29, 1999, the new Homeowner's Protection Act of 1998, also known
as the PMI Act, regarding the cancellation of PMI takes effect.
Private Mortgage Insurance (PMI) is required by lenders when a loan
is originated and closed without a 20 percent down payment. This
insurance protects the lender from default losses in the event a
loan becomes delinquent. The PMI Act will enable homeowners with
new loans originated after July 29, 1999 and who meet specified
requirements to have their PMI canceled. If your loan was issued
before July 29, 1999, CONTACT YOUR MORTGAGE LENDER FOR FURTHER INFORMATION
ON CANCELLATION OF PMI.
The law provides 2 situations in which borrower paid PMI may be
cancel - it can be automatic or by request. Lender-paid PMI is excluded
from these mandates, but requires an up front disclosure to the
borrower about lender-paid PMI.
2 cancellation situations are:
In general, when the homeowner's equity position reaches 22 percent
of the original value of the property, the mortgage servicer must
automatically cancel the PMI. The borrower must be current in
making payments for automatic cancellation to apply.
requirements exist for "high risk mortgage loans, as defined
by government-sponsored entities (i.e. Fannie Mae and Freddie
Mac). CONTACT YOUR MORTGAGE LENDER IF YOU FIT THIS CATEGORY.
Request. Homeowners can request cancellation of the PMI when
their equity position reaches 20 percent of the original value
of the property, if they meet certain criteria. CONTACT YOUR MORTGAGE
LENDER FOR ITS CRITERIA LIST.
BE ADVISED: HUD's Office of Regulatory Affairs and Manufactured
Housing, has no enforcement authority pertaining to the new
PMI Act. Inquiries should be presented to your lender using the
Qualified Written Request
format. Under Section 6 of RESPA, lenders must acknowledge the complaint
within 20 business days and must resolve the complaint within 60
business days by correcting the account or giving a statement of
the reasons for its position.
complain about a lender who does not comply with the PMI Act, please
contact the appropriate federal regulator.
Deposit Insurance Corporation (FDIC)
and Consumer Affairs Division
17th Street., NW
Toll free: (877) 275-3342
handles questions about deposit insurance coverage and complaints
about FDIC-insured state banks which are not members of the
Federal Reserve System.
of Thrift Supervision (OTS)
of Consumer and Civil Rights
G Street, NW
free: (800) 842-6929
handles complaints about
Federal savings and loans and
Federal savings banks.
Credit Union Administration (NCUA)
NCUA Shared Insurance Fund provides Federal insurance for nearly
13,000 credit unions.
Credit Administration (FCA)
of Congressional and Public Affairs
Farm Credit Drive
regulates banks, associations, and related entities that comprise
the Farm Credit System, including the Federal Agricultural Mortgage
Corporation (Farmer Mac)
of the Currency (OCC)
E. Street, SW
free: (800) 613-6743
handles complaints and
regulates National Banks. (Usually have "National"
in name or "N.A." after their names.)
Federal Reserve Board
of Consumer and Community Affairs
and C Streets, NW
complaints and regulates
state-chartered banks and trusts.
Administers Truth-in-Lending, Equal Credit Opportunity Act,
and Fair Credit Reporting Act.