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PMI is a type of insurance that helps protect the mortgage company against losses due to foreclosure. This protection is provided by private mortgage insurance companies and allows mortgage companies to grant loans that would otherwise be considered too risky (i.e. loans approved with less than 20% down payment) to be purchased by third party investors such as Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC). The ability to sell loans to these investors is critical to enabling mortgage companies to continue originating new loans.
The PMI premium ranges on a national average from $50 to $125 per month. This premium is a non tax deductible fee that is generally included in your monthly mortgage payment. Essentially, you are paying for an insurance policy protecting ONLY your mortgage company. PMI can usually be canceled by the homeowner after he or she has attained at least 20 percent equity in the home.* Homeowner's whom are interested in learning more about having your PMI released should contact MB Servicing, Inc. at:
*"Homeowners Protection Act of 1998** prescribes guidelines for mandatory termination of Private Mortgage Insurance (PMI) for a residential mortgage when the principal balance is first scheduled to reach or actually reaches 80 percent of the original value of the property securing the mortgage loan, including: (1) a mortgagor's written cancellation request; (2) automatic termination; (3) final termination; (4) no further payments; and (5) return of unearned premiums."
Additionally, the Act "Subjects any servicer, mortgagee, or mortgage insurer in violation of this Act to civil liability for damages incurred by each mortgagor to whom the violation relates."
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