A borrower's PMI was scheduled for automatic termination on the loan's 15th anniversary (midpoint of 30-year term). However, the servicer failed to terminate the PMI and continued collecting premiums for 8 additional months. What must the servicer do?
Correct Answer
A) Refund only the premiums collected after the termination date
Under the HPA, when a servicer fails to automatically terminate PMI as required, they must refund any unearned premiums collected after the termination date. While additional damages may apply in some cases, the primary requirement is to refund the improperly collected premiums.
Why This Is the Correct Answer
Under the HPA, when a servicer fails to automatically terminate PMI as required, they must refund any unearned premiums collected after the termination date. While additional damages may apply in some cases, the primary requirement is to refund the improperly collected premiums.
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