Skip to main content

CFPB Issues Guidance to Servicers on PMI Cancellation
Aug 04, 2015

The Consumer Financial Protection Bureau (CFPB) has issued a bulletin providing guidance to mortgage servicers regarding the cancellation and termination of private mortgage insurance (PMI). The bulletin explains certain requirements of the Homeowners Protection Act and is intended to help servicers comply with the law. 

“Consumers should not be billed for unnecessary private mortgage insurance,” said CFPB Director Richard Cordray. “We will continue to supervise mortgage servicers to ensure they are treating borrowers fairly, and today’s guidance should help servicers come into compliance with the Homeowners Protection Act.” 

PMI protects the lender if the borrower stops making payments on a loan. Lenders generally require consumers to purchase PMI if their down payment is less than 20 percent of the sales price or the appraised value of the home. PMI premiums are added to the borrower’s monthly mortgage payment. The Homeowners Protection Act of 1998 was passed by Congress to address borrowers’ difficulties in cancelling private mortgage insurance when they had reached a certain level of equity in the property. 

Private mortgage insurance can be expensive for consumers, and the Homeowners Protection Act provides specific cancellation and termination rights. If a servicer does not cancel a borrower’s PMI promptly, it can lead to the borrower paying significant amounts of money on unnecessary premiums. 

The CFPB has identified substantial industry confusion over implementation of the PMI cancellation and termination requirements in the Homeowners Protection Act. Examinations by the CFPB have identified violations of several different provisions of the Act.  The CFPB discussed a number of Homeowners Protection Act violations in the Summer 2013, Winter 2013, and Summer 2015 issues of Supervisory Highlights. 

Aug 04, 2015
CFPB Slaps Bank Of America With $12 Million Penalty For False Mortgage Data Reporting

For at least four years, hundreds of Bank of America loan officers failed to ask mortgage applicants certain demographic questions.

Rising Home Values Propel Higher Loan Limits

FHFA Announces 5.6% Increase in Conforming Loan Limits for 2024

NMLS — Then, Now, And To Come

Leaders reminisce, plan, and dream about the regulatory group on its 15th birthday

Fannie Mae, Freddie Mac Shareholders Win Prejudgment Interest On $299M Verdict

Federal court upholds shareholders' right to interest after government's wrongful claim on profits; simple interest rate set, drawing from Delaware law precedent.

ADUs Can Now Be Sold Separately In California

‘Backyard revolution’ opens up the affordable housing market.

Cracking The Crackdown

How to eliminate and prevent ‘junk’ fees to avoid penalties