Which statement is true regarding Private Mortgage Insurance (PMI)?

The statement that loan servicers must give borrowers an annual disclosure about the right to cancel Private Mortgage Insurance (PMI) is accurate. This requirement is in place to inform borrowers of their rights related to PMI and to ensure they are aware of the factors that could lead to the cancellation of such insurance. According to the Homeowners Protection Act, borrowers have the ability to cancel PMI when their loan-to-value (LTV) ratio reaches a certain threshold, typically 80% of the home's original value. The annual disclosure serves as a reminder and facilitates transparency between the borrower and the servicer, affecting the overall cost of homeownership.

The need for this regulation stems from the potential financial burden that PMI can impose on borrowers, particularly if they do not realize they have the option to remove it once certain equity levels are reached. This focus on consumer protection is a key aspect of federal laws that govern mortgage practices, ensuring that borrowers are not unduly burdened for longer than necessary.

In contrast, the other options do not accurately represent the requirements or facts regarding PMI. Not all loans require PMI; it is typically needed for loans with a down payment of less than 20%. Additionally, PMI is not a requirement for VA loans, which are backed by the