Cancellation of PMI
The Homeowners Protection Act of 1998 - which became effective in 1999 - establishes
rules for automatic termination and borrower cancellation of PMI on home mortgages.
These protections apply to certain home mortgages signed on or after July 29,
1999 for the purchase, initial construction, or refinance of a single-family
home. These protections do not apply to government-insured FHA or VA loans or
to loans with lender-paid PMI.
For home mortgages signed on or after July 29, 1999, your PMI must - with certain
exceptions - be terminated automatically when you reach 22 percent equity in
your home based on the original property value, if your mortgage payments are
current. Your PMI also can be canceled, when you request - with certain exceptions
- when you reach 20 percent equity in your home based on the original property
value, if your mortgage payments are current.
One exception is if your loan is "high-risk." Another is if you have
not been current on your payments within the year prior to the time for termination
or cancellation. A third is if you have other liens on your property. For these
loans, your PMI may continue. Ask your lender or mortgage servicer (a company
that collects your payments) for more information about these requirements.
If you signed your mortgage before July 29, 1999, you can ask to have the PMI
canceled once you exceed 20 percent equity in your home. But federal law does
not require your lender or mortgage servicer to cancel the insurance