As of July 1999 lenders are required by Federal Law to cancel Private Mortgage Insurance once the loan goes below 78% of the original loan amount and the borrowers have a good payment history. If one of your customers has a loan made after July of 1999 the borrower has the right to cancel their PMI once their homes equity reaches 20%. I have been made aware of a situation were the lender said the PMI was for 5 years regardless of the homes equity. This loan was an FHA loan and the home was purchased in 2005. The PMI payment is lower now than it was when the home was first bought.
If there is anyone out there who has more knowledge about the law and PMI I would love to hear from you. My customer is in a quandary as to what to do, and I don't feel comfortable giving him advice on a matter that I am not totally clear about. So if you can help I would appreciate it. Thanks!!!
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