Can I cancel PMI on my account?
Your ability to cancel PMI on your loan depends on a number of things, such as the date your loan originated; whether it was a refinance or a purchase loan; whether it is a fixed-rate or adjustable-rate mortgage; whether you occupy the home or not; etc.
Federal law, state law, and investor guidelines may all play a role in determining whether you can cancel PMI. However, the important thing to know is that you only have to be eligible to cancel PMI under one of the three. Thus, you should be aware of some general criteria you have to meet if you want to cancel PMI:
- You must have a good payment history. Generally, that means that none of your mortgage payments has been 30 days or more past due during the last 12 months or 60 days or more past due during the last 24 months.
- You must be current on your payments.
- Your request to cancel PMI must be in writing.
We’ll also need to order an appraisal or a broker price opinion (BPO) to confirm the market value of your property. The costs vary widely, but we’ll give you an estimate before the appraisal or BPO is performed.
If you think you meet basic these criteria, review the information below to get an idea of whether you’re eligible to cancel PMI.
Homeowners Protection Act (HPA)
The HPA is the Federal law that gives consumers the right to remove PMI under certain circumstances. If you can answer Yes to each of the following three questions, then your loan is covered by the HPA:
- Did your loan originate on or after July 29, 1999?
- Is your loan secured by a single-family home?
- Is that home your principal residence?
If you answered No to any of the questions, scroll to the Investor Guidelines section below to determine if you may be able to cancel PMI based on investor guidelines.
If you answered Yes to all three questions, the HPA gives you the right to request that PMI be cancelled on the date that the principal balance of your mortgage (1) is first scheduled to reach 80 percent of the original value of your home or (2) actually reaches 80 percent of the original value of your home, based on payments made. (This percentage is commonly referred to as loan-to-value or LTV. Thus, if the original value of your home was $200,000 and the principal balance of your loan is $160,000, your LTV is 80% ($160,000 ÷ $200,000 = 0.80, or 80%).)
What does “original value” mean? For purchase transactions, it means (a) the sale price of the property or (b) the appraised value of the property at the time of closing, whichever is less. So, if you bought your home for $195,000 but it appraised for $200,000, its “original value” is $195,000. For refinance transactions, “original value” means the appraised value of the property that was relied upon to approve the transaction.
If you think you qualify to cancel PMI based on your LTV and other requirements, click here to access our Authorization for Appraisal/BPO form. Complete the form and send it to us along with your written request to cancel PMI to:
• e-mail:
PMIRequests@Ditech.com
or
• mail:
Ditech Financial LLC
T-456 Escrow Department
345 2100 E. Elliot Rd.
Tempe AZ 85284
or
• fax: 480-383-0632
Investor Guidelines
Fannie Mae and Freddie Mac have their own guidelines for determining whether you may cancel PMI on your loan, and there are differences between the two. Therefore, the first thing you’ll want to know is whether your loan is owned by Fannie Mae or Freddie Mac. To find out, call us at 1-800-xxx-xxxx or visit Fannie Mae at
https://www.knowyouroptions.com/loanlookup or Freddie Mac at
https://ww3.freddiemac.com/loanlookup/.
If neither Fannie Mae nor Freddie Mac owns your loan, then we’ll have to determine if your investor has specific guidelines for PMI cancellation (many do not). Regardless, you should scroll to the State Law section below to determine if you may be able to cancel PMI based on the laws of your State.
If either Fannie Mae or Freddie Mac owns your loan and, after reviewing the information below, you think you qualify to cancel PMI based on your LTV and other requirements, click here to access our Authorization for Appraisal/BPO form. Complete the form and send it to us along with your written request to cancel PMI to:
• e-mail: @ditech.com
or
• mail: Ditech Financial LLC
L1000 – Escrow Department
345 St. Peter Street
St. Paul, MN 55102
or
• fax: 480-383-0632
Fannie Mae
Fannie Mae offers two methods for determining whether PMI may be cancelled on your loan: the Current Value Method and the Original Value Method. The Current Value Method compares the outstanding balance of your mortgage loan against the current value of the property. Under the Current Value Method, the value of the property must be evidenced by an appraisal that is (a) based on an inspection of both the interior and exterior of the property and (b) ordered, and directly received, by Ditech.
The Original Value Method compares the outstanding balance of your mortgage loan against the original value of the property. Under the Original Value Method, the property’s current value (a) must be at least equal to the original value, but (b) may be verified by either a BPO, a certification of value, or an appraisal that is ordered, and directly received, by Ditech.
Use the chart below to determine the LTV requirements that apply to cancelling PMI under Fannie Mae guidelines.
| |
|
|
Property Type |
| Method |
Loan Originated |
Lien Type |
1-Unit Primary |
2-4 Unit Primary |
2nd Home |
1-4 Unit Investment |
| Original Value |
Before July 29, 1999 |
First |
LTV
has reached 75%†
LTV
has reached 80%‡ |
LTV
has reached 70% |
LTV
has reached 75%†
LTV
has reached 80%‡ |
LTV
has reached 70% |
| Subordinate |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
On or after July 29,
1999 |
First |
LTV is first scheduled to reach 80% or actually
reaches 80% |
LTV
has reached 70% |
LTV is first scheduled to reach 80% or actually
reaches 80% |
LTV
has reached 70% |
| Subordinate |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
Combined
LTV reaches 70% of the property value at the time the subordinate lien was
originated |
| Current Value |
|
First |
- Loan originated less than two years ago: LTV is 75% or less IF you have made
improvements to the property that have increased its value.
