Description
If a borrower is unable or chooses not to make a down payment on a home purchase of at least 20 percent, many lenders require that borrower to obtain private mortgage insurance (PMI). PMI allows these prospective buyers to obtain mortgage financing at affordable rates. PMI also protects the lender in case borrowers default on their mortgage payments when the house is not worth enough to entirely repay the lender through a foreclosure sale. The premium for PMI is included in the borrower’s monthly mortgage payment and varies depending on the type and size of the loan, the down payment amount, and the credit of the borrower. Many borrowers do not realize that eventually they can eliminate PMI premiums. This course explains how the Homeowners Protection Act (Act) establishes the right to cancel PMI, including three different types of cancellation and exceptions to the requirements. The course also covers required PMI- related disclosures and notices. Finally, the course describes suggested practices to build a control environment and consequences of noncompliance with the Act.
