What law requires lenders to terminate private mortgage insurance automatically when the loan reaches 78% of the original value?

The Homeowners Protection Act (HPA) is the law that mandates the automatic termination of private mortgage insurance (PMI) when the borrower's loan balance reaches 78% of the original property value. This legislation was designed to protect homeowners from the ongoing cost of PMI when their equity in the home has grown to a substantial amount, thereby reducing the risk for lenders.

Under this law, lenders are required to cancel PMI as soon as the requirements are met, allowing homeowners to benefit from reduced monthly payments once they have achieved sufficient equity. This enforcement promotes fairness and transparency in the mortgage lending process, providing relief to borrowers who have been responsible in their repayment.

Other options pertain to different aspects of mortgage lending and consumer protection but do not address the specific issue of PMI termination. For instance, MARS deals with mortgage assistance services, HOEPA centers around predatory lending practices, and HMDA focuses on data collection and disclosure concerning mortgage lending, none of which relate directly to the automatic termination of private mortgage insurance as specified by the HPA.