What is PMI?
Private mortgage insurance (PMI) protects the lender in case the borrower defaults on their mortgage loan. Lenders generally require PMI when your down payment on a home is less than 20% of the home’s total value.
Since PMI coverage is insurance for the lender, not the homeowner, you can’t choose the PMI company. However, you can:
- Shop around when choosing your mortgage lender.
- Ask lenders how much they charge for PMI coverage.
PMI and your consumer rights
Under the federal Homeowners Protection Act (HPA), your lender must:
- Inform you in writing that you have PMI.
- Provide you with an explanation of coverage.
- Tell you when and how you can cancel PMI.
- Let you know annually when you qualify to cancel the coverage.
If you have a history of paying your monthly mortgage bill on time, you can ask to cancel the coverage once your mortgage is less than 80% of the home's value or purchase price.
How to file a complaint if your lender doesn’t comply with the HPA
First, find out who regulates your financial institution. Then, contact the appropriate organization that oversees or regulates it:
State chartered banks are financial institutions chartered by the state’s Division of Banks. Send complaints against state chartered banks to the:
Washington State Department of Financial Institutions (www.dfi.wa.gov)
Division of Banks
P.O. Box 41200
Olympia, WA 98504-1200
Call 877-746-4334 (in-state only), 360-902-8822 or 360-902-8744
National banks are usually identified by the words “national” or “national association” in their titles, or the letters “N.A.” or “NT&SA” following their titles. Send complaints against a national bank to the:
U.S. Department of Treasury, Office of the Comptroller of the Currency (www.occ.gov)
Customer Assistance Group
1301 McKinney St., Suite 3450
Houston, TX 77010