When Is an Appraisal Required for Pmi Removal?

Your servicer handles payments and cancellation requests, while another entity may own the loan. Ask whether Fannie Mae, Freddie Mac, or another investor’s requirements apply.

Records from mortgage loan origination help establish the transaction date, original value, and insurance arrangement. If you refinanced, use the records for that transaction.

The servicer should identify which route it reviewed. A current-value policy cannot replace cancellation rights that HPA provides.

Original value generally means the lower of the purchase price or appraisal at the original transaction. For a refinance, it generally means the value established by the appraisal relied on for that refinancing.

For an ordinary HPA-covered loan, cancellation becomes available when the balance is scheduled to reach, or actually reaches, 80% of original value. The borrower must also submit a written request, have a good payment history, and be current.

The mortgage holder may require evidence that the property has not declined below original value and certification concerning junior liens. An appraisal can satisfy the value requirement. A higher appraisal does not change the original-value calculation.

Appreciation-based cancellation follows the applicable investor policy. Fannie Mae generally requires current-value LTV of 75% or less for a one-unit principal residence or second home when the loan is between two and five years old. The threshold is 80% when the loan is more than five years old.

Qualifying improvements may support waiver of the two-year minimum, with an 80% LTV requirement. Routine maintenance does not qualify under that exception. Other property types have different standards.

These are Fannie Mae requirements, not universal federal rules. Confirm the policy governing your loan before relying on them.

Request confirmation of:

• The cancellation route and policy being applied.
• Whether an automated valuation, broker price opinion, or appraisal is acceptable.
• Who orders the evaluation and selects the provider.
• The fee, inspection requirements, and process for disputing factual errors.

Fannie Mae’s original-value process can use a value generated through its servicing system. When an ordered evaluation is necessary, its procedures generally call for an interior and exterior broker price opinion for one-unit properties, or an appraisal if required by law. Two- to four-unit properties require an appraisal.

An independently obtained report may therefore fail to satisfy the required process.

Divide the quoted evaluation fee by your monthly PMI charge to estimate how many months of savings would recover the cost if cancellation is approved.

Check how close you are to automatic termination. A favorable valuation may offer limited savings if that date is near, and it cannot overcome an unmet payment-history or eligibility requirement.

Keep the PMI disclosure, closing records, relevant appraisal, recent statements, and evidence of additional principal payments. Include payment history and information about second mortgages or home equity liens.

For an improvement-based request, provide descriptions, completion dates, invoices, and permits where relevant. Preserve correspondence, fee receipts, and valuation results.

If lien status is unclear, compare the recorded documents with the relevant loan agreements. Reducing a balance does not necessarily establish that the lien has been released.

When a servicer determines that HPA cancellation or automatic termination requirements were unmet, it must provide written grounds, including any appraisal results used.

For requested cancellation, the notice generally is due within 30 days after the later of receipt of the request or satisfaction of applicable evidence and certification requirements. Ask which condition remains unmet if the explanation is unclear.

For ordinary HPA-covered loans, automatic termination generally occurs when the scheduled balance reaches 78% of original value, provided payments are current. Additional principal payments do not advance that scheduled date. High-risk loans have statutory exceptions.

A paid valuation cannot be imposed as a condition of HPA automatic termination. If the servicer demands one, request a written explanation and preserve subsequent PMI charges. Unresolved errors may warrant a CFPB complaint or a consumer protection review of the applicable rights and disputed charges.