Homeowners Protection Act of 1998

Butch, a reader who has been following my PMI removal problems while going through the same routine himself, emailed me on Wednesday evening with a link to the full text of the Homeowners Protection Act.

He wished to highlight the very last part of Section 2 which defines “termination date”:

(16) TERMINATION DATE.–The term “termination date”
means–
(A) with respect to a fixed rate mortgage, the date on which the principal balance of the mortgage, based solely on the initial amortization schedule for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 78 percent of the original value of the property securing the loan; and

(B) with respect to an adjustable rate mortgage, the date on which the principal balance of the mortgage, based solely on amortization schedules for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 78 percent of the original value of the property securing the loan.

In Butch’s words, it’s “as though the FTC website is missing a crucial tidbit.”

You know what?

He’s right.

The FTC’s “Alert” curiously omits any reference to paragraph 16A or 16B of Section 2.

They simply state:

If you put less than 20 percent down on a home mortgage, lenders often require you to have Private Mortgage Insurance (PMI). PMI protects the lender if you default on the loan. The Homeowners Protection Act of 1998 - which became effective in 1999 - establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI.

For home mortgages signed on or after July 29, 1999, your PMI must - with certain exceptions - be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current. Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current.

One exception is if your loan is “high-risk.” Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue. Ask your lender or mortgage servicer (a company that collects your payments) for more information about these requirements.

This “crucial tidbit” must have fallen under their “certain exceptions” or something… In my opinion, it shouldn’t have.

Anyway, I was aware of this section of the law. Before I even called Countrywide, I wanted to make sure I wasn’t missing anything.

Hard to believe, but I did actually read all 15 pages — though much of it does not apply to my situation.

I was even prepared for Countrywide to respond with something very similar, half expecting them to, but they didn’t.

That’s why I, again, resorted to Jedi mind tricks with my last online request.

Okay, maybe I didn’t use any Jedi mind tricks, but I definitely opened the door for them.

At what point will the PMI on my account be automatically cancelled? I’d like a specific date please.

I mean, could I have given them a better set-up?

Still no response.

But if they do come back and plainly say, “July of 2010″ or something, I’ll put this issue to rest.

I won’t be happy but at least I’ll know where they got their answer.

As of right now, they don’t have an answer at all…

(And it also makes you wonder how so many people got their PMI dropped just by using the appreciation of their home rather than the size of their mortgage payments. There are all kinds of articles out there on the net from 2006 or so about that. If PMI isn’t supposed to drop until the amortization schedule says it is, well, what’s up with that?)

Posted on September 5th, 2008 at 5:29 am by Brainy Smurf
PMI - Mortgage Insurance | 3 Comments »

Roth IRA or Traditional IRA? How about neither?

Hmmmmm… Which to choose… I’m not really sure. I’ve researched the advantages and disadvantages of both and it’s just left me more confused than I was at the start.

It seems most folks my age (32) lean heavily towards the Roth IRA because it’s taxed now and not in the future when you expect to be in a higher tax bracket.

But unlike most folks my age, I’m a little bit more realistic when it comes to my earning potential and what tax bracket I’ll fall in to fifteen to twenty years down the road. I’m not optimistic.

When nearing retirement, though taxes will most likely have gone up, I actually expect to be in a lower tax bracket than I am now so that “advantage” of the Roth is totally lost on me. The Traditional IRA wins out.

On the other hand, with a Roth IRA, you can make withdrawals all along without penalty. No waiting until turing 59 and a half. If I need another $5k to build my dream garage or something, I can grab it from my Roth IRA and not get hit with a bunch of fees, penalties, and/or taxes. In that respect, the Roth IRA is clearly better.

By the end of this year, I’ll easily have enough to fully fund one or the other. Obviously I’m still having a hard time deciding which is the wiser course of action.

Further, I still struggle to come to terms with the idea that being limited to $5k per year will add up very quickly or keep me interested.

I realized that the limit is increased slightly every few years, but even still — what takes me just three years of contributing to my 401k will take over a decade with either type of IRA.

It just seems…slow? It is slow.

The advantages, from my perspective, don’t outweigh the limitations — specifically, the low contribution limits.

