A servicer automatically terminates PMI when the loan balance reaches 78% of the original property value at the midpoint of the loan's amortization schedule. Is this action compliant with the HPA?
Correct Answer
D) Yes, but only if the borrower is current on payments
Under the HPA, automatic PMI termination occurs when the loan balance reaches 78% of the original property value at the midpoint of the amortization period, but ONLY if the borrower is current on payments. The servicer's action is correct in principle but must verify the borrower's payment status.
Why This Is the Correct Answer
Under the HPA, automatic PMI termination occurs when the loan balance reaches 78% of the original property value at the midpoint of the amortization period, but ONLY if the borrower is current on payments. The servicer's action is correct in principle but must verify the borrower's payment status.
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