PRIVATE MORTGAGE INSURANCE CANCELLATION POLICIES
- Applies to single family residential loans originated on or after July 29, 1999
Borrower Disclosures Required
- The originator (lender) must provide to borrowers, at closing, disclosure regarding the right to cancel private mortgage insurance
- The servicer must provide an annual disclosure to borrowers regarding their right to cancel PMI, either:
- On the escrow statement
- Or on the IRS Disclosure of Interest Payments Statement
- For those loans originated before July 29, 1999, servicers are required to give annual notice
- That the possibility of cancellation exists
Cancellation at 80% LTV
- Borrower is allowed to cancel MI when the loan amortized to 80% LTV based on the initial amortization schedule provided
- Borrower must make written request
- Borrower must provide evidence (as determined by investor) that property value has not depreciated below the original value
- Pay history is good (current and 0x30 in the last 12 months and 0x60 in the last 24 months)
Automatic Cancellation at 78% LTV
- Servicer must cancel MI when the LTV reaches 78% (based on the initial amortization schedule) if the borrower is current. If the borrower I not current at this time, the coverage is terminated when the borrower becomes current
- Exceptions to automatic cancellation
- Cancellation of MI on a high-risk conforming loan (as defined by the agencies) at the mid-point of the amortization period provided the borrower is current
- Cancellation of MI on a high-risk non-conforming loan (as defined by the investor) at 77% LTV provided the borrower is current
Refunds of Premium
- Refunds of unearned premium must be transferred to the borrower within 45 days
- Mortgage insurer has no longer than 30 days to transfer premium to servicer
Law goes into effect on July 28, 1999
conventional
loan package
LTV's
Mortgage
Insurance
Remove PMI
Loans LTV
Refinances
