Under the federal Homeowners Protection Act, automatic termination of private mortgage insurance happens on a scheduled date with no value evidence at all, while borrower-requested cancellation starts with a written request and can require evidence that the property has not declined below its original value. An appraisal, if one is involved, fits only the requested route, or a separate current-value request that some loan investors allow. For a Claremont borrower, the first step either way is the servicer, which applies the rules and decides.
This article belongs to the PMI removal and home equity appraisals section, whose pillar, PMI removal appraisals: what the servicer reviews, covers what goes into the report. Here the subject is the statute itself, read section by section.
The three routes in the statute
The Act, at 12 U.S.C. 4901 and 4902, applies to a residential mortgage on a single-family dwelling that is the borrower's principal residence, for transactions closed on or after July 29, 1999. The servicer is the company that collects the payments and manages the loan.
Borrower-requested cancellation, 4902(a)Automatic termination, 4902(b)Final termination, 4902(c)
Who starts it
The borrower, by a request "in writing to the servicer"
No request needed
No request needed
When
The cancellation date, or the later date every condition is met
The termination date
The first day of the month after the midpoint of the amortization period
Balance test
First scheduled to reach, or actually reaches, "80 percent of the original value of the property" (4901(2))
First scheduled to reach "78 percent of the original value of the property" (4901(18))
None; the calendar midpoint controls
Payments
Good payment history and current
Current on the termination date, or the first day of the month after becoming current
Current
Value evidence
Any holder requirement for evidence the value "has not declined below the original value"
None
None
Liens
Certification that equity is not encumbered by a subordinate lien
Not a condition
Not a condition
Good payment history has its own definition in 4901(4): no payment 60 days or more past due in the 12-month period beginning 24 months before the later of the cancellation date or the request, and no payment 30 days or more past due in the 12 months before that later date.
Where an appraisal fits, and where it does not
Automatic and final termination. Value plays no part. The CFPB's Compliance Bulletin 2015-03 says that because current value is not a factor in the termination date, "servicers may not require a borrower to pay for a property valuation as a condition of automatic termination of PMI." It adds that automatic termination is required even if the current value has fallen below the original value, and that extra payments do not move the termination date.
Borrower-requested cancellation. Here a valuation can enter, for one narrow purpose. The same bulletin says servicers "may require a property appraisal as evidence that the value of the property has not declined below the original value," and may require the borrower to pay for it, but the cancellation date "is calculated based on the original value and not the current value." The appraisal answers whether value has held; it does not reset the math. The Act also says the type of evidence is established in advance and made known by the servicer promptly after the request, which is why the request comes before any appraisal, as explained in ask the servicer before ordering an appraisal.
Current-value requests under investor rules. The bulletin notes that some investor guidelines base cancellation on current value, which may allow cancellation earlier than the Act provides. Fannie Mae's Servicing Guide, B-8.1-04 (published October 14, 2026), is one example: it treats a request based on current value as a separate, borrower-initiated route, evidenced by a valuation "based on an inspection of both the interior and exterior of the property" obtained through Fannie Mae's system, with its own loan-to-value limits, loan-to-value being the balance divided by the property's value, and seasoning, how long the loan has been in place. Fannie Mae issued Lender Letter LL-2026-07, updating its mortgage insurance termination requirements, on September 16, 2026, so ask the servicer which current limits apply to your loan. The CFPB's consumer page says investor rules cannot be less favorable to the borrower than the Act.
Original value for a Claremont borrower
Every percentage in the Act is measured against original value, defined in 4901(12) as the lesser of the contract sales price or the appraised value when the loan closed. For a refinance of the principal residence, it means only the appraised value the lender relied on to approve the refinance.
That matters in common Claremont situations. An owner who bought a postwar ranch house north of Foothill Boulevard and later refinanced has an original value set by the refinance appraisal, not the purchase price. An owner of a pre-1940 house near the Village who added a permitted room since closing has not changed the original value; the addition matters only if the servicer's investor allows a current-value request. The figures sit in your closing file and the servicer's records; read them there rather than guessing.
