The laws of both California and Washington require disclosures to be provided to borrowers informing them of the conditions under which private mortgage insurance (PMI) could be cancelled or should automatically terminate (see Cal. Civ. Code § 2954.6 and Wash. Rev. Code Ann. § 61.10.020). The details required to be disclosed are extensive enough that we provide detailed summaries of the cancellation requirements for FNMA, FHLMC, and RD in these documents (see our previous announcements on these changes here and here for details).
Under FNMA 2015 Servicing Guide B-8.1-04, PMI could not be cancelled or terminated unless “all outstanding late charges were paid by the end of the month in which the payment was due.” However, FNMA has since modified these requirements and removed this condition (see FNMA SVC-2016-07 for details).
We are, therefore, modifying the text of Cx999 and Cx18541 by removing all instances of the phrases “and any outstanding late charges” and “and all outstanding late charges.”
These changes will take effect on January 27th, 2017. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.