A quality-control reviewer flags a case because a borrower asks to cancel PMI at the scheduled 80 percent point. What correction is appropriate?
Correct Answer
D) Cancel PMI if the written 80 percent request meets conditions
Why this is correct: Under the Homeowners Protection Act (HPA), the required corrective action when a borrower's written request meets the conditions at the 80% point is to cancel the PMI. The original explanation confirms that borrower-requested cancellation is a right under the statute. Why the other choices are wrong: "Treat prior mortgage experience as a substitute for the required compliance condition" is wrong because experience does not override the black-letter law. "Use a generic national checklist instead of the requirement in this branch procedure update" is wrong because a checklist must accurately reflect the law; if it doesn't, it should be updated, not blindly followed. "Document that HPA PMI was reviewed, but take no required corrective action" is wrong because review without action violates the HPA's mandate to cancel when conditions are satisfied. Exam tip: In quality control, finding that the conditions for PMI cancellation are met but no action was taken is a clear compliance failure.
Why This Is the Correct Answer
The correct response is "Cancel PMI if the written 80 percent request meets conditions" because Lines 76-85; CFPB PMI cancellation page, borrower-requested cancellation section.
Why the Other Options Are Wrong
Option A: Treat prior mortgage experience as a substitute for the required compliance condition.
Treat prior mortgage experience as a substitute for the required compliance condition. is not correct because it does not apply the rule tested by this file scenario.
Option B: Use a generic national checklist instead of the requirement in this branch procedure update.
Use a generic national checklist instead of the requirement in this branch procedure update. is not correct because it does not apply the rule tested by this file scenario.
Option C: Document that HPA PMI was reviewed, but take no required corrective action.
Document that HPA PMI was reviewed, but take no required corrective action. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
Homeowners Protection Act PMI rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to Homeowners Protection Act PMI rules; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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