When is a borrower eligible to request the cancellation of PMI according to the Homeowners Protection Act?

A borrower can request the cancellation of Private Mortgage Insurance (PMI) according to the Homeowners Protection Act when their equity in the home reaches 20% of its original value. This reflects the intent of the law to protect homeowners from unnecessary PMI costs once they have built up enough equity, which typically occurs as the mortgage balance decreases relative to the property's value.

In practical terms, once homeowners have made sufficient payments and/or the property's market value has increased to the point where their equity is 20% or more, they have a right to approach their lender for cancellation of PMI. This helps borrowers save money by eliminating a monthly premium that can significantly add to their housing costs.

The other choices do not align with the provisions of the Homeowners Protection Act. For instance, simply passing one year of the mortgage does not guarantee eligibility for PMI cancellation, as equity must be considered. Likewise, allowing borrowers to cancel PMI whenever they choose would undermine the equity requirement established by the law, and waiting until the end of the loan term would not provide any financial relief during the borrower's payment period.