What is PMI or Private Mortgage Insurance?
Private Mortgage Insurance The Homeowners Protection Act of 1998 (Public Law 105-216) was signed into law on July 29, 1998. The Act provides a statutory framework for canceling or automatically terminating private mortgage insurance (PMI). PMI is an insurance policy that protects the lender from losses when a mortgage with a low down payment is in default. In general, most PMI requirements in connection with a residential mortgage transaction entered into after July 29, 1999, will terminate when the mortgage is scheduled to reach 78 percent of the original value of the property. A mortgagor with a good payment history and who meets other requirements of the Act may request the cancellation when the mortgage balance reaches 80 percent of the property’s value. The federal banking agencies, the NCUA, and the Farm Credit Administration are directed to enforce these requirements.
