Under the Homeowners Protection Act, when can borrowers request lenders to cancel PMI?

Under the Homeowners Protection Act, borrowers have the right to request the cancellation of Private Mortgage Insurance (PMI) when their loan balance falls below 80% of the original value of the property at the time the loan was taken out. This provision is designed to protect homeowners from the additional financial burden of PMI once they have built enough equity in their homes.

The rationale for this 80% threshold is based on the recognition that when a borrower has 20% equity in their home, the lender no longer faces the same level of risk that justified the requirement for PMI. As property values can change over time, the Act provides that borrowers can request cancellation based on their current loan balance relative to the initial property value, ensuring that they are not unnecessarily paying for insurance that is no longer needed.

This concept highlights the broader goal of the Homeowners Protection Act, which is to empower homeowners and provide them with options to manage their mortgage insurance obligations fairly and efficiently.