Feds Direct Fannie Mae to Expand Outreach on Mortgage Insurance Cancellation

Federal Housing Finance Agency Director Bill Pulte has directed government-sponsored mortgage holder Fannie Mae to change its rules so mortgage servicers can alert homeowners who may qualify to cancel private mortgage insurance and lower their monthly payments.

“Today, I directed Fannie Mae to update their Guide to reflect Freddie Mac’s Guide, namely that mortgage servicing companies can notify borrowers who qualify for mortgage insurance cancellation based on current market value,” Pulte wrote on Sept. 15 on X.

Private mortgage insurance, or PMI, is generally required on conventional mortgages when borrowers put down less than 20 percent.

The insurance protects lenders against losses if borrowers default, but premiums are typically paid by homeowners and add to their monthly mortgage payment.

Under Fannie Mae’s current servicing guide, homeowners can request PMI cancellation based on the current value of their property if they meet certain loan-to-value and other eligibility requirements.

However, the guide specifically says servicers “must not solicit” borrowers for cancellation based on current property values and can act only after a borrower initiates the request.

Meanwhile, Freddie Mac, a government-sponsored entity that also supports mortgage lending, has servicing rules that allow mortgage companies to contact borrowers who may be approaching or have reached applicable mortgage-insurance cancellation thresholds

Aligning Fannie Mae’s rules with Freddie Mac’s, Pulte said, could help homeowners who have accumulated enough equity through rising home values or by paying down their mortgages but may not realize they are eligible to slash the additional cost of their mortgage insurance.

“If your Home is worth more, or you have paid the loan down far enough, you should be able to drop EXTRA Mortgage Insurance,” Pulte wrote.

The change would not automatically eliminate PMI. Borrowers would still have to meet Fannie Mae’s eligibility requirements, which can include an acceptable payment history, minimum loan seasoning, and a property valuation showing that the loan-to-value ratio has fallen sufficiently.

Federal law already provides for the eventual cancellation of borrower-paid PMI on many mortgages based on the home’s original value and the scheduled reduction of the loan balance. The change Pulte is pushing concerns another path to cancellation, based on a property’s current market value.

The directive comes as elevated borrowing costs continue to strain housing affordability.

The average contract rate on a 30-year fixed mortgage reached 6.97 percent in the Mortgage Bankers Association’s latest weekly survey, the highest level recorded since May 2025.

Mortgage rates typically track yields on longer-term government bonds, particularly the 10-year Treasury.

The benchmark yield climbed above 5 percent on Sept. 14, a level briefly reached in 2023 and otherwise not seen since 2007, before retreating to just below that threshold.

On Sept. 16, the 10-year Treasury yield again traded at 5 percent after the Federal Reserve raised its benchmark interest rate for the first time in three years.

The central bank’s overnight lending rate now sits in a 3.75 percent to 4 percent range, up from 3.5 percent to 3.75 percent.