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Sep 16, 12:53 AM
FHFA Director and Fannie Mae and Freddie Mac Chairman Bill Pulte said Fannie Mae will adopt Freddie Mac’s policy allowing lenders to proactively contact borrowers who may qualify to cancel private mortgage insurance (PMI) because of home-price appreciation or loan amortization. Under current Fannie Mae rules, borrowers must initiate the cancellation request themselves, while Freddie Mac permits lenders to directly notify eligible homeowners.
Pulte said mortgage insurers generate substantial profits and urged them to pass savings on to consumers when appropriate. The policy change could allow more homeowners to eliminate PMI payments once they have sufficient equity in their properties, potentially reducing demand for mortgage insurance coverage.
PMI is generally required on conventional mortgages when borrowers make down payments below 20%, and borrowers can typically request cancellation once they reach 20% equity, subject to Fannie Mae and Freddie Mac guidelines.
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