I am regularly asked ” how can I cancel my mortgage insurance?” Under HPA the Borrower has the right to request cancellation of PMI when they pay down their mortgage to the point that it equals 80% of the original purchase price or appraised value of the home, whichever is less. This includes amortization or actual payments. They of course need to have a good payment history, meaning that they cannot have been 30 days late with their mortgage payment within a year of the request, or 60 days late within two years. The lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage.

Automatic Termination

Under HPA Mortgage Lenders and/or Servicers must automatically cancel MI coverage on most loans, as of the date on which the original amortization schedule shows the principal balance will decline to 78% LTV if they are current on the loan. In the event the loan is delinquent on the date of automatic termination, the lender must terminate the coverage as soon as the loan becomes current.

Final Termination

Under HPA, if the MI has not been canceled or otherwise terminated, coverage must be removed when the loan reaches the midpoint of the amortization period.

Cancelation and Termination rules do not apply to:

• Mortgages other than single-family dwellings 
• Mortgages on second homes or non-owner occupied property
• Mortgages obtained for purposes other than acquisition, construction, or refinancing of a dwelling 
• Mortgages designated as high-risk loans (except that final termination does apply) Could not find any actual definition of high risk.

Cancelation using current value (appreciation)

From what I read the law does not require the lender to consider the current property value (appreciation) for PMI cancelation.

Please call me @ (775) 828-7006 with all of your mortgage questions.