Bill Pulte, the director of the Federal Housing Finance Agency (FHFA), is moving to allow Fannie Mae and Freddie Mac to let mortgage companies call borrowers when rising home values or loan paydowns make it possible to cut monthly payments by dropping mortgage insurance.
Pulte outlined the shift in a social media post on Tuesday, saying Fannie will follow Freddie’s policy that lets companies contact borrowers who may qualify to cancel mortgage insurance because their homes have appreciated or their principal balances have fallen far enough.
“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.
Pulte said there has been a divergence between the government-sponsored enterprises (GSEs) as Freddie has allowed companies to conduct outreach in these situations, while Fannie has not. Allowing both GSEs to support proactive borrower contact could increase the number of homeowners who remove private mortgage insurance (PMI) earlier in the life of the loan.
“Right now Fannie Mae will not let your loan company call and tell you that you may qualify because your home has gone up in value! You have to know to ask,” Pulte wrote. “Freddie Mac will let them call. That is crazy. We are fixing that. Fannie Mae will follow Freddie’s rule: if you may qualify to drop unnecessary extra insurance because your home has gained value, they can contact you and walk you through how to cancel your PMI. You can stop paying for coverage you do not need and keep the money.”
Affordability pressures
The move comes as non-principal loan costs weigh more heavily on homeowners’ budgets. A report published in March by Missouri-based Neighbors Bank found that taxes and insurance account for an average of 21% of monthly mortgage payments nationwide. This adds hundreds — and sometimes thousands — of dollars to borrowers’ bills across nearly 450 U.S. metro areas.
Separately, the average single-family mortgage holder paid a record $209 per month for insurance in the second quarter of 2026, nearly 80% more than at the start of 2020, according to Intercontinental Exchange (ICE).
Mortgage insurance allows borrowers who cannot, or choose not to, make large down payments to obtain loans at affordable rates. It is used extensively to facilitate mortgages with loan-to-value ratios near or above 80%.
Regulatory backdrop
Under the Homeowners Protection Act of 1998, passed after complaints about the difficulty of canceling PMI, automatic termination is generally pegged to the original value of the home and an amortization schedule, not future appreciation.
Counting home price gains when determining whether PMI can be dropped is considered a discretionary policy area for Fannie and Freddie.
“People should not have to pay for extra mortgage insurance. People should pay for only proper and appropriate mortgage insurance,” Pulte wrote. “The Mortgage Insurance Companies make incredible amounts of money and have truly unbelievable PROFIT percentages as a percentage of revenue. I am asking Mortgage Insurance Companies to allow savings for Consumers where proper and appropriate.”
Seth Appleton, the president of U.S. Mortgage Insurers, issued a statement to HousingWire in which the organization expressed support for the Trump administration’s efforts to improve housing affordability.
“Private mortgage insurance helps homebuyers achieve the dream of homeownership without the need for a large cash down payment and it has become even more affordable in recent years with premium rates declining 25% or more since 2017, driven by robust competition in the market and lower corporate tax rates enacted during President Trump’s first term. Aligning Fannie Mae with Freddie Mac’s policy so servicers can proactively reach out to borrowers is an action that we support,” Appleton said.
“In 2025 alone, private MI saved the average homebuyer $48,000 in cash due at the closing table. And, starting this year, the Working Families Tax Cuts Act restored the deductibility of private and government MI premiums for eligible households, making low down payment homeownership even more affordable.”
Todd Bitter, national director of sales at NEXA Lending, said that when borrowers have been in the loan long enough and have built equity, they can request a new appraisal and ask to have PMI removed. But he also noted that contracts typically require minimum seasoning with on-time payments.
“Most of the loan contracts state that if they’re going to get rid of the PMI, they have to have 24 months of on-time payments, then they can request a new appraisal. If it comes in high enough, they can drop the PMI,” Bitter said.
That process comes with an upfront cost. “Then, they have to pay for this appraisal. It varies by market, but anywhere from $500 to $700 is typically the cost,” he said.
According to Bitter, the lender usually orders a full appraisal. For borrowers who can qualify to remove PMI, these upfront costs can be outweighed by the monthly savings over the remaining life of the loan.
Editor’s note: This story has been updated with comments from U.S. Mortgage Insurers.