On August 4, 2015, the Consumer Financial Protection Bureau (CFPB) issued a bulletin providing guidance to mortgage servicers regarding cancellation and termination of private mortgage insurance.
The bulletin, discusses certain Homeowners Protection Act requirements and should assist servicers with compliance. The guidance summarizes existing requirements under the law and does not create any new standards.
"Consumers should not be billed for unnecessary private mortgage insurance," said CFPB director Richard Cordray. "We will continue to supervise mortgage servicers to ensure they are treating borrowers fairly, and today's guidance should help servicers come into compliance with the Homeowners Protection Act."
The Homeowners Protection Act of 1998 addresses borrowers' challenges in cancelling private mortgage insurance when they had reached a certain level of equity in the property. The act provides specific cancellation and termination rights.
The CFPB said it identified "confusion" over implementation of private mortgage insurance cancellation and termination requirements in the Homeowners Protection Act. CFPB exams have noted violations of several different provisions of the Act.
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