U.S. Senator Christopher Dodd, right, yesterday
speaks about proposed mortgage insurance laws at Glenn MArr's
Stamford Home. With him is Richard J. Roll, president of the
American Homeowners Association.
real estate agent is the last person you'd imagine getting
caught in a mortgage trap, but Glenn Marr did and spent thousands
trying to get out. Marr, a real estate agent from Stamford,
continued to make private mortgage insurance payments on his
first house even after he reached the threshold at which whose
payments were no longer required.
mortgage insurance is offered to homebuyers who cannot afford
to make a standard 20 percent down payment. Those consumers
can put down as little as 5 percent on a mortgage if they
pay the lender an extra monthly or annual charge.
type of insurance is intended to protect the lender against
loss in care of foreclosure. Payments are required until the
homeowner achieves 20 percent equity in the home.
reaching the 20 percent mark on his first home, a house in
Norwalk, Marr attempted to discontinue the payments, with
was certain I had reached that point of 20 percent equity, and I
was told I had to pay for an appraisal to be sure I was at 20 percent,"
Marr said yesterday morning on the front lawn of his Stamford home,
where he moved about a year and a half ago. "My mortgage holder
then said even if I was at that point, there was no guarantee the
PMI would be stopped."
Marr, co-owner of Marr & Caruso Realty Group in Stamford, said he continued to spend $48 a month on mortgage insurance payments during his struggle with the bank. In all, he paid about $6,000 over the first five years of an 11-year mortgage.
He believes he was overcharged about $3,600 during that time.
His story is typical among homeowners, according to U.S. Sen. Christopher Dodd, D-Conn. Dodd, the state's senior senator, is a co-sponsor of legislation that would make it easier for homeowners to discontinue PMI payments.
"Glen Marr, a real estate agent, knew he rights and still could not get satisfaction," Dodd said. "There are so many homeowners who don't know about the PMI rules . . . This is costing consumers millions of dollars every month, unnecessarily."
PMI payments on the average range from $200 to $600 annually, according to Richard J. Roll, president of American Homeowners Association (AHA)®, based in Stamford. Connecticut homeowners are typically on the higher end of that range because of the cost of housing in the region, he said.
"The issue subtle enough that it escapes attention, but homeowners could really use that money," Roll said.
The homeowners association yesterday released a PMI worksheet and informational guide that explains the insurance and how to calculate when the 20 percent equity mark is reached. Consumers may obtain a copy by calling the organization's Summer Street headquarters at 323-7715.
Under current regulations, a homeowner must request that payments be discontinued. Under the legislation, a homeowner must be notified when the 20 percent threshold is reached.
"PMI is a good idea, it's not a bad idea in the least," Dodd said. "It's the abuse of it that needs to be controlled . . . No one is saying PMI payments should be stopped prematurely, but they certainly must stop when you reach that threshold."
The legislation is an attempt to "take the bull by the horns" because the banking and insurance industries are not advocating PMI reform, Dodd said.
The legislation is expected to be debated on Capitol Hill in the coming weeks, Dodd said.
Only eight companies in this country offer PMI, including a unit of Stamford-based General Electric Capital Corp. Officials at that unit, based in Raleigh, N.C., referred calls yesterday to Mortgage Insurance Companies of America, the industry's trade association.
Telephone calls to the association were not immediately returned yesterday.