the federal homeowners protection act (hpa) provides rights to eliminate private mortgage insurance (pmi) under certain circumstances. The law generally provides two ways to remove the PMI from your home loan: (1) request cancellation of the PMI or (2) automatic or final termination of the PMI.
request pmi cancellation
Reading: When is mortgage insurance removed
You have the right to request that your servicer cancel PMI when you have reached the date your mortgage principal balance is scheduled to drop to 80 percent of your home’s original value. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can’t find the disclosure form, contact your administrator.
You can request to cancel pmi sooner if you’ve made additional payments that bring your mortgage principal balance down to 80 percent of your home’s original value. For this purpose, “original value” generally means the lower of the contract sales price or the appraised value of your home at the time you bought it (or, if you’ve refinanced, the appraised value at the time you bought it). in which you refinanced).
There are other important criteria you must meet if you want to cancel the PMI on your loan:
- Your request must be in writing.
- You must have a good payment history and be current on your payments.
- Your lender may require you to certify that there are no minor liens (such as a second mortgage) on your home.
- Your lender may also require you to provide proof (for example, an appraisal) that the value of your property has not fallen below the home’s original value. If your home’s value has dropped below its original value, you may not be able to cancel PMI at this time.
Even if you don’t ask your servicer to cancel pmi, your servicer should still automatically cancel pmi on the date your principal balance is scheduled to reach 78 percent of your home’s original value. In order for your PMI to terminate on that date, you must be current on your payments on the early termination date. otherwise pmi will not be canceled until shortly after your payments are updated.
final termination of the pmi
there is another way to stop paying pmi. If you are current on your payments, your lender or servicer must end PMI the month after you reach the midpoint of your loan’s amortization schedule. (This final termination applies even if you haven’t reached 78 percent of your home’s original value.) the midpoint of your loan’s amortization schedule is half of the total term of your loan. for 30-year loans, the midpoint would be after 15 years have passed.
This standard for ending PMI in the middle of the loan term is more likely to occur for people who have a mortgage with an interest-only period, principal forbearance, or a balloon payment. Please note that you must be current on your monthly payments for termination to occur.
other things to consider about the homeowner protection law
Loan investors, including Fannie Mae and Freddie Mac, often create their own PMI cancellation guidelines that may include PMI cancellation provisions beyond what HPA provides. But these guidelines cannot restrict the rights that the hpa grants to borrowers. For example, the HPA does not contain any requirement for loan tenure before a borrower can apply for discharge or become eligible for PMI automatic termination (known as the “adequacy” requirement).
Note: Homeowner Protection Act rights apply to mortgages related to primary single-family residences that closed on or after July 29, 1999.
if you have a loan from the federal housing administration (fha) or the department of veterans affairs (va), the hpa does not apply. If you have questions about mortgage insurance on an FHA or VA loan, contact your servicer.
If you have mortgage insurance paid for by the lender, different rules apply.