For example, it wouldn't be fair to the lender to require termination if the borrower has been chronically late on his payments, has taken out a second mortgage, or has moved out and is renting the house. Lenders can be made responsible if termination is based on the current loan balance and the original property value, because the lender has that information. But lenders can't be made responsible for termination based on the current property value, because they don't have that information and it would be inordinately costly to maintain it for every borrower. There is no alternative to making borrowers responsible for initiating termination based on current market value. They know better than the lender what their property may be worth.
Government requires lenders to disclose the rules and procedures at the time the loan is made.
So borrowers already suffering from information overload at the closing table, get one more set of disclosures that they can ignore. Now introduce the additional complication that there are multiple government entities with somewhat different agendas setting termination rules. Fannie Mae, a US Government-sponsored enterprise, has established the termination rules for the mortgages it purchases from lenders. Freddie Mac, another US Government-sponsored enterprise, has established the termination rules for the mortgages it purchases from lenders. Congress in the Homeowners Protection Act of 1998 set out ground rules for termination of private mortgage insurance on all mortgages originated after July 29, 1999.