12 U.S.C. §4905 — Disclosure requirements for lender paid mortgage insurance

hpa-12usc-4905

HPA lender-paid mortgage insurance (LPMI) section. Definitions of borrower-paid PMI, lender-paid PMI, and loan commitment; statutory exclusion of LPMI from §§4902-4904 cancellation/ termination/notification framework; loan-commitment LPMI disclosure (differences from BPMI, higher-rate effect, refinance- only termination, cost-benefit analysis); 30-day post-notional- termination refinance-options notice.

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source:
  type: regulation
  id: hpa-12usc-4905
  authority: 12 U.S.C. §4905 — Disclosure requirements for lender paid mortgage insurance
  description: |
    HPA lender-paid mortgage insurance (LPMI) section. Definitions
    of borrower-paid PMI, lender-paid PMI, and loan commitment;
    statutory exclusion of LPMI from §§4902-4904 cancellation/
    termination/notification framework; loan-commitment LPMI
    disclosure (differences from BPMI, higher-rate effect, refinance-
    only termination, cost-benefit analysis); 30-day post-notional-
    termination refinance-options notice.
obligations:
  - id: hpa-12usc-4905-c1-lpmi-loan-commitment-disclosure
    canonical_id: hpa-12usc-4905-c1-lpmi-loan-commitment-disclosure
    section: 12 U.S.C. §4905(c)(1) — LPMI loan-commitment written disclosure
    description: |
      For every residential mortgage transaction in which lender-paid
      mortgage insurance (LPMI) is required, [LENDER] (as prospective
      mortgagee) shall, not later than the date on which the loan
      commitment is made, provide to the prospective mortgagor a
      written notice that: (A) LPMI differs from borrower-paid PMI in
      that LPMI may not be canceled by the mortgagor; (B) LPMI usually
      results in a higher interest rate and terminates only when the
      mortgage is refinanced, paid off, or otherwise terminated; (C)
      LPMI and borrower-paid both have benefits and disadvantages,
      with a 10-year generic cost-benefit comparison; and (D) LPMI
      may be tax-deductible if the mortgagor itemizes.
    type: do
    audit_question: For every residential mortgage transaction [LENDER] originates with lender-paid mortgage insurance, can [LENDER] evidence delivery on or before the loan-commitment date of the §4905(c)(1) four-element written notice — covering (A) no-cancellation difference from BPMI, (B) higher-rate effect and refinance-only termination, (C) 10-year cost-benefit comparison, and (D) tax-deductibility?
    program_review: Do the P&Ps ensure that for every LPMI loan, on or before the loan-commitment date [LENDER] delivers the §4905(c)(1) four-element written notice — (A) no-cancellation difference from BPMI, (B) higher-rate effect and refinance-only termination, (C) 10-year cost-benefit comparison, (D) tax-deductibility?
    file_review: For sampled LPMI loans, confirm delivery of the four-element notice on or before the loan-commitment date.
    judgment: false
    feeds: []
    workflow_phase: closing
    owner_role: compliance_officer
    secondary_owner_role: closer
    cadence: per-loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hpa
      - lpmi
      - disclosure
      - loan-commitment
      - closing
      - promoted
    primary_source:
      tier: 1
      authority: 12 U.S.C. §4905(c)(1)
      source_class: hpa-statute
      source_url: https://www.law.cornell.edu/uscode/text/12/4905
      snapshot_id: 07eec8c1cca4541e
      fetched_at: '2026-05-24T00:47:09Z'
      content_hash: sha256:40c4f9654956d8f84567f447eac626d0b7bbbb7faeff30c023cf6a701d9806e1
      paragraph_quote: not later than the date on which a loan commitment is made for the residential mortgage transaction, the prospective mortgagee shall provide to the prospective mortgagor a written notice—
      drafter_attestation: |
        Copied verbatim from snapshot 07eec8c1cca4541e (content.txt) at
        2026-05-23T01:00Z. Substring is the §4905(c)(1) operative loan-
        commitment LPMI notice trigger; the (A)-(D) sub-content elements
        are paraphrased in description and audit_question.
    promoted_at: '2026-05-24T00:54:52+00:00'
    promoted_from: hpa-12usc-4905-roundb-v1.yaml
  - id: hpa-12usc-4905-c2-lpmi-refinance-options-notice
    canonical_id: hpa-12usc-4905-c2-lpmi-refinance-options-notice
    section: 12 U.S.C. §4905(c)(2) — LPMI refinance-options notice at notional termination
    description: |
      Not later than 30 days after the termination date that would
      apply in the case of borrower-paid PMI (i.e., the §4901(18)
      78-percent date the loan would have hit had it been BPMI),
      [LENDER] (as servicer) shall provide to the mortgagor a
      written notice indicating that the mortgagor may wish to
      review financing options that could eliminate the requirement
      for PMI in connection with the residential mortgage
      transaction. The LPMI itself does not terminate on this date
      (per §4905(b) exclusion from §4902); the notice is the only
      LPMI-specific borrower communication at the notional
      termination-date milestone.
    type: do
    audit_question: For every loan [LENDER] services with lender-paid mortgage insurance, can [LENDER] evidence delivery of the §4905(c)(2) written refinance-options notice within 30 days of the date that would have been the §4901(18) termination date for an equivalent borrower-paid loan?
