What is the Homeowner’s Protection Act?

The Homeowner’s Protection Act is a federal law that was enacted in 1998 to protect homeowners in Texas and across the United States from unfair and deceptive practices in the mortgage industry. It requires lenders to provide written notice when they decide to stop guaranteeing private mortgage insurance (PMI). PMI is insurance that lenders require borrowers to purchase if they make a down payment of less than 20% of the home’s purchase price. The Homeowner’s Protection Act also requires lenders to automatically cancel PMI when a borrower’s loan-to-value ratio (the amount of the loan compared to the value of the home) reaches 78%. Lenders have specific requirements they must meet in order to be in compliance with the Homeowner’s Protection Act. These include providing borrowers with an annual disclosure statement about PMI, providing a notice when lenders cease guaranteeing PMI, and automatically terminating PMI after the borrower’s loan is paid down to 78%. The Homeowners Protection Act is beneficial for Texas homeowners as it protects them from lenders attempting to take advantage of them. Additionally, it can help borrowers save money on premiums for PMI when they are paying down their loan balances.

Related FAQs

What is the difference between a bank and a mortgage lender?
What is FDIC insurance?
What is the Home Mortgage Disclosure Act?
What are the requirements for creating a bank?
What is the Cash Management Improvement Act?
What is the Right to Financial Privacy Act?
What is the National Bankruptcy Reform Act?
What is the Money Laundering Control Act?
What laws protect personal banking information?
What are the general principles of banking law?

What is the Homeowner’s Protection Act?

Related FAQs

Related Blog Posts