It seems like they’re little more than a way to supplement your savings — being limited to such a small contribution, it’s certainly not jump starting anything. It can’t.

But maybe I’m *still* missing something…

Posted on September 4th, 2008 at 5:49 am by Brainy Smurf
Finance, 401k, Roth IRA | 3 Comments »

Would You Pay $300 to See Miley Cyrus/Hannah Montana? Would You Pay $300 to See Anyone?

So, I think it’s been pretty well established that I enjoy cheap entertainment.

What, with my stories of Jordan Knight, They Might Be Giants (twice!), and Smash Mouth just in the past year or so…

And to think, I never even mentioned that I’d also taken in Weird Al Yankovic, the Jonas Brothers, Aaron Carter, Bowling for Soup, and some kid from High School Musical (I forget his name…) recently as well. We even saw those two hip-hop violin guys that are on America’s Got Talent right now…

Some are big names. The Jonas Brothers, specifically, are apparently HUGE right now.

Others, well, admittedly, are not. Like Aaron Carter. Or the violin guys…

But all of these concerts have had one thing in common — they’ve been cheap. Highest ticket price so far was last weekend’s rather disappointing Smash Mouth show. Twelve bucks.

I bring this up because later this month Miley Cyrus is coming to town. Now, she’s not exactly one of my favorite artists — I can’t name a single song she sings — but I’d still be interested to see what all of the fuss is about.

And I’ve no doubt that someday, in the future, I’ll see her at one of the agricultural fairs or something similar. No doubt.

But not this year.

Her tickets are (ready for this?) $300, $250, and $150 per seat.

Can you believe that? It’s real. No joke.

A nosebleed seat to see Miley/Hannah will set you back $150. Now, most of her fans aren’t old enough to go on their own (and the venue happens to be in a casino), so make that $300.

If you actually want to visually see her, well, that’s a minimum $600 investment.

I can’t believe I just called that an investment…

Ironically, it was only a few years ago that I blew off seeing her father perform at a po-dunk little agricultural fair because I thought it would be a dud of a show.

I mean, he had, what, maybe one or two hit songs?

Don’t get me wrong, I know he was HUGE, but still, it’s not like he was on his way to becoming a music legend.

History will undoubtedly repeat itself — I wouldn’t be surprised if I see Hannah Montana perform for less than $20 in fewer than three years once the hype runs it’s course.

But back to those INSANE ticket prices — it blows my mind that someone can command that kind of ticket price and still sell out in a matter of minutes. It also blows my mind that ticket prices can be so high for an artist whose songs I’ve never even heard on the radio before.

I mean, I get out.

I don’t live in a box.

Or maybe I do? Who the heck is Lil’ Wayne?

Anyway, I know what Hannah Montana looks like and I’ve stumbled upon her TV show numerous times, but does she even have “a” hit song? Does she have two hit songs?

Let’s be serious, that’s A LOT OF FREAKING MONEY for a concert!

I’m trying to think of anyone I’d spend $300 to see.

The Beatles can’t happen. McCartney on his own isn’t that big a draw. Springsteen? No way. The Rolling Stones are a complete joke at this point. Led Zeppelin? Nah, still not worth $300.

Maybe Michael Jackson? Sure, he’s wacked out and a little creepy these days, but he’s got an endless supply of hit songs and, well, based on what I remember from the 1980’s, he has the ability to put on a show good enough to make people pass out. You don’t see concert footage like that anymore…

Put them next to one another, Miley and Michael, and ask yourself, who’s the bigger star?

Age aside, who would you pay more to see perform?

It’s a no-brainer. This Miley Cyrus concert is a complete rip-off…

In my mind, Miley ranks about as high as Steve Harwell…

Posted on September 3rd, 2008 at 5:34 am by Brainy Smurf
Music, Bargains | 3 Comments »

Back to Getting it in Writing

Back at it. On Sunday evening, I submitted another online inquiry to Countrywide:

Hello, I’ve called customer service twice and spoken to three people this past week, all of which have been unable to answer my questions:

1. Does Countrywide acknowledge the Homeowners Protection Act in regards to the automatic cancellation of PMI.

2. At what point will the PMI on my account be automatically cancelled. I’d like a specific date please.

Please answer these two questions for me.

