Chapter 1
Federal Mortgage Laws and Consumer Protection Regulations
Course: Safe Mlo Prep
Subject: Safe Mlo Prep
Chapter: Federal Mortgage Laws And Consumer Protection Regulations
OVERVIEW
Beyond the primary mortgage laws, several additional federal statutes directly affect daily mortgage origination. The NMLS exam regularly tests specific numbers, thresholds, and rules from each of these laws. Know the key fact for each one.
- Homeowners Protection Act (HPA)
Governs the cancellation and termination of Private Mortgage Insurance on conventional loans only.
Three PMI milestones:
- Borrower-requested cancellation: When LTV reaches 80% based on original value — good payment history, no 30-day lates in past year, no subordinate liens
- Automatic termination: Lender must automatically cancel PMI when LTV reaches 78% based on original value and original amortisation schedule — no borrower action required
- Final termination: PMI must be cancelled at the midpoint of the loan term — year 15 on a 30-year loan — if payments are current