Private mortgage insurance (PMI)
What is PMI?
Private mortgage insurance (PMI) protects the lender in case the borrower defaults on his or her mortgage loan. Lenders generally require PMI when your down payment on a home is less than 20 percent 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 percent 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
- Call 800-613-6743