Not holding my breath on the response to this one.

By the way, thanks for all of the emails of encouragement over the past couple of weeks!

Posted on September 2nd, 2008 at 7:26 am by Brainy Smurf
PMI - Mortgage Insurance | No Comments »

Net Worth Update: August 2008 (+$4,473)

Another big gain this month but not everything was a success…

Really, an increase of over four grand should feel awesome — especially considering that my total non-mortgage debt is less than four thousand — but for some reason, I feel like I’ve been spinning my wheels all month long.

Probably that darn PMI thorn in my side… Ouch!

Anyway, here are how my finances break down this month:

Cash:
Down a bit as expected. Last month was high because of a paycheck arriving on the last day of the month. I do my best to have this hover around $2000.

Oddly enough, I’ve already written a $1300 check for the mortgage this morning so technically this balance is already down to $1000.

Savings:
In June, I “borrowed” $1500 from this account to pay for vacation. Now, a couple of months later, I’ve finally replenished my ING account. I expect this to continue to rise in the months ahead.

Gov’t Bonds:
As is the norm, no action here. I’d pull the money out since I find I-Bonds dreadfully boring, but they’re earning a decent return right now so it wouldn’t make sense to move then.

401k:
For a bit this month it was way up. But then it came back down. Even still, a gain of $1898 is more than I contributed, so it was a good month. September should be even better as that’s the month my employer contribution is deposited each year.

Home:
Another $1500 drop. Still no where near approaching what I paid for it. That would be $141000.  So, no, I’m not feeling the burn of a housing slump.

Auto 1:
Small fuel efficient cars continue to rise in value and I’m not complaining one bit. It was one of my better purchases. I thought that at the time — now, 3 years later, it’s been confirmed.

Auto 2:
The value of the BMW continues to decline. Even still, as it’s paid for already, I’ve no problem letting it sit in the garage until it starts to appreciate. I’ve no doubt that it will sooner or later.

Credit Cards:
This is the elephant in the room. I’ve been at the zero mark every single month since March, when I finally paid off the last of my credit card debt.

This past month, I wrote a $1500 zero percent interest check to myself in a failed attempt to have PMI cancelled on my mortgage.

No worry, though. I’ve got a weekly payment plan set-up to have it paid off in another 12 weeks without ever having to pay any finance charges.

Auto Loan:
Same idea here. I started the month with a couple of huge payments in an attempt to rid myself of this sometime in September. Then, I smartened up a bit and set-up a plan to pay it down at a more relaxing pace. This balance will be eliminated by December on the plan, though I have a feeling, I’ll wipe it out well before that…

Other Loans:
Zero. Been that way since May 2007.

Mortgage:
DENIED! Like July, there was a ton of progress here but, again, no reward. I managed to knock $2318 off of principle in one month and the purpose was to have my PMI eliminated. Didn’t work because Countrywide is apparently above the law — so I won’t be doing this again.

Posted on September 1st, 2008 at 12:43 pm by Brainy Smurf
Finance, Net Worth Updates | 1 Comment »

Photo of the Week: What Can You Expect for $12?

This is Steve Harwell, the lead singer for the band Smash Mouth.

We saw him yesterday at the 148th Woodstock Fair and I took this picture.

For the record, he can’t sing. He was terrible. The rest of the band wasn’t so great either.

I like this band. I thought I liked this band.

Actually, now having seen them live — I like them less.

The played all of their hits, which was good, and a ton of Van Halen for some reason, which wasn’t so good.

Actually, the guitarist actually seemed to know what he was doing on the VH songs, but once they broke into “Walking on the Sun“, well, I could have been playing guitar up there. Very strange. Had it not been for the bassist staying consistent with the bass line, the whole thing would have fallen apart.

They finished up the show, expectedly, with “All Star“, but Steve’s voice was totally worn out at that point.

He was flat for the entire show, beginning to end, and worn out for the last few songs.

Often Smash Mouth is criticized for being a campy 60’s cover band and, now, having seen them up close, well, they almost sounded like a cover band of themselves.

