When checking out finances this morning after the trail, I noticed for the first time that we're finally paying more principal than interest per month and so I know that's going to make things move quicker. But my blood started to boil when I saw that we're still paying close to $200 a month in this damnable PMI. Even in the face of a 60% Loan to Value (LTV) ratio and 24 months of solid payment history. Turns out, if you have a loan through the devil (Fannie Mae), they sneak some language in their docs about "natural amortization".
What is natural amortization, you, of sound and reasonable intellect, might ask?
Who knows!? And seriously...who talks like that anyway? Lawyers and bankers and finance people, I guess. Well, I'm a lawyer and I don't talk like that and I think it's stupid. Maybe that makes me a bad lawyer.
This PMI requirement steamed me. So, I picked up the phone to call my bank for explanation. When I ask the nice man why PMI has not yet been removed, he starts talking about the requirements to getting it removed: the note must have an 80% LTV ratio. Check. 24 months of good payment history. Check. If those are met, the investor requires an appraisal/broker notice to ensure that the home has not gone down in value. Doh.
So, I ask him..."Well, hold up. Aren't I the investor? It's my home and as you can see, we're trying diligently to pay it off, which we're doing." If I want to have a weedy yard (which we don't) and pink flamingo stucco and a zoo living within (which we don't) and that makes some appraiser/broker assess the house as lesser in value - then what?
Well, as you can gather, I'm not the investor. And neither is my bank, which services the note. No, the investor is Fannie Mae.
And apparently, Fannie Mae and lawyers and bankers and other greedy finance people came up with the idea of requiring something called "Natural Amortization," which is defined as...um...well, as near as I can guess, I think what it means is that at the time you sign the dotted line on your note, they calculate when you'll reach your 80% LTV ratio paying just the required amount each month. I mean, that's what guy on the phone tried to explain to me anyway.
But of course, I had to google it and try to look up the term on my own.
I defy you to get me a googled definition of natural amortization (I know some smart ass..., I mean, someone much smarter than me, [@pokergrump?] is going to find this). Seriously. Even the 'Dictionary of Real Estate Terms' doesn't include a definition of natural amortization. My Black's Law Dictionary doesn't even contain this term.
Mother. Fuckers. WE'LL BE DONE PAYING THE HOUSE BY THE TIME NATURAL AMORTIZATION OCCURS.
So. We must put our fate in the hands of some appraiser/broker - of Fannie Mae's choosing - to value our home and decide whether or not we will be required to keep lining Fannie Mae's pockets with our $200 per month, $2400 per year, $21,600 over nine years, etcetera etcetera vomit die die Fannie Mae.
I could cut a
Credit is necessary, often. But stupid. Fine printed. Greedy. BS like this is just wrong. Do reasonable things different upfront oh ye financial institutions.
I can't go occupy a tent on Wall Street to show my contempt for such practices, and my support for #ows, but I can pay off debt, and that's exactly what we're doing. If that helps prevent the continued lining of Fannie Mae et al's pockets, then I'll keep doing it. And I encourage you to do it, too. Besides - there are excellent personal/individual advantages to this; namely, the pockets you line are your own.
Up yours, Fannie Mae.
(got this vid from my dad, EDIT 1/9/12):
Last but not least - the trail. It was nice today. I hope your day is nice, too.