Mortgage Loan PmiPmi Mortgage Loan
Before the HPA was adopted, there were no statutory PMI standards. Among other conditions, the HPA has established a 80% limit of the loan on the value of the 'borrower's request for termination' of the PMI. As part of a PMI reversal request, the HPA allows the creditor to request proof that the present value of the real estate has not deviated from its initial value.
HPA also established a 78% Loan to Value Ratio for the "automatic termination" of the PMI. Unlike the required lapse rules, the HPA's automated lapse rules do not allow the creditor to require proof that the initial value of the real estate has not fallen. The PMI must be reversed as soon as the loan recipient becomes up-to-date after the notice date, if the loan recipient is not currently on the loan on the date of notices.
Lastly, the HPA provides for'final termination' of the PMI at the average of the amortisation periods laid down in the loan documentation, which for a 30 year default mortgage loan is the maximum 180 years. The CFPB warns with regard to these provisions: "The supervisor has found breaches of this rule in one or more audits, both for a borrower who was overdue on the "date of termination" and for a borrower who was overdue on the "date of termination" but later became overdue.
CFPB urges service personnel to ensure that the date of notice, unlike the date of notice, does not allow a mortgage creditor to demand proof of the present value of the real estate, nor is a service employee obliged to calculate the real amount of capital on the basis of the real payment. Rather, the date of notice is not dependant on changes in the real estate value.
" CFPB Bulletin further notes that while investment policies may pretend to require different cancellations and denunciations of PMIs, they cannot require higher cancellations and denunciations than those of the HPA. In addition, when collecting PMI premia in breach of the HPA, CFPB warns that they should not be immediately surrendered to the borrowers and not deposited for an indefinite period.
The bulletin indicates a new interest in CFPB in PMI and the HPA demands. Creditors and credit service providers should therefore assess their PMI denunciation guidelines and processes without delay to make sure that these conditions are fulfilled and that higher denunciation and denunciation levels are not required.
For the full CFPB Bulletin 2015-03 on the cancellation and termination of mortgage insurance, please visit the CFPB website.