§4903 Disclosure requirements

Summary

When private mortgage insurance (PMI) is required for a home loan, the lender must give the borrower written notices when the loan closes. For fixed-rate loans the lender must give an initial payment schedule and a letter that explains: when the borrower can ask to cancel PMI based on that schedule, that the borrower may ask to cancel earlier based on actual payments, when PMI will automatically end and what that end date is, and that there are some exceptions to canceling or automatic ending and whether any apply. For adjustable-rate loans the lender must give a letter saying when the borrower can cancel, that the loan servicer will tell the borrower when that cancellation date is reached, when PMI will automatically end and how the borrower will be told, and that there are exceptions and whether any apply. For loans covered by a special rule in the law, the lender must say PMI cannot be required past the midpoint of the loan’s amortization if the borrower is current. The loan servicer must also send an annual written statement that explains the borrower’s rights to cancel or end PMI and gives a phone number and address to ask about cancellation. Those annual rules apply to loans made on or after the date that is 1 year after July 29, 1998. For older loans, servicers must still give an annual statement saying PMI might be cancellable in some cases and provide contact information. These notices can be included on required escrow or IRS annual forms, and lenders or servicers may use standard forms.