On July 29,
1999, the new Homeowner's Protection Act of 1998, also known as the PMI
Act, regarding the cancellation of PMI takes effect. Private Mortgage
Insurance (PMI) is required by lenders when a loan is originated and
closed without a 20 percent down payment. This insurance protects the
lender from default losses in the event a loan becomes delinquent. The
PMI Act will enable homeowners with new loans originated after July
29, 1999 and who meet specified requirements to have their PMI
canceled. If your loan was issued before July 29, 1999, CONTACT YOUR
MORTGAGE LENDER FOR FURTHER INFORMATION ON CANCELLATION OF PMI.
The law provides 2 situations in which borrower paid PMI may be cancel -
it can be automatic or by request. Lender-paid PMI is excluded from
these mandates, but requires an up front disclosure to the borrower
about lender-paid PMI.
The 2 cancellation situations are:
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Automatic. In general, when the homeowner's equity position
reaches 22 percent of the original value of the property, the mortgage
servicer must automatically cancel the PMI. The borrower must be
current in making payments for automatic cancellation to apply.
Different requirements exist for "high risk mortgage loans, as defined
by government-sponsored entities (i.e. Fannie Mae and Freddie Mac).
CONTACT YOUR MORTGAGE LENDER IF YOU FIT THIS CATEGORY.
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By Request. Homeowners can request cancellation of the PMI when
their equity position reaches 20 percent of the original value of the
property, if they meet certain criteria. CONTACT YOUR MORTGAGE LENDER
FOR ITS CRITERIA LIST.
PLEASE BE ADVISED: HUD's Department
of Consumer and Regulatory Affairs and the RESPA Division has no
enforcement authority pertaining to the new PMI Act. Inquiries
should be presented to your lender using the
Qualified Written Request format. Under Section 6 of RESPA, lenders
must acknowledge the complaint within 20 business days and must resolve
the complaint within 60 business days by correcting the account or
giving a statement of the reasons for its position.
To complain about a lender who does not comply with the PMI Act, please
contact the appropriate federal regulator.
PMI ENFORCEMENT AUTHORITIES:
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Federal Deposit Insurance Corporation (FDIC)
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Compliance and Consumer Affairs Division
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550 17th Street., NW
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Washington, DC 20429
Toll free: 1-800-934-3342
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FDIC handles questions about deposit insurance coverage and
complaints about FDIC-insured state banks which are not members of
the Federal Reserve System. |
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Office of Thrift Supervision (OTS)
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Division of Consumer and Civil Rights
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1700 G Street, NW
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Washington, DC 20552
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Toll free: 1-800-842-6929
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OTS handles complaints about
Federal savings and loans and
Federal savings banks. |
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National Credit Union Administration (NCUA)
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1175 Duke Street
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Alexandria, VA 22314-3428
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(703) 518-6330
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The NCUA Shared Insurance Fund provides Federal insurance for nearly
13,000 credit unions. |
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Farm Credit Administration (FCA)
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Director
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Office of Congressional and Public Affairs
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Farm Credit Administration
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1501 Farm Credit Drive
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McLean, VA 22102-5090
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FCA regulates banks, associations, and related entities that
comprise the Farm Credit System, including the Federal Agricultural
Mortgage Corporation (Farmer Mac) |
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Comptroller of the Currency (OCC)
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Compliance Management
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250 E. Street, SW
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Mail Stop 309
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Washington, DC 20219
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Toll free: 1-800-613-6743
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OCC handles complaints and
regulates National Banks. (Usually have "National" in name or "N.A."
after their names.) |
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The Federal Reserve Board
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Division of Consumer and Community Affairs
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20th and C Streets, NW
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Mail Stop 801
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Washington, DC 20551
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(202) 452-3693
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Handles complaints and regulates
state-chartered banks and trusts.
Administers Truth-in-Lending, Equal Credit Opportunity Act, and Fair
Credit Reporting Act. |
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