Article 2. Mortgage of Real Property - California Civil Code Section 2954.7
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California Laws > Civil Code > Article 2. Mortgage of Real Property - California Civil Code Section 2954.7
2954.7. Except when a statute, regulation, rule, or written
guideline promulgated by an institutional third party applicable to
notes or evidence of indebtedness secured by a deed of trust or
mortgage purchased in whole or in part by an institutional third
party specifically prohibits cancellation during the term of the
indebtedness, if a borrower so requests and the conditions
established by paragraphs (1) to (5), inclusive, of subdivision (a)
are met, a borrower may terminate future payments for private
mortgage insurance, or mortgage guaranty insurance as defined in
subdivision (a) of Section 12640.02 of the Insurance Code, issued as
a condition to the extension of credit in the form of a loan
evidenced by a note or other evidence of indebtedness that is secured
by a deed of trust or mortgage on the subject real property.
(a) The following conditions shall be satisfied in order for a
borrower to be entitled to terminate payments for private mortgage
insurance or mortgage guaranty insurance:
(1) The request to terminate future payments for private mortgage
insurance or mortgage guaranty insurance shall be in writing.
(2) The origination date of the note or evidence of indebtedness
shall be at least two years prior to the date of the request.
(3) The note or evidence of indebtedness shall be for personal,
family, household, or purchase money purposes, secured by a deed of
trust or mortgage on owner-occupied, one- to four-unit, residential
(4) The unpaid principal balance owed on the secured obligation
that is the subject of the private mortgage insurance or mortgage
guaranty insurance shall not be more than 75 percent, unless the
borrower and lender or servicer of the loan agree in writing upon a
higher loan-to-value ratio, of either of the following:
(A) The sale price of the property at the origination date of the
note or evidence of indebtedness, provided that the current fair
market value of the property is equal to or greater than the original
appraised value used at the origination date.
(B) The current fair market value of the property as determined by
an appraisal, the cost of which shall be paid for by the borrower.
The appraisal shall be ordered and the appraiser shall be selected by
the lender or servicer of the loan.
(5) The borrower's monthly installments of principal, interest,
and escrow obligations on the encumbrance or encumbrances secured by
the real property shall be current at the time the request is made
and those installments shall not have been more than 30 days past due
over the 24-month period immediately preceding the request, provided
further, that no notice of default has been recorded against the
security real property pursuant to Section 2924, as a result of a
nonmonetary default by the borrower (trustor) during the 24-month
period immediately preceding the request.
(b) This section does not apply to any of the following:
(1) A note or evidence of indebtedness secured by a deed of trust
or mortgage, or mortgage insurance, executed under the authority of
Part 3 (commencing with Section 50900) or Part 4 (commencing with
Section 51600) of Division 31 of the Health and Safety Code.
(2) Any note or evidence of indebtedness secured by a deed of
trust or mortgage that is funded in whole or in part pursuant to
authority granted by statute, regulation, or rule that, as a
condition of that funding, prohibits or limits termination of
payments for private mortgage insurance or mortgage guaranty
insurance during the term of the indebtedness.
(3) Notes or evidence of indebtedness that require private
mortgage insurance and were executed prior to January 1, 1991.
(c) If the note secured by the deed of trust or mortgage will be
or has been sold in whole or in part to an institutional third party,
adherence to the institutional third party's standards for
termination of future payments for private mortgage insurance or
mortgage guaranty insurance shall be deemed in compliance with the
requirements of this section.
(d) For the purposes of this section, "institutional third party"
means the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation, the Government National Mortgage
Association, and other substantially similar institutions, whether
public or private, provided the institutions establish and adhere to
rules applicable to the right of cancellation of private mortgage
insurance or mortgage guaranty insurance, which are the same or
substantially the same as those utilized by the above-named
Last modified: February 16, 2015