Congress passed The homeowners protection act of 1998 to address borrowers’ difficulties in cancelling PMI when they had reached a certain level of equity in the property. The statute requires the following: Automatic termination of borrower-paid private mortgage insurance when the mortgage.
or by the automatic termination provision, the servicer must terminate PMI coverage by the first day of the month immediately following the date that is the midpoint of the loan’s amortization period if, on that date, the borrower is current on the payments required by the terms of the
Hansen said that after passage of the PMI-cancellation law two years ago. Under the new proposal, FHA homeowners would be eligible for automatic cancellation of their mortgage insurance premiums.
The federal statute governing PMI termination is the HPA, contained at 12 U.S.C.A 4900-4910 (West 2001). Section 4902(b) thereof requires the automatic termination of PMI on the "termination date" of the mortgage. Section 4901(18) defines "termination date" as follows:
The automatic termination date is the date the lender must terminate PMI even without a borrower's request and is based on the initial amortization schedule.
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Automatic termination: The month following the mid-point of the amortization period. 2-4 Family Principal Residence or 1-4 Unit Investment Property Automatic termination: The month following the mid-point of the amortization period. Not eligible for automatic cancellation. Borrower Initiated Cancellation guidelines fannie mae freddie Mac
IN A STRONG, pro-consumer move, the Bush administration has decided to allow automatic termination of mortgage. with borrowers in the conventional marketplace who pay private mortgage insurance.
Automatic Termination of Conventional Mortgage Insurance The servicer must not charge the borrower a fee for processing an automatic termination. The servicer must take the following steps to terminate the MI, as applicable: 1. determine when the MI is due to automatically terminate.
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The right to request cancellation of PMI and the date on which this request may be made. The requirement that PMI be automatically terminated and the date on which this will occur. Any exemptions to the right to cancellation or automatic termination. A written initial amortization schedule (fixed-rate loans only).
(Note: info below provided by the Federal Trade Commission) The Homeowners Protection Act of 1998 – which became effective in 1999 – establishes rules for automatic termination and borrower cancellation of private mortgage insurance (PMI) on home mortgages.