AGENT ALERT! THE HOMEOWNER'S PROTECTION ACT OF 1998

BRIEF SUMMARY OF THE HOMEOWNER'S PROTECTION ACT OF 1998 1. Purpose of Act: To require automatic termination of Private Mortgage Insurance 2. When Does it Go Into Effect: July 29, 1999 3. Who Does It Cover? All loans consummated from July 29, 1999 onward 4. Are there any exceptions to Coverage? Yes, high risk loans, FHA and VA 5. How Does PMI Terminate? 1. When mortgage is scheduled to reach or based on actual payments reaches 80% of the original value of property securing loan:    1. Upon written request by borrower;    2. Borrower has a good payment history (no more than 60 days late in prior 24 months and no    more than 20 days late in preceding 12 months of written request);    3. Borrower has satisfied any lender requirements;    4. Evidence that value of property has not declined from original value;    5. Certification that equity is unencumbered by a subordinate lien. 2. Automatic Termination when:    1. Borrower is current on loan or becomes current on loan and;    2. Mortgage is scheduled to reach or has reached as a result of payments 78% of original value    of the property securing loan. 3. Termination at Mid-Point:    1. High risk loans are exempt from the 80% and 78% termination requirements, however, in no    event can such loans collect PMI after the first day of the month immediately following the date    that is the midpoint of the amortization period of the loan if the borrower is current on their    payments. VI. Exemptions    1. High risk loans as determined by the Federal National Mortgage Association and the Federal    Home Loan Corporation in the case of a mortgage loan with an original principal balance that    does not exceed the applicable annual conforming loan limit for the secondary market    established.    2. As determined by the lender in the case of any other mortgage, except that termination of    these loans must occur at the time the payments are scheduled to reach or reach 77% of the    original value of the property securing the loan. VII. Liability    1. Individual can bring suit for actual damages, up to $2,000 statutory damages, attorneys    fees, and costs of the action.