Finance
What is the purpose of 'private mortgage insurance' (PMI) cancellation rights under the Homeowners Protection Act?
AThe right to cancel PMI if the property increases in value
BThe automatic or requested cancellation of PMI once the borrower reaches a specified equity level (typically 20%) and meets other requirements✓ Correct
CThe right to cancel PMI if interest rates fall
DThe right to transfer PMI to a different property
Explanation
The Homeowners Protection Act (HPA) requires lenders to cancel PMI automatically when the borrower's equity reaches 22% of the original value, and allows borrowers to request cancellation at 20% equity, reducing monthly housing costs.
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