Finance
A Mississippi lender requires private mortgage insurance (PMI) on a conventional loan. PMI can typically be cancelled when:
AThe borrower has made 12 consecutive on-time payments
BThe borrower's equity reaches 20% of the original purchase price or appraised value, based on Homeowners Protection Act requirements✓ Correct
CThe loan has been outstanding for 5 years
DThe property is refinanced
Explanation
Under the Homeowners Protection Act (HPA), borrowers can request PMI cancellation when equity reaches 20% of the original value. Lenders must automatically cancel PMI when the LTV reaches 78% based on original amortization, and must terminate it at the midpoint of the loan term.
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