- Loan originated between two and five years ago: LTV is 75% or less
- Loan
originated more than five years
ago: LTV is 80% or less
|
LTV
is 70% or less |
- Loan originated less than two years ago: LTV is 75% or less IF you have made
improvements to the property that have increased its value.
- Loan originated between two and five years ago: LTV is 75% or less
- Loan
originated more than five years
ago: LTV is 80% or less
|
LTV
is 70% or less |
| Subordinate |
LTV
is 70% or less |
LTV
is 70% or less |
LTV
is 70% or less |
LTV
is 70% or less |
† applies only to loans delivered under a negotiated contract that prohibits the cancellation of PMI until a specified term has elapsed
‡ applies to loans not delivered under a negotiated contract that prohibits the cancellation of PMI until a specified term has elapsed
Freddie Mac
Freddie Mac offers two methods for determining whether PMI may be cancelled on your loan: the Current Value Method and the Original Value Method. The Current Value Method compares the outstanding balance of your mortgage loan against the current value of the property. The Original Value Method compares the outstanding balance of your mortgage loan against the original value of the property. Under either Method, the LTV ratio and/or current value must be verified by a BPO or appraisal that (a) includes an interior and exterior inspection and (b) is ordered, and directly received, by Ditech.
Use the chart below to determine the LTV requirements that apply to cancelling PMI under Freddie Mac guidelines.
| |
Property Type |
| Method |
1-Unit Primary |
2-4 Unit Primary |
2nd Home |
1-4 Unit Investment |
| Original Value |
LTV has reached 80% |
LTV has reached 65% |
LTV has reached 80% |
LTV has reached 65% |
| Current Value |
- Loan originated less than two years ago: LTV is 80% or less IF you have made substantial improvements to the property that have increased its value.
- Loan originated between two and five years ago: LTV is 75% or less
- Loan originated more than five years ago: LTV is 80% or less
|
- Loan originated less than two years ago: LTV is 65% or less IF you have made substantial improvements to the property that have increased its value.
- Loan originated more than two years ago: LTV is 65% or less
|
- Loan originated less than two years ago: LTV is 80% or less IF you have made substantial improvements to the property that have increased its value.
- Loan originated between two and five years ago: LTV is 75% or less
- Loan originated more than five years ago: LTV is 80% or less
|
- Loan originated less than two years ago: LTV is 65% or less IF you have made substantial improvements to the property that have increased its value.
Loan originated more than two years ago: LTV is 65% or less |
State Laws
If your property is located in California, Minnesota, New York, or Washington, the laws of those State may give you the right to remove PMI even if you were unable to do so under the HPA or investor guidelines. If after reviewing the information below you think you qualify to cancel PMI based on your LTV and other requirements, click here to access our Authorization for Appraisal/BPO form. Complete the form and send it to us along with your written request to cancel PMI to:
• e-mail: @ditech.com
or
• mail: Ditech Financial LLC
L1000 – Escrow Department
345 St. Peter Street
St. Paul, MN 55102
or
• fax: 480-383-0632
California
If your property is located in California and your loan is not owned by an institutional third party, such as Fannie Mae or Freddie Mac, you may be eligible to cancel PMI under California law if you meet all of the following conditions:
- Your loan originated on or after January 1, 1991;
- Your loan is secured by an owner-occupied, one- to four-unit, residential real property;
- The date of your Note is at least two years prior to the date of your request to cancel PMI;
- Your monthly payments of principal, interest and escrow were current at the time of your request to cancel PMI;
- You have a good payment history (i.e., none of your monthly payments has been more than 30 days past due over the 24-month period immediately preceding the request);
- No notice of default has been recorded against the property as a result of your nonmonetary default during the 24-month period immediately preceding the request; and
- The LTV is not more than 75% of either (a) the sale price of the property at origination (provided that the current fair market value of the property is equal to or greater than the original appraised value used at the origination date) or (b) the current fair market value of the property as determined by an appraisal.
Minnesota
If your property is located in Minnesota, you may be eligible to cancel PMI under Minnesota law if you meet all of the following conditions:
- The LTV is not more than 80% of the current fair market value of the property securing the loan;
- You have a good payment history (i.e., none of your mortgage payments has been 30 days or more past due within the past 12-month period or 60 days or more past due within the past 24-month period);
- Your loan originated at least 24 months prior to the date of your request to cancel PMI; and
- Your property is owner-occupied.
New York
If your property is located in New York, you may be eligible to cancel PMI under New York law if you meet all of the following conditions:
- Your loan is secured by a first lien on real estate; and
- The LTV is 75% or less of the appraised value of the property at origination.
Washington
If your property is located in Washington and your loan is not owned by an institutional third party, such as Fannie Mae or Freddie Mac, you may be eligible to cancel PMI under Washington law if you meet all of the following conditions:
- Your loan originated on or after July 1, 1998;
- Your loan is at least two years old;
- The LTV is (A) not more than 80% of the current fair market value of the property securing the loan and either (a) if your loan was made to purchase the property, is less than 80% of the lesser of the sales price or the appraised value of the property at origination, or (b) if your loan was not made to purchase the property, is less than 80% of the appraised value of the property at origination;
- Your monthly payments of principal, interest and escrow were current at the time of your request to cancel PMI;
- You have a good payment history (i.e., none of your monthly payments has been more than 30 days past due over the 12-month period immediately preceding your request to cancel PMI); and
- You have not been assessed more than one late penalty over the past 12-month period.
To learn more about PMI and PMI cancellation, visit the
Understanding Private Mortgage Insurance or PMI page.