PMI Act Information

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On July 29, 1999, the new Homeowner's Protection Act of 1998, also known as the PMI Act, regarding the cancellation of PMI takes effect. Private Mortgage Insurance (PMI) is required by lenders when a loan is originated and closed without a 20 percent down payment. This insurance protects the lender from default losses in the event a loan becomes delinquent. The PMI Act will enable homeowners with new loans originated after July 29, 1999 and who meet specified requirements to have their PMI canceled. If your loan was issued before July 29, 1999, CONTACT YOUR MORTGAGE LENDER FOR FURTHER INFORMATION ON CANCELLATION OF PMI.

The law provides 2 situations in which borrower paid PMI may be cancel - it can be automatic or by request. Lender-paid PMI is excluded from these mandates, but requires an up front disclosure to the borrower about lender-paid PMI.

The 2 cancellation situations are:

• Automatic. In general, when the homeowner's equity position reaches 22 percent of the original value of the property, the mortgage servicer must automatically cancel the PMI. The borrower must be current in making payments for automatic cancellation to apply.

Different requirements exist for "high risk mortgage loans, as defined by government-sponsored entities (i.e. Fannie Mae and Freddie Mac). CONTACT YOUR MORTGAGE LENDER IF YOU FIT THIS CATEGORY.

• By Request. Homeowners can request cancellation of the PMI when their equity position reaches 20 percent of the original value of the property, if they meet certain criteria. CONTACT YOUR MORTGAGE LENDER FOR ITS CRITERIA LIST.

PLEASE BE ADVISED: HUD's Office of Regulatory Affairs and Manufactured Housing, has no enforcement authority pertaining to the new PMI Act. Inquiries should be presented to your lender using the Qualified Written Request format. Under Section 6 of RESPA, lenders must acknowledge the complaint within 20 business days and must resolve the complaint within 60 business days by correcting the account or giving a statement of the reasons for its position.

To complain about a lender who does not comply with the PMI Act, please contact the appropriate federal regulator.

PMI ENFORCEMENT AUTHORITIES:

Federal Deposit Insurance Corporation (FDIC) Compliance and Consumer Affairs Division 550 17th Street., NW Washington, DC 20429 Toll free: (877) 275-3342	FDIC handles questions about deposit insurance coverage and complaints about FDIC-insured state banks which are not members of the Federal Reserve System.
Office of Thrift Supervision (OTS) Division of Consumer and Civil Rights 1700 G Street, NW Washington, DC 20552 Toll free: (800) 842-6929	OTS handles complaints about Federal savings and loans and Federal savings banks.
National Credit Union Administration (NCUA) 1775 Duke Street Alexandria, VA 22314-3428 (703) 518-6330	The NCUA Shared Insurance Fund provides Federal insurance for nearly 13,000 credit unions.
Farm Credit Administration (FCA) Director Office of Congressional and Public Affairs Farm Credit Administration 1501 Farm Credit Drive McLean, VA 22102-5090 (703) 883-4100	FCA regulates banks, associations, and related entities that comprise the Farm Credit System, including the Federal Agricultural Mortgage Corporation (Farmer Mac)
Comptroller of the Currency (OCC) Compliance Management 250 E. Street, SW Mail Stop 309 Washington, DC 20219 Toll free: (800) 613-6743	OCC handles complaints and regulates National Banks. (Usually have "National" in name or "N.A." after their names.)
The Federal Reserve Board Division of Consumer and Community Affairs 20th and C Streets, NW Mail Stop 801 Washington, DC 20551 (202) 452-3693	Handles complaints and regulates state-chartered banks and trusts. Administers Truth-in-Lending, Equal Credit Opportunity Act, and Fair Credit Reporting Act.