Lender demands PMI despite 50% equity

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DEAR BENNY: My mother-in-law's mortgage was sold to another lender. The new lender is asking for PMI, which was not required by her previous lender. She has more than 50 percent equity in her home. She really cannot afford the PMI. Does the new lender have this right? What are her options? --Craig DEAR CRAIG: For the benefit of my readers, PMI stands for private mortgage insurance. Typically, when you buy a house and do not put down at least 20 percent of the purchase price, the lender may require PMI. This is insurance that will insure that the lender will be paid in the event of a foreclosure. The buyer has to pay the annual PMI premiums. (To get around this, in the past few years, lenders would make two loans to home buyers: a first trust (mortgage) in the amount of 80 percent of the purchase price and a second trust in the amount of some -- or even all -- of the difference. Of course, nowadays, those kinds of loans -- called "piggyback" -- are getting harder a...