Federal Mortgage LawsQuestion 10 of 400
Under the Homeowners Protection Act, private mortgage insurance (PMI) on a residential loan must be automatically terminated when the loan balance reaches what percentage of the original property value, assuming payments are current?
a.80% LTV
b.78% LTV
c.75% LTV
d.70% LTV
Explanation
The Homeowners Protection Act requires automatic termination of borrower-paid PMI when the loan-to-value ratio reaches 78% of the original value, provided the borrower is current on payments. At 80% LTV the borrower may request cancellation, but automatic termination is at 78%. Seventy-five and seventy percent are not the statutory thresholds.
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