Borrowers using MI also are protected by law under the Homeowners Protection Act of 1998. The Act requires lenders to inform borrowers about their right to request mortgage insurance cancellation and to automatically cancel insurance for borrowers who do not request it when the loan reaches 78% LTV (or reaches its half-life on “high risk” loans). Mortgage insurers are then required to refund any unearned premium to the borrower under the Act.

This applies only to mortgages on single-family primary residences originated on or after July 29, 1999. Homeowners with existing mortgages must be provided with annual statements detailing whether and how they can cancel their insurance, but there’s no requirement to automatically terminate the coverage.

RMIC has a brochure you can provide borrowers explaining PrivateMI and canceling PrivateMI. Contact your RMIC Account Manager for a copy.