PMI Removal Appraisals: What the Servicer Reviews

A PMI removal appraisal is evidence a servicer may ask for when a borrower requests that private mortgage insurance come off a conventional loan. The servicer, the company that collects the payments and manages the loan for its owner, decides what kind of value evidence it accepts, who orders it and whether the request is approved. Under the federal Homeowners Protection Act, a value report on a borrower's request answers one narrow question, whether the property has declined below its original value; some loan investors also allow a separate request based on current value. Either way, the appraisal documents value and the servicer makes the decision.

This pillar of the PMI removal and home equity appraisals section explains what the statute says, where investor rules differ, what a servicer reads in the report, and which houses around Claremont make that evidence harder to build.

What the Homeowners Protection Act actually requires

The Homeowners Protection Act of 1998 (12 U.S.C. 4901 and following) sets three separate routes for private mortgage insurance on a residential mortgage, which the Act defines as a loan on a single-family dwelling that is the borrower's principal residence. The rules apply to transactions closed on or after July 29, 1999.

• Borrower-requested cancellation. Under section 4902(a), the insurance is canceled on the cancellation date, or a later date when every condition is met, if the borrower submits a written request to the servicer, has a good payment history, is current on payments, and satisfies any requirement of the holder for "evidence (of a type established in advance and made known to the mortgagor by the servicer promptly upon receipt of a request under paragraph (1)) that the value of the property securing the mortgage has not declined below the original value of the property," plus a certification that the equity is not encumbered by a subordinate lien. Section 4901(2) sets the cancellation date as the date the balance is first scheduled to reach, or actually reaches, "80 percent of the original value of the property."
• Automatic termination. Under section 4902(b), the requirement ends on the termination date if the borrower is current. Section 4901(18) defines that date as when the balance is first scheduled to reach "78 percent of the original value of the property."
• Final termination. Under section 4902(c), the insurance cannot be required past the first day of the month after the midpoint of the loan's amortization period, if the borrower is current.

Original value has its own definition in section 4901(12): the lesser of the contract sales price or the appraised value when the loan closed, or, for a refinance of the principal residence, only the appraised value the lender relied on to approve the refinance. The routes differ in ways that matter for an appraisal, compared side by side in automatic vs. requested PMI cancellation.

Original value and current value are two different questions

The Consumer Financial Protection Bureau's Compliance Bulletin 2015-03 is direct about it: 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." For automatic termination, the bulletin says servicers may not require a borrower to pay for a property valuation as a condition of termination.

The same bulletin notes that some investor guidelines base cancellation on the current value of the property, which can allow cancellation earlier than the Act requires. A house that has gained value since purchase does not change the borrower's rights under the Act; it may matter under an investor's own rules. The CFPB's consumer page adds that investor rules cannot be less favorable to the borrower than the Act.

Fannie Mae's Servicing Guide, section B-8.1-04 (published October 14, 2026), shows how one investor handles both. For a request based on original value, the servicer first obtains a property valuation from Fannie Mae's servicing system to check that current value is at least the original value. For a request based on current value, the servicer must not solicit the borrower, and the loan-to-value, the loan balance divided by the property's value, must be evidenced by a valuation "based on an inspection of both the interior and exterior of the property." The guide sets loan-to-value limits and seasoning, how long the loan has been in place; ask the servicer which apply to your loan rather than reading a figure off a website.

Who orders the appraisal

Fannie Mae's procedure in Servicing Guide F-1-02 says that on one-unit properties "the servicer must order an interior and exterior BPO, or appraisal if the servicer determines it is required by law," through Fannie Mae's servicing system, at the borrower's expense, and only after the servicer receives the fee. A broker price opinion, or BPO, is a value estimate prepared by a real estate broker or agent; it is not an appraisal. On a loan held by Fannie Mae, then, the borrower does not choose the valuation provider, and a report the borrower orders independently may simply not be used. Fannie Mae issued Lender Letter LL-2026-07, updating its mortgage insurance termination requirements, on September 16, 2026, so ask your servicer which current requirements apply.

Other investors and portfolio lenders write their own procedures. Some accept an appraisal ordered by the borrower from an appraiser who meets their stated qualifications, on the form they specify. That is why the first step is a written request to the servicer asking what it accepts, as laid out in drop mortgage insurance in Claremont: ask the servicer before ordering an appraisal. Section 4903 of the Act also requires the servicer to send an annual statement with a phone number and address to ask about cancellation.

What the servicer reads in the report

When a servicer does accept an appraisal, it reads it the way a lender's reviewer would. The items that decide whether the report is usable:

• Intended use and intended users. The intended use is what the report will be used for, here the PMI request, and the intended users are the people entitled to rely on it, here the servicer. Both are named on the report.
• Current market value as of the effective date. Current market value is the opinion of market value as of a recent effective date, the date the opinion of value applies to, normally the inspection date.
• The form and scope the servicer specified. Scope of work, the type and extent of research and analysis, includes an interior and exterior inspection when the servicer asks for one.
• Gross living area and condition. Finished, above-grade living area measured on site, and a condition rating that matches what the photographs show.
• Improvements since purchase. Fannie Mae's guide asks borrowers to describe improvements made since origination and separates renovations, such as kitchen and bath work or added square footage, from repairs that keep the house maintained. The appraiser describes each improvement and its permit status; whether it counts toward the request is the servicer's call.
• Comparable sales from the same market. Closed sales a buyer of this house would have weighed, with any wider search explained.

Houses around Claremont where the evidence gets harder

These properties need more care, and here is why.

• Claraboya hillside homes. View, grade and access set these apart from the flat tracts below, so comparables often come from a wider foothill band, with the radius explained. The Claremont area page describes these pockets.
• Pre-1940 houses near the Village and the Colleges. Enclosed porches and old back-room additions mean public-record square footage is often wrong; living area is measured on site.
• Pomona houses with an ADU. A second unit is treated according to its permit status, and its contributory value, what it adds to the whole property in the market, is supported from sales; see how an ADU is appraised.
• Montclair postwar tracts on the county line. A Claremont or Pomona sale across Mills Avenue can be valid evidence only with the location difference explained, because the county, the schools and the buyer pool change at the line.
• Alta Loma horse lots. Barns, arenas and lot use need sales of similar large lots, not tract houses nearby.

What does not count as a PMI removal appraisal

An automated valuation model, the statistical estimate a portal or a servicing system produces from records and nearby sales, is not an appraisal; that includes the Zestimate. An agent's comparative market analysis is not an appraisal, the county's assessed value is not an appraisal, and a BPO is not an appraisal. A servicer may still choose to use an AVM or a BPO under its investor's rules, and Fannie Mae's guide does both. That is the servicer's choice of evidence, not a substitute the borrower can offer in place of what was asked for. AVM vs. appraisal explains the difference in more depth.

What an appraisal cannot do here

No appraiser can say before the work what a value will be, and no report decides whether the insurance comes off. The appraiser is independent of every party, including the borrower who pays the fee. The fee is set by the scope of the assignment and quoted before work begins, and it does not depend on the value. The same report may support the request or not; the servicer applies its investor's rules, its payment-history test and its lien certification, and decides.

Home equity lines follow a different path, with the lender rather than the servicer choosing the valuation; HELOC appraisal in Montclair covers it.

Next step

Get your servicer's written requirements first. If the servicer accepts a homeowner-ordered appraisal, send the address and those requirements through the PMI removal and home equity appraisal page, or call (909) 324-6122, and the scope will be confirmed against the servicer's rules before any work begins.

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
• Fannie Mae Servicing Guide F-1-02, Escrow, Taxes, Assessments, and 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.