lender may have a point. The 1998 The Homeowner’s Protection Act that governs PMI termination offers two scenarios for termination:

1. AUTOMATIC TERMINATION once the mortgage balance is down to either 78% LTV (Prime loans) or 77% LTV (Subprime loans). The LTV is calculated by the lender/servicer by assuming you are making the payments called for – not more and not less.

2. REQUESTED CANCELLATION of the PMI once the LTV is down to 80%. In this scenario, it is up to you (and not the lender) to provide proof that your loan is down to 80% or less LTV. This method is quite useless during periods of real estate slump, when values drop.

Now, let’s go back to the first scenario. If I understand you correctly, you’d be at 78% LTV even if you hadn’t made additional payments. If your loan is not a high-risk loan, the lender should terminate your PMI now. On the other hand, if your loan IS a high-risk loan, they may prevail in an argument and force you to wait a few more months before they remove the PMI. In that case, I would file a complaint with the regulating agency, with the hope that such a complaint would get the lender to move faster.