A California homeowner with a conventional loan wants to remove their private mortgage insurance (PMI). Under the Homeowners Protection Act, at what loan-to-value ratio is the lender required to automatically terminate PMI based on the original value of the property?
Correct Answer
A) 78% LTV based on original value
Under the Homeowners Protection Act, the lender must automatically terminate PMI when the loan balance reaches 78% of the original value of the property, provided the borrower is current on payments. The borrower may also request cancellation at 80% LTV.
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Related Topics & Key Terms
Key Terms:
Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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