    program_review: Do the P&Ps ensure that for every LPMI loan, within 30 days of the date that would have been the §4901(18) termination date for an equivalent BPMI loan, [LENDER] delivers the §4905(c)(2) refinance-options written notice?
    file_review: For sampled LPMI loans, confirm delivery of the refinance-options notice within 30 days of the notional termination date.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hpa
      - lpmi
      - notification
      - 30-day
      - refinance-options
      - servicing
      - promoted
    primary_source:
      tier: 1
      authority: 12 U.S.C. §4905(c)(2)
      source_class: hpa-statute
      source_url: https://www.law.cornell.edu/uscode/text/12/4905
      snapshot_id: 07eec8c1cca4541e
      fetched_at: '2026-05-24T00:47:09Z'
      content_hash: sha256:40c4f9654956d8f84567f447eac626d0b7bbbb7faeff30c023cf6a701d9806e1
      paragraph_quote: not later than 30 days after the termination date that would apply in the case of borrower paid mortgage insurance , the servicer shall provide to the mortgagor a written notice indicating that the mortgagor may wish to review financing options that could eliminate the requirement for private mortgage insurance in connection with the residential mortgage transaction.
      drafter_attestation: |
        Copied verbatim from snapshot 07eec8c1cca4541e (content.txt) at
        2026-05-23T01:00Z. Substring is the full §4905(c)(2) operative
        30-day refinance-options notice rule; no paraphrasing.
    promoted_at: '2026-05-24T00:54:52+00:00'
    promoted_from: hpa-12usc-4905-roundb-v1.yaml
  - id: hpa-12usc-4905-b-lpmi-exclusion-from-4902-4904
    canonical_id: hpa-12usc-4905-b-lpmi-exclusion-from-4902-4904
    section: 12 U.S.C. §4905(b) — LPMI exclusion from §§4902-4904
    description: |
      [LENDER] must recognize that §§4902 through 4904 (the
      borrower-cancellation, automatic-termination, final-termination,
      return-of-unearned-premiums, and post-termination notification
      obligations) do not apply in the case of lender-paid mortgage
      insurance. The borrower's only HPA-conferred rights in an LPMI
      transaction are the §4905(c) disclosures. [LENDER] may not
      represent to a borrower that LPMI is subject to §4902
      cancellation or termination.
    type: monitor
    audit_question: Does [LENDER] correctly classify every loan with LPMI as outside the §§4902-4904 cancellation/termination/notification framework, and ensure no §4902 cancellation request, §4902(b) automatic-termination process, or §4904 notification is improperly applied to an LPMI loan?
    program_review: Does the program account for the §4905(b) exclusion — correctly classifying every LPMI loan as outside the §§4902-4904 cancellation/termination/notification framework, so no §4902 cancellation, §4902(b) auto-termination, or §4904 notice is improperly applied, and no representation is made that LPMI is §4902-cancellable?
    file_review: Spot-check LPMI loans to confirm none was run through the §§4902-4904 processes and that borrower communications did not misrepresent LPMI cancellability.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hpa
      - lpmi
      - exclusion
      - servicing
      - promoted
    primary_source:
      tier: 1
      authority: 12 U.S.C. §4905(b)
      source_class: hpa-statute
      source_url: https://www.law.cornell.edu/uscode/text/12/4905
      snapshot_id: 07eec8c1cca4541e
      fetched_at: '2026-05-24T00:47:09Z'
      content_hash: sha256:40c4f9654956d8f84567f447eac626d0b7bbbb7faeff30c023cf6a701d9806e1
      paragraph_quote: Sections 4902 through 4904 of this title do not apply in the case of lender paid mortgage insurance .
      drafter_attestation: |
        Copied verbatim from snapshot 07eec8c1cca4541e (content.txt) at
        2026-05-23T01:00Z. Substring is the full §4905(b) operative
        exclusion rule; no paraphrasing.
    promoted_at: '2026-05-24T00:54:52+00:00'
    promoted_from: hpa-12usc-4905-roundb-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-24T00:54:52+00:00'
    candidate_path: obligations\_remediation\_round_b_drafts\hpa-12usc-4905-roundb-v1.yaml
    candidates_promoted: 3
    candidates_skipped_existing: 0

Verbatim regulatory text (3)

Verbatim provisions from 12 U.S.C. §4905 — Disclosure requirements for lender paid mortgage insurance — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

12 U.S.C. §4905(c)(1) — LPMI loan-commitment written disclosure

not later than the date on which a loan commitment is made for the residential mortgage transaction, the prospective mortgagee shall provide to the prospective mortgagor a written notice—

Source: 12 U.S.C. §4905(c)(1) · source URL · snapshot 07eec8c1cca4541e

12 U.S.C. §4905(c)(2) — LPMI refinance-options notice at notional termination

not later than 30 days after the termination date that would apply in the case of borrower paid mortgage insurance , the servicer shall provide to the mortgagor a written notice indicating that the mortgagor may wish to review financing options that could eliminate the requirement for private mortgage insurance in connection with the residential mortgage transaction.

Source: 12 U.S.C. §4905(c)(2) · source URL · snapshot 07eec8c1cca4541e

12 U.S.C. §4905(b) — LPMI exclusion from §§4902-4904

Sections 4902 through 4904 of this title do not apply in the case of lender paid mortgage insurance .

Source: 12 U.S.C. §4905(b) · source URL · snapshot 07eec8c1cca4541e