The criticism is well deserved.

Thankfully, admission was only $12 each and we got to pet cows, sheep, chickens, and other things too…

We also saw a number of bearded ladies and even a few one thousand pound men too… Though they all probably paid twelve bucks to get in too…

Posted on September 1st, 2008 at 7:19 am by Brainy Smurf
Music, Bargains, Photo | 1 Comment »

Enough of the PMI Conflict; On to Some Lighter ‘Fair’…

Yep, it’s that time of year again in New England.

Agricultural Fair season.

Now, I’m not into pigs, cows, sheep, and chickens or anything. Tractor pulls don’t get the blood flowing either, and trust me, these fairs are overflowing with that sort of thing.

I like the fairs for the low admission price and the top-notch entertainment — though much of it has fallen off the radar screen when it comes to mainstream.

Longtime readers may recall that last Labor Day weekend, we saw Jordan Knight of New Kids on the Block fame.

Laugh all you like.

I said then, and I’ll say it again now, that I was never really a fan of NKOTB, but he put on a really good show.

Afterwards, I even downloaded “Hanging Tough”.  Again, continue to laugh…

Done laughing yet?

See, it only cost $10 to get in to see the show — and you could pet pigs, cows, sheep, and things if you really wanted to! That’s a deal.

Now, Jordan Knight will be back in the area later this month — but guess what?

He’s not playing local fairs this year.

He’s back to playing arenas with his bandmates. Tickets at the venue closest to my house are $62.50 and $47.50 each. Wonder if all those suckers that bought tickets for this tour realize that just one year ago these guys were playing local fairs.

And to think, for a 600% mark-up, you probably don’t even get to see a ribbon winning chicken or witness a sheep shearing contest. I’m not sure the New Kids could hold my attention long enough to make them worth $47.50…

Anyhow, I’ve got this year’s fair schedule set in stone already.

Over the next month or so, we’ll be sitting on some trampled grass or in uncomfortable bleachers watching bands such as Smash Mouth, America, and The Guess Who.

Up first, tomorrow afternoon, is Smash Mouth.

They haven’t completely fallen off the map so I’m expecting it to be a little crowded but for a few bucks, hey, they’re a band who still have three or four songs in heavy rotation (All Star, Walking on the Sun, and the covers of I’m a Believer and Can’t Get Enough of You, Baby) on the radio station I listen to.

I’m looking forward to it.

And, hey, maybe next year they’ll be back touring arenas and amphitheatres too…

But really, if you live in a part of the country that has these types of fairs, you really should look up the entertainment because, more often than not, a few of them will have an act you’d really like to see at a bargain price!

Posted on August 30th, 2008 at 6:44 am by Brainy Smurf
Music, Bargains | No Comments »

Tales of PMI Cancellation: Slept On It

The more I think about my conversation with, well, I never caught her name, but the more I think about the entire discussion yesterday, the more I wish I’d at least gotten a solid answer to well, anything.

Does Countrywide acknowledge the existence of Homeowners Protection Act?

From what I can tell, no.

Does a scenario exist where PMI is automatically terminated?

Again, it doesn’t appear so.

Had yesterday’s conversation gone differently, even with the same negative result, I think I’d still consider myself a satisfied customer.

Unhappy, but satisfied.

I mean, had she said something along the lines of, “Yes, Mr. Smurf, you have indeed reached the required loan to value percentage, but PMI will continue until the date that your original amortization schedule would have had you reaching that percentage. By the way, would you like to discuss refinancing options?”

Yeah, that’s still a BS response, and still a rip-off, but at least it would have been some solid information. All I have now is a bunch of jumbled worlds — COV, market conditions, however, and Smorf…

This morning I’m going to try the online customer service method again asking bluntly, “Is Countrywide aware of a law called the Homeowners Protection Act?” and “At what date will my PMI be terminated automatically.”

I’ll also ask them not to send my another letter in 7-10 days. And I’ll also ask that that they not ask me to call customer service again. I’ve spoken to three people and no one has answered my question.

Posted on August 30th, 2008 at 5:55 am by Brainy Smurf
PMI - Mortgage Insurance | 3 Comments »