The Homeowners Protection Act of 1998 - which became effective in 1999 - establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI.
For home mortgages signed on or after July 29, 1999, your PMI must - with certain exceptions - be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current. Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the appreciated property value, if your mortgage payments are current. If the basis of your request for PMI removal is that the loan is now less than 78% of the property’s original purchase price AND if the loan has at least 24 months seasoning, then the PMI should be removed automatically under the provisions of the Homeowners Protection Act of 1998.
One exception to automatic removal is if your loan is “high-risk” (sub-prime). Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue.
If you signed your mortgage before July 29, 1999, you can ask to have the PMI cancelled once you exceed 20 percent equity in your home. But federal law does not require your lender or mortgage servicer to cancel the insurance.
You said your loan was sold to Fannie or Freddie. I suspect that CW is your loan servicer, but Fannie Mae or Freddie Mac holds your note. Fannie Mae and Freddie Mac also have guidelines affecting termination or cancellation of PMI on home mortgages signed before July 29, 1999. If your mortgage was originated before July 1999, I suspect the rules you are being cited are Fannie/Freddie rules and not CW rules.
If your loan is at least 24 months old, you have had no late pays, and if your equity is at least 22% of the original property value, then just ask CW to send you their standard form to request PMI cancellation. Fill out the form and send it in. If the note holder requires a current appraisal to ensure that the property value has not declined since the loan was originated, it will be at your expense. In most cases, the appraiser will be a local appraiser and the appraisal fee will be consistent with the prevailing rate for your area.
Since CountryWide is owned by Bank of America, maybe a local BoA loan representitive will be able to assist you.