Together, MBA and ACB represent the major players in the origination, servicing and investor business for loans destined for the secondary market and those that will stay in the originator's portfolio. Private mortgage insurance, which is usually required when the downpayment on a home loan is less than 20 percent, protects lenders against the risk of mortgage loan default. Many lenders routinely cancel PMI coverage once a homeowner's equity reaches 20 percent, but cancellation policies vary and only a handful of state laws deal with the subject. Congress passed the Homeowners Protection Act last year to address these concerns. Lenders must provide separate annual PMI disclosures for loans originated before July 29, 1999.
Termination is required only if the loan is current.
Borrowers can ask to have their PMI canceled earlier when the LTV reaches 80 percent if their recent payment history is unblemished and there is no subordinate debt on the property. Under no circumstance may PMI be required beyond the midpoint of the amortization period if the borrower is current. The guide is organized into six tabbed parts that parallel the law. A compliance checklist that identifies the necessary action to be taken at each step in the loan transaction. A comprehensive glossary of key terms.