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Guild Mortgage Fails to Tell Borrower of Right to Cancel PMI Class Action

Home buyers who make a down payment of less than twenty percent may be required to pay for Private Mortgage Insurance (PMI) for a period of time. The complaint for this class action alleges that Guild Mortgage Company, LLC does not tell mortgage borrowers when PMI is no longer required or give them other information, so that they continue to pay unnecessary Guild unnecessary fees.

The first of two classes for this action is all persons who, within the applicable statute of limitations, were charged PMI fees by Guild after borrowers had the right to cancel their PMI insurance. The second is the same, but for all such persons in Hawaii.

Guild, and the PMI company, are supposed to give borrowers a yearly written statement that tells them that they have a right to cancel the PMI after certain thresholds of payments have been reached. Also, the complaint says, they “misrepresented to borrowers the amount of time [Guild] could continue to collect PMI after the loan qualified for PMI cancellation.”

Congress passed the Homeowner’s Protection Act of 1998 (HPA). The HPA says that borrowers may cancel PMI when the mortgage’s principal balance fall to eight percent of the original value of property’s value—in other words, when the principal balance is where it would have been had the borrower paid the usual twenty percent down payment.

Plaintiff Zachary Purcell bought a home in Honolulu in April 2017. In December of that year, he refinanced it with Guild. Since he had to pay PMI on the mortgage, he had to execute a PMI disclosure at the closing.

The disclosure stated that he would be allowed to cancel the PMI, under certain conditions, on or after one of two dates: the date the loan balance was scheduled to reach eighty percent of the original property value, or the date the loan balance actually did so. The cancellation would be permitted if Purcell met these conditions:

  • His payment history was good.
  • He gave the lender evidence that the value of his home had not fallen below its original value.
  • He gave the lender evidence that his ownership of the property was not bound by any other lien.
  • He was current on his mortgage payments.

    Guild did not provide Purcell with the yearly notices required, informing him of his right to cancel the PMI, so Purcell was unaware that he was eligible to cancel on August 1, 2020. He thus went on paying PMI fees after that date.

This was not an oversight, the complaint contends: “This action stems from an unjust scheme undertaken by [Guild] to maximize profit by failing to notify [Purcell and others] about their option to cancel… As a result, [Guild] collected monthly PMI fees that were unearned, fraudulent, illegal, excessive, repetitive, unfair, deceptive, false, and fictitious by charging them to unsuspecting borrowers’ accounts.”

Article Type: Lawsuit
Topic: Loans

Most Recent Case Event

Guild Mortgage Fails to Tell Borrower of Right to Cancel PMI Complaint

June 3, 2021

Home buyers who make a down payment of less than twenty percent may be required to pay for Private Mortgage Insurance (PMI) for a period of time. The complaint for this class action alleges that Guild Mortgage Company, LLC does not tell mortgage borrowers when PMI is no longer required or give them other information, so that they continue to pay unnecessary Guild unnecessary fees.

Guild Mortgage Fails to Tell Borrower of Right to Cancel PMI Complaint

Case Event History

Guild Mortgage Fails to Tell Borrower of Right to Cancel PMI Complaint

June 3, 2021

Home buyers who make a down payment of less than twenty percent may be required to pay for Private Mortgage Insurance (PMI) for a period of time. The complaint for this class action alleges that Guild Mortgage Company, LLC does not tell mortgage borrowers when PMI is no longer required or give them other information, so that they continue to pay unnecessary Guild unnecessary fees.

Guild Mortgage Fails to Tell Borrower of Right to Cancel PMI Complaint
Tags: Mortgage-Related Unfair Practices, Private Mortgage Insurance