I went trough this with a BPO. It left me with a sour taste.
I bought my house in 2009 for $220k, and made extra payments to get to the 80% where I can request the PMI removal. At 80% the bank requires a BPO and it cost me $100. So I did it, and the BPO came and looked at my house, took a few pics and the whole process took maybe 10min. Than the asshole BPO calls me a few days later telling me that he thought it was appraisal not a BPO and asked me for what improvements I've made (new floors trough out, new kitchen, new bathroom). He comes in with an evaluation of $185k... really underpriced considering my improvements, and the excellent condition of the house. I estimate, worst case scenario it came at $205k
Here is the trick part. I got to 78% ltv (on the purchase price) so I would t have to deal with the BPO again, and was expecting an automatic removal of the PMI. Reaching the 78% from the original LTV does NOT remove your PMI, the PMI gets removed at the date is has been scheduled in your original loan. If your current appraisal/BPO is less than your LTV you are screwed. I'm my case major screwed because I did not due diligence.
The takeaway:
- Expect the BPO to undervalue your house than what you expect. They seem to side on the bank side.
- if the BPO undervalues your house, you get to dispute the evaluation. They will send you documentation, and you basically have to do what the BPO did. Find two or three similar houses in your neighborhood and show what they have sold for. My BPO basically matched my house in terms of bedrooms and bathrooms, garage, square footage but did not account for circular driveway, renovations, vinyl/stone siding)
- 80% of current house LTV removes your PMI right now with a BPO.
- 78% of original before the PMI due date LTV does not remove it.
- The bank needs to do a BPO Assesment, if you are to remove the PMI before it's due date.
I think this PMI is complete BS, I wish I was able to avoid it.