Cancelling PMI

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. 

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