PMI Cancellation Pilot Excludes Existing Loans

Existing loans would be excluded from the private mortgage insurance (PMI) cancellation pilot outlined in President Trump's October 22, 2026, order. Section 2 of the order limits potential eligibility to mortgages made after the program is established. Homeowners already paying PMI can investigate established cancellation routes now.

Which loans would the pilot cover?

The directive is conditional: the Federal Housing Finance Agency (FHFA) director must first make the required best-interest determination. Under the contemplated pilot, Fannie Mae and Freddie Mac would periodically review single-family loans they own, guarantee or securitize, using automated valuations and other data. Cancellation would remain subject to equity and payment-history requirements, safety and soundness standards, and legal and contractual safeguards. Borrower notifications would depend on legal and operational feasibility. These conditions appear in Section 2 of the executive order.

The directive does not cover every mortgage carrying an insurance charge. FHA mortgage insurance follows different rules from conventional PMI, and lender-paid mortgage insurance also receives different treatment, as the CFPB's guidance explains. Confirm the loan and insurance type with the servicer before pursuing cancellation.

What proactive cancellation would change

The order's proactive-cancellation provisions would measure equity against current market value. Periodic reviews could reduce the burden on borrowers to recognize when they might qualify and initiate the process.

Existing borrowers can already receive outreach about current-value cancellation. Fannie Mae's September 16, 2026, Lender Letter LL-2026-07, effective immediately, permits servicers to contact borrowers whose loans approach or meet the requirements and explain the necessary actions.

That permission predates the executive order, and the letter retains a borrower-initiated process. An invitation to request review does not mean the insurance charge will disappear automatically. Professionals answering homeowner questions should distinguish existing outreach from participation in the contemplated pilot.

What existing borrowers can pursue now

Request cancellation based on original value

For covered mortgages, borrowers generally may request cancellation when the balance is scheduled to reach 80% of original value, or reaches that point early through extra principal payments. The CFPB's cancellation guidance, reviewed August 28, 2026, describes protections for single-family principal-residence mortgages closed on or after July 29, 1999.

The statutory request must be written. The borrower must be current, have a good payment history, and satisfy applicable requirements for evidence that the property has not lost value and certification that there is no subordinate lien. High-risk-loan exceptions also apply under 12 U.S.C. §4902.

For the calculation details, see how original value affects existing PMI cancellation routes.

Check automatic termination dates

For covered loans, PMI generally terminates when the balance is scheduled to reach 78% of original value, provided payments are current. Appreciation does not move that scheduled date forward, as the CFPB guidance explains. A separate statutory backstop generally ends PMI the month after the amortization midpoint, also subject to being current.

Ask about cancellation using current value

Appreciation-based cancellation already has an investor framework. For Fannie Mae loans secured by a one-unit principal residence or second home, the standard current-value limits are:

• Two through five years old: loan-to-value ratio, or LTV, of 75% or less.
• More than five years old: LTV of 80% or less.
• Qualifying improvements that increase value: the two-year minimum may be waived, with an 80% maximum LTV.

Payments must be current, with no payment 30 or more days late in the previous 12 months or 60 or more days late in the previous 24 months. Late payments caused by a disaster are not counted in those periods if the borrower complied with the servicer's forbearance plan, repayment plan, trial period plan or disaster payment deferral. These Fannie Mae cancellation requirements apply to the listed property types; other loans can have different requirements.

Why a higher home value may still fall short

Consider a hypothetical three-year-old Fannie Mae loan on a one-unit primary residence. Assume a $300,000 balance, an accepted current valuation of $390,000, no improvement-based exception and satisfactory payment history.

The LTV is about 76.9%: $300,000 divided by $390,000. That exceeds the applicable 75% limit. A $400,000 accepted value would bring the same balance to 75%, satisfying the equity threshold, though the servicer must still verify the remaining requirements.

The valuation process also matters. For this current-value cancellation process, Fannie Mae's valuation procedures, dated May 13, 2026, require the servicer to order the applicable valuation through the prescribed system, at the borrower's expense. Before commissioning a valuation independently, ask the servicer which review applies, what evidence it accepts and what fee it requires.

What is known as of October 23

The order's signing date does not establish the pilot's start date. Section 2 specifies no launch deadline; the order's 180-day deadline concerns manufactured-housing recommendations.

As of October 23, 2026, the review for this article of FHFA releases, Fannie Mae servicing communications, Freddie Mac's pilot disclosures and dated searches of their sites did not locate a launch announcement or implementing eligibility instructions for this pilot. That finding is limited to the public material checked; it does not establish whether internal work has begun.

Before changing customer guidance, professionals tracking housing rules and implementation timelines need confirmation of the establishment date, eligible origination dates, participating loans and servicers, review frequency, valuation standards, and instructions for notifying borrowers and stopping charges. A future closing date alone cannot establish pilot participation.

Existing borrowers can send a mortgage-servicing request asking which cancellation route applies now, what requirements remain unmet and when the next eligible date occurs. Ask for the answer in writing before budgeting for a lower payment.