Resources > Glossary > PMI

Glossary of Notary Public, Mortgage, Signing Agent, and Loan Signing Terms.

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Common Terms 1   Common Terms 2

PMI

Function: noun

Nongovernment provided insurance that protects lenders from loss if a particular borrower defaults. Fannie Mae usually requires private mortgage insurance for loans with loan-to-value (LTV) percentages exceeding 80%. There are certain disclosures regarding PMI that are required be given to the borrower. A borrower can cancel their PMI once your mortgage is paid the point where they owe less than 80% of the purchase price or appraised value. Under HPA, mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once the mortgage is paid down to 78 percent of the value if you are current on the loan. For high risk loans, mortgage lenders or servicers must automatically cancel PMI coverage once the borrower pays the mortgage down to 77 percent of the original value of the property, provided they are current on your loan.

The following disclosures are required be provided to the borrower:

The right to request cancellation of PMI and the date on which this request may be made.

The requirement that PMI be automatically terminated and the particular date on which this will occur. Any exemptions to the right to cancellation or automatic termination.

A written initial amortization schedule (for fixed-rate loans only).