source:
  type: guide
  id: fnma-svc-b-8.1-04
  authority: Fannie Mae Servicing Guide B-8.1-04 — Termination of Conventional Mortgage
    Insurance
  description: Fannie Mae Servicing Guide B-8.1-04 — Termination of Conventional Mortgage
    Insurance.
  coverage_tier: operative
obligations:
- id: fnma-svc-b-8.1-04-full
  canonical_id: fnma-svc-b-8.1-04-full
  section: Fannie Mae Servicing Guide B-8.1-04 — Termination of Conventional Mortgage
    Insurance
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide B-8.1-04 — Termination of Conventional Mortgage
      Insurance
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/servicing-guide
    snapshot_id: cf63a82bbb4adfba
    fetched_at: '2026-05-22T23:53:19Z'
    content_hash: sha256:89df66c43baad07f8a8dd9d224492fff7d15e8839edba02ad0e74c7e50fe5da3
    paragraph_quote: 'B-8.1-04, Termination of Conventional Mortgage Insurance (05/15/2019)
      Introduction This topic contains the following: Automatic Termination of Conventional
      Mortgage Insurance Borrower-Initiated Termination of Conventional Mortgage Insurance
      Based on Original Value of the Property Borrower-Initiated Termination of Conventional
      Mortgage Insurance Based on Current Value of the Property Veriﬁcation of Acceptable
      Payment Record for Borrowers Impacted by a Disaster Terminating the Conventional
      Mortgage Insurance for a Modiﬁed Mortgage Loan Finalizing and Reporting the
      Mortgage Insurance Termination Performing an Escrow Analysis Upon Termination
      of Mortgage Insurance Automatic Termination of Conventional Mortgage Insurance
      The servicer must not charge the borrower a fee for processing an automatic
      termination. The servicer must take the following steps to terminate the MI,
      as applicable: 1. Determine when the MI is due to automatically terminate. The
      servicer’s review must determine whether a mortgage loan is eligible for automatic
      termination of MI based on the scheduled termination date (or the mid-point
      of the amortization period, as applicable), and the borrower’s payments are
      current on that date. The following table describes the timing of the automatic
      termination. Published May 13, 2026 194 If the mortgage loan closed... Then
      the MI is eligible to be terminated... on or after July 29, 1999 and is secured
      by a one-unit principal residence or second home on the applicable termination
      date, provided the borrower’s payments are current on the termination date.
      The applicable termination date is • the date the principal balance of the mortgage
      loan is ﬁrst scheduled to reach 78% of the original value of the property, or
      • the ﬁrst day of the month following the date the mid-point of the mortgage
      loan amortization period is reached, if the scheduled LTV ratio for the mortgage
      loan does not reach 78% before the mid-point. before July 29, 1999, regardless
      of the property type; or on or after July 29, 1999 and is secured by a one-
      to four- unit investment property or a two- to four- unit principal residence
      on the ﬁrst day of the month after the date that is the mid-point of the original
      amortization period, provided the borrower’s payments are current on that date.
      Note: The servicer must determine the original value of the property in accordance
      with applicable law. 2. Verify the borrower’s payments are considered current.
      The borrower’s payments are considered current if the payment due in the month
      preceding the scheduled termination date, or the mid-point of the amortization
      period, as applicable, was paid by the end of the month in which the payment
      was due. The following table describes the action the servicer must take depending
      upon the status of the borrower’s payments. If the borrower’s payments are...
      Then the servicer... current and the mortgage loan is eligible for automatic
      termination based on its scheduled amortization must terminate the MI immediately.
      current and the mortgage loan is eligible for automatic termination based on
      the mid-point of the amortization period must terminate the MI no later than
      the ﬁrst day of the month following the mid-point date. Published May 13, 2026
      195 If the borrower’s payments are... Then the servicer... not current must
      not terminate the MI, even if the other eligibility criteria for automatic termination
      are met. The servicer must • notify the borrower within 30 days after the termination
      date the MI was not automatically terminated because the payments were not current,
      and • terminate the MI immediately if the borrower’s payments are current at
      the time of a subsequent review. Borrower-Initiated Termination of Conventional
      Mortgage Insurance Based on Original Value of the Property The servicer must
      take the following steps to evaluate the borrower''s written or verbal request
      for MI termination due to reduction in the UPB through the payment of scheduled
      monthly payments or an unscheduled principal curtailment: 1. Verify the LTV
      ratio of the mortgage loan meets Fannie Mae’s eligibility criteria. The following
      table describes the LTV ratio eligibility criteria. If the mortgage loan is
      secured by... Then the LTV ratio eligibility criterion is met... • a one-unit
      principal residence or • second home on the date the mortgage loan balance is
      ﬁrst scheduled to reach 80% (or actually reaches 80%) of the original value
      of the property. • a one- to four-unit investment property or • a two- to four-unit
      principal residence on the date the outstanding principal balance of the mortgage
      loan reaches 70% of the original value of the property. Note: The servicer must
      determine the original value of the property in accordance with applicable law.
