HPA Flashcards
What is the primary motive of HPA?
Facilitate the cancellation of PMI when a homeowner has achieved 20% equity in their dwelling
HPA only applies to these types of transactions
Residential Mortgage Transactions
Lenders may continue to collect PMI payments until the homeowner until the LTV has reached XX%
78%
HPA for depository institution < $10 Billion is enforced by the
Farm Credit Administration
HPA for depository institution > $10 Billion is enforced by the
CFPB
HPA does not apply to these residential mortgage transactions:
- Government-insured FHA or VA loans
2. Loans protected by PMI paid for by the lender
Higher risk loans don’t follow typical HPA provisions related to cancellation of PMI. For these loans, PMI can automatically be cancelled at:
The midpoint of the amortization period if the borrower is current on his/her payments.
HPA defines “Good Payment History” as:
- Borrower did not make a mortgage payment that was 60 days or more past due during the 12-month period beginning 24 months before the date on which the mortgage reaches the cancellation date, AND
- Did not make a mortgage payment that was 30 days or longer past due during the 12-month period preceding the date on which the mortgage reaches the cancellation date.
The date by which a borrower achieves 80% LTV
Cancellation Date
The date by which a borrower achieves 78% LTV
Termination Date
The “Original Value” of a home is the greater of:
- The purchase price
2. The current appraised value
If payments are not current on the termination date, PMI will be terminated at:
The first of the month following the date that the borrower is current on payments
Term used to describe PMI termination triggered by the homeowner reaching the midpoint of the amortization period
Final Termination
HPA defines High-Risk loans as:
- Conforming loans that Fannie Mae and Freddie Mac identify as high-risk loans, or
- Nonconforming loans that lenders identify as high-risk loans
How is PMI terminated on conforming loans?
Final Termination
