The Homeowners Protection Act (HPA) protects homeowners with private mortgage insurance (PMI) and requires lenders to cancel PMI payments once the loan balance is below 78% of the original home value. Borrowers can also request cancellation at 80%. PMI is paid by the borrower and allows loans above 80% of a home’s value. The HPA requires lenders to disclose when PMI payments will cease. The law does not apply to all residential mortgage loans and borrowers must meet certain requirements. Information is available online or from mortgage lenders.
The Homeowners Protection Act, or HPA, is a law passed by the United States Congress and signed into law by President Bill Clinton in 1998. It is designed to protect homeowners who have mortgages on their homes using private mortgage insurance, or PMI. The HPA applies to some residential mortgage loans that originated on or before July 29, 1999, although there are some provisions that apply to loans made before that date.
The primary purpose of the Homeowners Protection Act is to require mortgage lenders to cancel or terminate a borrower’s private mortgage insurance payments once the outstanding balance on the loan does not exceed 78% of the value of the original value of the house, as long as certain conditions are met. Borrowers also have the right under the HPA to request the cancellation of private mortgage insurance when the loan value reaches 80%. Private mortgage insurance is insurance coverage for mortgage lenders who originate loans to borrowers who are unable to provide at least a 20% down payment on a home purchase. Private mortgage insurance may also apply to mortgage refinance borrowers if the new mortgage loan amount exceeds 80% of the home’s current value.
The private mortgage insurance premium is paid by the borrower to the lender, and the premium is added to the borrower’s monthly mortgage payment amount. The PMI payment amount will vary depending on the mortgage lender and the specific situation of the borrower; however, the average private mortgage insurance premium is about half of one percent of the total loan amount. The benefit of private mortgage insurance is that it allows a borrower to obtain a mortgage loan that exceeds 80% of a home’s current value, while also providing a means for borrowers to protect themselves in the event that the borrower fails. to grant a loan.
Before the law was passed, many borrowers would continue to pay PMI premiums even after the outstanding balance on the mortgage loan fell to 80% or below the home’s original value. In addition to imposing an automatic cessation point for PMI premiums, the Homeowners Protection Act also requires lenders to provide and disclose exactly when private mortgage insurance payments will cease or when the lender will notify the borrower of pending cancellation, whichever is more. The loan is a fixed or variable rate mortgage. The law does not apply to all types of residential mortgage loans, and there are certain requirements that borrowers must meet before they are eligible for some of the protections under the HPA. Those interested in learning more about HPA can find a wealth of information on the Internet. A mortgage lender or banker can also be a good source of information regarding homeowners protection law.
Protect your devices with Threat Protection by NordVPN