Exceptions and notices worth reading
- High-risk loans. Under 4902(g), the requested and automatic routes do not apply to a loan classified as high risk at closing, under Fannie Mae and Freddie Mac guidelines for conforming loans or by the lender for others. Those loans still reach final termination at the midpoint. The closing disclosure required by 4903 says whether the exemption applied.
- Annual statement. Under 4903(a)(3), the servicer sends a yearly written statement of your cancellation and termination rights, with an address and phone number to ask whether you may cancel.
- Lender-paid, FHA and VA insurance. The CFPB says different rules apply to lender-paid mortgage insurance. The Act's definition of private mortgage insurance in 4901(13) excludes insurance under the National Housing Act, which covers FHA loans, and title 38, which covers VA loans.
- Premiums after cancellation. Under 4902(e) and (f), no premiums may be required more than 30 days after the applicable date, and unearned premiums are returned within 45 days.
If a valuation is called for
When the servicer asks for value evidence and accepts a homeowner-ordered appraisal, the report states its intended use, the PMI request, and its intended user, the servicer, the party entitled to rely on it. The effective date, the date the opinion of value applies to, is current. The comparables come from the house's own pocket first, which in Claremont means the Village blocks, the tracts north of Foothill, or Claraboya and Padua Hills, each read as its own market; the Claremont area page describes them. A home equity line opened since closing is a subordinate lien and belongs in the conversation with the servicer; HELOC appraisal in Montclair explains how those lenders value a house.
The appraiser is independent of every party, including the borrower who pays. The fee is set by the scope of the assignment and quoted before work begins, and it does not depend on the value. Whether the insurance comes off is the servicer's decision under the statute and its investor's rules.
Next step
Write to the servicer first. If it accepts a homeowner-ordered appraisal, send its requirements and the address through the PMI removal and home equity appraisal page, or call (909) 324-6122.
Sources
- 12 U.S.C. 4901, Homeowners Protection Act definitions (Cornell LII), accessed November 6, 2026
- 12 U.S.C. 4902, termination of private mortgage insurance (Cornell LII), accessed November 6, 2026
- 12 U.S.C. 4903, disclosure requirements (Cornell LII), accessed November 6, 2026
- CFPB Compliance Bulletin 2015-03, Private Mortgage Insurance Cancellation and Termination, accessed November 6, 2026
- CFPB, When can I remove private mortgage insurance (PMI) from my loan?, accessed November 6, 2026
- Fannie Mae Servicing Guide B-8.1-04, Termination of Conventional Mortgage Insurance, accessed November 6, 2026
Gordon Hall, California Certified Residential Real Estate Appraiser, BREA No. AR003877 (lookup: https://www2.brea.ca.gov/breasearch/faces/party/view.xhtml?id=23601). Reports are prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). Nothing here is legal or tax advice; admissibility is always the court's decision.
Frequently asked questions
Does automatic PMI termination require an appraisal?
No. Under the Homeowners Protection Act, automatic termination happens on the date the balance is first scheduled to reach 78 percent of the original value, if the borrower is current. The CFPB's 2015 compliance bulletin says servicers may not require a borrower to pay for a property valuation as a condition of automatic termination.
When can a servicer ask for an appraisal to cancel PMI?
On a borrower-requested cancellation. The Act lets the holder require evidence, of a type made known by the servicer after the request, that the property's value has not declined below the original value. Some investors also allow a separate request based on current value, with their own valuation rules.
What is the original value of my Claremont house for PMI purposes?
Under 12 U.S.C. 4901(12), it is the lesser of the contract sales price or the appraised value when the loan closed. For a refinance of your principal residence, it is only the appraised value the lender relied on to approve the refinance. The figures are in your closing file and the servicer's records.
Do these rules apply to FHA or VA loans?
No. The Act's definition of private mortgage insurance excludes insurance under the National Housing Act, which covers FHA loans, and title 38, which covers VA loans. The CFPB says those loans have different requirements; ask the servicer.
