When is private mortgage insurance (PMI) automatically terminated according to the Homeowners Protection Act (HPA)?

Private mortgage insurance (PMI) is automatically terminated when the loan-to-value (LTV) ratio reaches 78% of the property's original value, according to the Homeowners Protection Act (HPA). This regulation is designed to protect homeowners from the ongoing costs of PMI once they have built sufficient equity in their home. The act specifies that lenders must cancel PMI when the borrower’s equity reaches a certain threshold, allowing homeowners to alleviate the financial burden associated with this insurance.

While homeowners can request PMI removal at any point, and the insurance can also end if the property is sold or the loan balance is paid off, the HPA specifically outlines the automatic termination process tied directly to the LTV ratio. This ensures that borrowers do not have to remain burdened by PMI payments unnecessarily once they have achieved a designated level of equity in their property.