Updates to Fannie Mae Borrower Requested PMI Removal

August 21, 2019

In response to Fannie Mae’s Lender Letter LL-2018-03, effective September 1, 2019, Cenlar’s Mortgage Insurance Department will be revising the process borrowers need to follow to request Private Mortgage Insurance (PMI) removal. Fannie Mae expects that these new requirements will provide an improved customer experience for borrowers and servicers.

Alignment with the new Fannie Mae guidelines has prompted the adoption of new requirements related to borrower-initiated conventional Mortgage Insurance termination requests for loans where Fannie Mae is the investor:

• MI termination requests based on original value will allow the use of Fannie Mae’s Automated Property Service (APS) to verify the current value. In some cases, APS will not render a property value. Such instances require the borrowers must instead choose a broker price opinion (BPO) or appraisal to verify the current value at their expense.

• MI termination requests based on current value will allow the use of BPOs through Fannie Mae’s Valuation Management System (VMS) to verify the current value of the property. Borrowers will have the option to order a BPO or appraisal, at their expense, for one-unit residences unless stated otherwise by state guidelines. Multi-unit properties must have an appraisal performed.

• MI termination requests based on current value with property improvements, have adjusted the loan-to-value (LTV) threshold from 75% or less to 80% or less with the borrower providing examples of what are considered substantial improvements. This requirement only applies to loans securing one-unit principal residences or second homes that are under two years seasoned. Loans securing one to four unit investment properties or two to four unit principal residences must be greater than two years seasoned to be eligible to have a valuation done to pursue MI terminations based on current value.

Please note, the acceptable payment record requirement for PMI terminations remains the same. The link to the announcement can be found here: https://www.fanniemae.com/content/announcement/ll1803.pdf