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Homeowners Protection Act (HOPA)The Homeowners Protection Act (HOPA) of 1998, also known as the PMI (Private Mortgage Insurance) Cancellation Act, was signed into law on July 29, 1998, and became effective on July 29, 1999. On December 27, 2000, President Clinton signed into law the American Homeownership and Economic Opportunity Act of 2000. Title IV of that act provides technical corrections and clarification to the Homeowners Protection Act (HOPA).Prior to HOPA, homeowners had little recourse when lenders refused to cancel PMI. HOPA protects homeowners by prohibiting life of loan PMI for borrower paid products, and it establishes uniform procedures for cancellation of PMI policies. HOPA establishes rules for automatic termination and borrower cancellation of PMI on home mortgages, establishes disclosure and notification requirements, and requires the return of unearned premiums. These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single family home. These protections do not apply to government insured FHA or VA loans or to loans with lender paid PMI. Automatic Termination: For home mortgages signed on or after July 29, 1999, the mortgage servicer must automatically cancel the PMI, with certain exceptions, when you reach 22 percent equity in your home based on the original property value. The borrower must be current in making payments for automatic cancellation to apply. Borrower Cancellation By Request: Homeowners can request cancellation of the PMI, with certain exceptions, when their equity position reaches 20 percent of the original value of the property and their payments are current. One exception is if your loan is high risk. Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue. Ask your lender or mortgage servicer (a company that collects your payments) for more information about these requirements. If you signed your mortgage before July 29, 1999, you can ask to have the PMI canceled once you exceed 20 percent equity in your home. But federal law does not require your lender or mortgage servicer to cancel the insurance. On a 100,000 dollar loan with 10 percent down (10,000 dollars), PMI might cost you 40 dollars a month. If you can cancel the PMI, you can save 480 dollars a year and many thousands of dollars over the loan. Check your annual escrow account statement or call your lender to find out exactly how much PMI is costing you each year. Additional provisions in the law:
Some states may have laws that apply to early termination or cancellation of PMI, even if you signed your mortgage before July 29, 1999. Call your state consumer protection agency for more information about your state's rules. Fannie Mae and Freddie Mac, which buy home mortgages from lenders, also may have guidelines affecting termination or cancellation of PMI on home mortgages signed before July 29, 1999. Check with your lender or mortgage servicer, or call Fannie Mae or Freddie Mac, for more information. Contact your lender or mortgage servicer to learn whether you're paying PMI. If you are, ask how and when it can be terminated or canceled. To complain about a lender who does not comply with the Homeowners Protection Act (HOPA), please contact the appropriate federal regulator. PMI Enforcement Authorities: Federal Deposit Insurance Corporation (FDIC) Compliance and Consumer Affairs Division 550 17th Street., NW Washington, DC 20429 Toll Free: 1-800-934-3342 www.fdic.gov/ The FDIC handles questions about deposit insurance coverage and complaints about FDIC insured state banks which are not members of the Federal Reserve System. Office of Thrift Supervision (OTS) Division of Consumer and Civil Rights 1700 G Street, NW Washington, DC 20552 Toll Free: 1-800-842-6929 www.ots.treas.gov/ The OTS handles complaints about Federal savings and loans and Federal savings banks National Credit Union Administration (NCUA) 1175 Duke Street Alexandria, VA 22314-3428 703-518-6330 www.ncua.gov/ The NCUA Shared Insurance Fund provides Federal insurance for nearly 13,000 credit unions. Farm Credit Administration (FCA) Director Office of Congressional and Public Affairs Farm Credit Administration 1501 Farm Credit Drive McLean, VA 22102-5090 www.fca.gov/FCA-HomePage.htm The FCA regulates banks, associations, and related entities that comprise the Farm Credit System, including the Federal Agricultural Mortgage Corporation (Farmer Mac). Comptroller of the Currency (OCC) Compliance Management 250 E. Street, SW Mail Stop 309 Washington, DC 20219 Toll free: 1-800-613-6743 www.occ.treas.gov/ The OCC handles complaints and regulates National Banks. (Usually have National in the name or N.A. after their names) The Federal Reserve Board Division of Consumer and Community Affairs 20th and C Streets, NW Mail Stop 801 Washington, DC 20551 202-452-3693 www.federalreserve.gov/ Handles complaints and regulates state chartered banks and trusts. Administers Truth In Lending, Equal Credit Opportunity Act, and Fair Credit Reporting Act. For more information on federal credit regulations and consumer rights go to the Federal Trade Commission (FTC) website at www.ftc.gov or www.federalreserve.gov Some state laws may provide you with additional rights. For information go to the website of the National Association of Attorneys General (NAAG) at www.naag.org.
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