Home Insurance Freddie Mac to allow quicker cancellation of private mortgage insurance Written by: Michelle Megna Michelle, the former editorial director, insurance, at QuinStreet, is a writer, editor and expert on car insurance and personal finance. Prior to joining QuinStreet, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News. Read full bio >> | Reviewed by: Penny Gusner Penny is an expert on insurance procedures, rates, policies and claims. She has extensive knowledge of all major insurance lines -- auto, homeowners, life and health insurance. She has been answering consumers’ questions as an analyst for more than 15 years and has been featured in numerous major media outlets, including the Washington Post and Kiplinger’s. Read full bio >> | Posted on December 7, 2009 Why you can trust Insure.comQuality VerifiedAt Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain our editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria. Last Updated May 5, 1999 Freddie Mac, one of the country’s largest providers of mortgages, will make canceling private mortgage insurance (PMI) easier for borrowers who hold Freddie Mac-owned mortgages. Homeowners who put a down payment of less than 22 percent of the total value of their house must buy PMI. The insurance protects the lender if the borrower defaults on the loan. In 1998, Congress enacted the Homeowners Protection Act, which will require lenders to automatically cancel PMI when a homeowner builds up 22 percent equity in their home for mortgages taken out after July 28, 1999. The law’s provisions apply only to these new loans, but Freddie Mac’s new guidelines will extend some of the benefits under that law to existing Freddie Mac-borrowers, provided the homeowner has made payments on time and the property’s value has been verified. Lenders who service current Freddie Mac mortgage-holders may opt to cancel private mortgage insurance once the borrower is halfway through the term of the mortgage. This stops being optional for lenders come Jan. 2, 2000, when they must automatically cancel the PMI halfway through a mortgage term. “We didn’t want to add an extra regulation while many lenders are still working on the Y2K problem,” explains Brad German, spokesperson for Freddie Mac. Freddie Mac was chartered by Congress in 1970 to create a continuous flow of money to mortgage lenders. For more information on the new rules and Freddie Mac, you can check its Web site: http://www.freddiemac.com. Related Articles Home insurance basics Michelle MegnaContributor . .Michelle, the former editorial director, insurance, at QuinStreet, is a writer, editor and expert on car insurance and personal finance. Prior to joining QuinStreet, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News. Related Articles Cost of living comparison by state By Casey Bond Mobile home insurance: What does it cover and how much does it cost By Chris Kissell What is dwelling coverage & how much do you need? By Lena Borrelli Guide to additional living expenses insurance By Lena Borrelli Average home insurance cost By Insure.com's Editor Guide to insurance claims history report (CLUE) By Shivani Gite