Mortgage Insurance Cancellation

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The Cancellation Process

The Homeowners Protection Act of 1998 became effective July 29, 1999; the Act requires that lenders cancel PMI when your equity versus original purchase price reaches 22%. Also, when 20% equity is attained based on current values, you can request that PMI to be cancelled (for loans made after July 1999), regardless of the original purchase price. Lenders are not required to honor your request; if they do, they will require you to have the loan for one-year and provide an appraisal. You will have to pay for the appraisal, but the lender may want to order it. Call them first.

Exceptions:

Your mortgage is considered "high risk"
You have not paid timely payments the year prior to normal cancellation, or your request to have PMI cancelled.
You have other liens on the property.

Additional Provisions in the Law

Lenders/mortgage services must advise borrowers at time of closing and annually about PMI termination and cancellation.
Lenders and servicers must provide a telephone number for all their mortgagors to obtain information about PMI termination & cancellation.
Although the Homeowners Protection Act's termination/cancellation rights do not apply to loans funded before July 29, 1999, or mortgages with lender paid PMI funded on any date, lenders/servicers must advise mortgagors of their termination/cancellation rights they would otherwise have under those loans (such as rights established by the contract or state law).