|
Cancelling PMI
The Federal Government passed a private mortgage
insurance (PMI) reform law, effective July 29, 1999. Known as
the Homeowners Protection Act of 1997, the new law amends the
Federal Truth in Lending Act and could save some homeowners more
than $1,000 a year in PMI payments.
The key provision in the new law forces most
lenders to automatically cancel PMI when a homeowner pays down
their mortgage balance to at least 78 percent of the home's
original purchase price. Homeowners also may apply to have the
insurance removed when the mortgage balance drops to 80 percent
of the original value. The appraised value may be determined by
the original, or a new appraisal. Both provisions require that
the borrower be current with their mortgage payments.
PMI reform not for all:
Only loans written July 29, 1999 or later are
covered by the new law, and the small print in many other
mortgages could preclude still more consumers from canceling PMI.
If you have questions about PMI cancellation
policies, contact your mortgage company. |
