What is the primary purpose of the Homeowners Protection Act?

The Homeowners Protection Act primarily aims to protect homeowners from unnecessary private mortgage insurance (PMI) costs. PMI is typically required when a borrower makes a down payment of less than 20% of the home's purchase price; it serves to protect the lender in case of default. The Act sets forth guidelines that allow borrowers to request cancellation of PMI once their loan-to-value (LTV) ratio reaches 80%, meaning that they have gained sufficient equity in their home. This legislation is designed to ensure that homeowners do not continue to pay for PMI once they no longer need this insurance, thereby reducing their monthly payments and overall financial burden.

The other options do not align with the primary intent of the Homeowners Protection Act. There are no mandates for maximum interest rates on mortgages, nor does the Act deal with home insurance regulations or establish minimum home equity requirements. These topics, while relevant to homeownership and financing, fall outside the specific protections afforded by the Homeowners Protection Act.