      2. Verify the borrower has an acceptable payment record. An acceptable payment
      record is achieved when the mortgage loan Published May 13, 2026 196 is current
      when the termination is requested, which means the mortgage loan payment for
      the month preceding the date of the termination request was paid; has no payment
      30 or more days past due in the last 12 months; and has no payment 60 or more
      days past due in the last 24 months. Note: When assessing the payment history
      for a mortgage loan that has been outstanding for fewer than 24 months (or for
      a new borrower who assumed a mortgage loan within the last 23 months), the servicer
      must apply the acceptable payment record criterion to the length of time the
      mortgage loan has been outstanding (or that has elapsed since the new borrower
      assumed the mortgage loan). The 12- and 24-month payment histories must be measured
      backward from the later of the date the balance is ﬁrst scheduled to reach,
      or actually reaches, 80% of the original value of the property; or the borrower
      actually requests termination. 3. Verify the current value of the property is
      not less than its original value. The servicer must obtain a property valuation
      from Fannie Mae''s servicing solutions system to verify that the current value
      of the property is at least equal to the original value of the property and
      take the required actions based on the following table. If... Then the servicer
      must... Fannie Mae''s servicing solutions system renders a current property
      value and the value is at least equal to the original value of the property
      terminate the MI and notify the borrower within 30 days of receiving the value.
      Fannie Mae''s servicing solutions system renders a current property value and
      the value is less than the original value of the property deny the borrower’s
      request for termination unless the borrower • pays down the mortgage loan balance
      to the point that satisﬁes Fannie Mae''s LTV ratio eligibility criterion, or
      • chooses to verify that the current value of the property is at least equal
      to the original value of the property by following the procedure in Ordering
      Property Values for Mortgage Insurance Termination in F-1-02, Escrow, Taxes,
      Assessments, and Insurance. Published May 13, 2026 197 If... Then the servicer
      must... Fannie Mae''s servicing solutions system does not render a property
      value deny the borrower''s request for termination unless the borrower chooses
      to verify that the current value of the property is at least equal to the original
      value of the property by following the procedure in Ordering Property Values
      for Mortgage Insurance Termination in F-1-02, Escrow, Taxes, Assessments, and
      Insurance. The BPO or appraised value is at least equal to the original value
      of the property terminate the MI and notify the borrower within 30 days of receiving
      the value. The BPO or appraised value is less than the original value of the
      property deny the borrower''s request for termination unless the borrower pays
      down the mortgage loan balance to the point that it satisﬁes Fannie Mae''s LTV
      ratio eligibility criterion. Note: The AVM value in Fannie Mae''s servicing
      solutions system will be updated after 120 days. If the request for termination
      is denied, the servicer must notify the borrower and provide the grounds for
      denial, including the results of the AVM value, BPO, or appraisal used to make
      the determination, and send this notice within 30 days of the date the servicer
      received the AVM value, BPO, or appraisal, if applicable and in accordance with
      applicable law. The servicer is authorized to identify a mortgage loan that
      is close to or has reached the LTV requirements for MI termination based on
      original value and notify the borrower of the actions required to terminate
      MI. The servicer must terminate MI based on original value of the property only
      after receiving a direct response from the borrower to do so. Borrower-Initiated
      Termination of Conventional Mortgage Insurance Based on Current Value of the
      Property The servicer must not solicit a borrower for MI termination based on
      current value of the property. The servicer must only terminate MI based on
      current value of the property in response to a borrower-initiated request for
      termination. If the borrower’s written or verbal request for termination based
      on the current value includes the information necessary to reach a decision,
      the servicer must evaluate the request based on the following: 1. Verify the
      LTV ratio of the mortgage loan meets Fannie Mae’s eligibility criteria. Published
      May 13, 2026 198 Satisfaction that the mortgage loan meets the applicable LTV
      ratio eligibility criterion must be evidenced by obtaining a property valuation
      based on an inspection of both the interior and exterior of the property from
      Fannie Mae''s servicing solutions system by following the procedure in Ordering
      Property Values for Mortgage Insurance Termination in F-1-02, Escrow, Taxes,
      Assessments, and Insurance. The following table describes the LTV ratio eligibility
      criteria. If the mortgage loan is... Then... secured by a one-unit principal
      residence or second home the LTV ratio must be • 75% or less, if the seasoning
      of the mortgage loan is between two and ﬁve years. • 80% or less, if the seasoning
      of the mortgage loan is greater than ﬁve years. If Fannie Mae’s minimum two-year
      seasoning requirement is waived because the property improvements made by the
