Homeowners Protection Act (HOPA)

Legislation passed in 1998 in response to abuses by some private mortgage insurance (PMI) issuers. In cases where home buyers wish to borrow more than 80% of the property value, they must usually purchase private mortgage insurance to reduce the lender's risk in case of default and foreclosure. However once less than 80% of the purchase price remains on the loan, there is no further need for the insurance. Yet some PMI companies continued to collect and pursue payments. HOPA requires PMI issuers to inform borrowers of their right to cancel after the 80% mark is passed, and to automatically cancel the insurance once only 78% remains. The act only affects homes purchased after July 29th 1999.