Transcription of Homeowners Protection Act - Federal Reserve
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Homeowners Protection Act - Federal Reserve
Homeowners Protection ActBackgroundThe Homeowners Protection Act of 1998 becameeffective in July 1999. The act, also known as thePMI Cancellation Act, addresses the difficultieshomeowners have experienced in canceling pri-vate mortgage insurance (PMI) coverage. It estab-lishes provisions for the cancellation and termina-tion of PMI,1sets forth disclosure and notificationrequirements, and requires the return of , lenders have viewed an 80 percentloan-to-value (LTV) ratio (and a corresponding20 percent down payment) as a prudent standardfor making consumer real estate loans. This ratiohas served to ensure that the borrower had enoughof an interest in the property to continue to makethe payments and, in the event the borrower wasunable to make the payments, that the lender hadsufficient equity available to cover lender foreclo-sure housing prices increased (and the corre-sponding down payment amounts increased),saving for a sufficient down payment becamedifficult for many prospective Homeowners .
Consumer Compliance Handbook HOPA•3(1/06) conforming loans that are determined by Freddie Mac and Fannie Mae to be high risk, a residential mortgage transaction that is a lender-defined high-risk loan is subject to the final-termination provision of the act. Basic Disclosure and Notice Requirements Applicable to
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