      borrower increased the property value, the LTV ratio must be 80% or less. Note:
      The borrower must provide details to the servicer on the property improvements
      made since the mortgage loan''s origination. Improvements that increase value
      are typically renovations that substantially improve marketability and extend
      the useful life of the property (e.g. kitchen and bathroom renovations and/or
      the addition of square footage). Repairs that are made to keep the property
      maintained and fully functional are not considered improvements. secured by
      a one- to four-unit investment property or a two- to four-unit principal residence
      the LTV ratio must be 70% or less and the seasoning of the mortgage loan must
      be greater than two years. 2. Verify the borrower has an acceptable payment
      record. An acceptable payment record is achieved when the mortgage loan is current
      when the termination is requested, which means the mortgage loan payment for
      the month preceding the date of the termination request was paid; has no payment
      30 or more days past due in the last 12 months; and has no payment 60 or more
      days past due in the last 24 months. Note: When assessing the payment history
      for a mortgage loan and the borrower has made property improvements, the servicer
      must apply the acceptable payment record criterion to the length of time the
      mortgage loan has been outstanding. Published May 13, 2026 199 If a mortgage
      loan has been assumed by a new borrower, the servicer must not agree to the
      termination unless the new borrower has a 24-month payment history for the mortgage
      loan. The servicer must notify the borrower if the request for termination is
      denied and provide the reasons for denial, including the results of the BPO
      or appraisal. This notice must be sent within 30 days after the later of the
      date the servicer received the borrower’s request for termination, or the date
      the servicer received the BPO or appraisal. Veriﬁcation of Acceptable Payment
      Record for Borrowers Impacted by a Disaster When verifying an acceptable payment
      history for a borrower that was impacted by a disaster event in which the servicer
      provided either a forbearance plan, a repayment plan, or a Trial Period Plan,
      or disaster payment deferral and the borrower complied with the terms of such
      workout option, the servicer must not consider any payment that is 30 or more
      days past due in the last 12 months, or 60 or more days past due in the last
      24 months that is attributable to the disaster event. This applies when reviewing
      the borrower''s request for termination of conventional MI based on either original
      or current value of the property. Terminating the Conventional Mortgage Insurance
      for a Modiﬁed Mortgage Loan The MI termination eligibility criteria for a modiﬁed
      mortgage loan must be based on the terms and conditions of the modiﬁed mortgage
      loan, including the amortization schedule of the modiﬁed mortgage loan, and
      must comply with applicable law. Finalizing and Reporting the Mortgage Insurance
      Termination The servicer must automatically terminate the MI on the applicable
      termination date and must approve a borrower-initiated request for termination
      if the previously stated requirements for the applicable type of MI termination
      are met. The servicer must not collect MIPs as part of the borrower’s mortgage
      loan payment more than 30 days after the later of the date the servicer received
      the borrower’s request for termination (or the scheduled termination date or
      the mid-point of the amortization period, as applicable, for an automatic termination),
      or the date all eligibility criteria for termination were satisﬁed. The following
      table provides the requirements for ﬁnalizing and reporting the termination
      of the MI. Published May 13, 2026 200 ✓ The servicer must... Reduce the borrower’s
      mortgage loan payment by the amount that was being collected to pay the MIP
      within the required time frame, unless the MIP was ﬁnanced as part of the mortgage
      loan amount. Notify the borrower within 30 days after termination that the MI
      has been terminated and, if applicable, indicate no further escrow deposits
      for MI will be due from the borrower. Forward any unearned MIP refund to the
      borrower as soon as it is received from the mortgage insurer, but no later than
      45 days after the MI termination date. Report the termination of MI to Fannie
      Mae with the next Fannie Mae investor reporting system reports it submits after
      the termination date. See Reporting Discontinuance of Mortgage Insurance in
      the Investor Reporting Manual for additional information. Performing an Escrow
      Analysis Upon Termination of Mortgage Insurance The following table outlines
      the actions the servicer must take depending on whether it performs a new escrow
      analysis at the time the MI is terminated. If the servicer... Then... does not
      perform a new escrow analysis the servicer must advise the borrower that escrow
      deposits accumulated to pay oﬀ the next MIP will be considered in the borrower’s
      next escrow account analysis. performs a new escrow analysis the resulting change
      in the mortgage loan payment must not equal the amount previously escrowed for
      the MIP, should other escrow items need to be adjusted. Recent Related Announcements
      The table below provides references to recently issued Announcements that are
      related to this topic. Published May 13, 2026 201 Announcements Issue Date Announcement
      SVC-2019-03 May 15, 2019 Section B-8.2, FHA Mortgage Insurance Requirements'
  judgment: false
