Many people have been inquiring about Private Mortgage Insurance or PMI. The legislation enacted to protect homeowners regarding PMI is the Homeowners Protection Act of 1998.
Less than a decade after the passing of a bill allowing homeowners to cancel private mortgage insurance policies, the number of cancellations has skyrocketed. The legislation allowing this is outlines requirements for borrowers to cancel their private mortgage insurance. This bill was passed on July 29, 1998, and went into effect in 1999. Homeowners may cancel private mortgage insurance after 24 months if they have an on time payment record and their home equity has grown to more than 20 percent. Homeowners may have to pay for an appraisal of their property to document the equity they have in their homes. Mortgage insurance is typically cancelled automatically when the mortgage amortizes 78 percent of it’s original value; however, few people carry the insurance for this long.