Final answer:
BPMI automatically falls off when the mortgage reaches an LTV ratio of 78% under the Homeowners Protection Act of 1998, provided the loan is current. Homeowners may also request cancellation at an 80% LTV ratio, with certain conditions met.
Step-by-step explanation:
The question relates to the automatic cancellation of Borrower-Paid Mortgage Insurance (BPMI) at a certain Loan-to-Value ratio (LTV). For most home mortgages, BPMI is set to automatically terminate when the mortgage reaches an LTV ratio of 78%. The Homeowners Protection Act of 1998 requires that BPMI be canceled when the mortgage is scheduled to reach an LTV ratio of 78%, based on the original property value and as long as the loan is current. This cancellation does not necessarily align with the actual LTV at the time because it does not account for additional principal payments or fluctuations in home value. Moreover, homeowners have the right to request cancellation of BPMI when the LTV ratio reaches 80% based on the current property value, subject to certain conditions such as a good payment history and no other liens on the property.