If a borrower fails to receive notification of PMI cancellation, what action can they take?

The correct answer is that a borrower can request the cancellation of PMI directly. Under the provisions set forth by the Homeowners Protection Act (HPA), borrowers have specific rights related to the cancellation of private mortgage insurance (PMI). If a borrower believes that they are eligible for cancellation—such as having reached a certain level of equity in their home or meeting other criteria—they can proactively contact their lender or servicer to formally request the PMI cancellation.

This option empowers the borrower to take charge of their PMI payments rather than relying solely on the servicer to provide the notification. It's important to note that borrowers are generally entitled to re-evaluate their PMI status after they have reached 20% equity based on either the original purchase price or the property's current appraised value.

The other choices do not align with the rights and options available to borrowers under the law. Filing a legal claim may not be necessary or appropriate and can be a lengthy and costly process, while continuing to pay PMI indefinitely is not reasonable considering that borrowers can initiate cancellation requests when eligible. Accepting the servicer's decision without question neglects the active role borrowers can take in managing their insurance costs.