A borrower with a conventional loan has been paying PMI for 2 years. They want to cancel PMI based on improvements made to the property. Under federal law, what is required for PMI cancellation in this scenario?
Correct Answer
C) Lender may require new appraisal and evidence that LTV is 80% or less
Under the Homeowners Protection Act, borrowers can request PMI cancellation before the automatic termination dates if the LTV ratio reaches 80% or less. When this is due to property improvements or appreciation, lenders may require a new appraisal at the borrower's expense and other evidence that the LTV requirement is met.
Why This Is the Correct Answer
Under the Homeowners Protection Act, borrowers can request PMI cancellation before the automatic termination dates if the LTV ratio reaches 80% or less. When this is due to property improvements or appreciation, lenders may require a new appraisal at the borrower's expense and other evidence that the LTV requirement is met.
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