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Understanding Good Payment History [Banks & Banking]: A Comprehensive Guide
Definition & Meaning
A good payment history refers to a borrower's record of making timely mortgage payments. Specifically, it indicates that the borrower has not had any mortgage payments that were 60 days or more past due within a 12-month period leading up to the cancellation date of their mortgage or the date they requested cancellation. Additionally, it means that the borrower has not made any payments that were 30 days or more past due during the same timeframe. Maintaining a good payment history is crucial for borrowers seeking to cancel private mortgage insurance (PMI) or for favorable loan terms in the future.
Table of content
Legal Use & context
This term is primarily used in the context of mortgage lending and real estate finance. A good payment history is essential for borrowers to qualify for various financial benefits, such as the cancellation of PMI, which can reduce monthly mortgage payments. It is also relevant in legal proceedings involving foreclosure or loan modification, where a borrower's payment history may be scrutinized. Users can manage related forms and procedures through resources like US Legal Forms, which provide templates created by legal professionals.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A homeowner has consistently made their mortgage payments on time for the past two years. They decide to cancel their PMI. Since they have no payments that were late by 60 days or more in the last 12 months, they qualify for cancellation.
Example 2: A borrower missed a mortgage payment 45 days ago but has made all subsequent payments on time. Since they have a payment that was 30 days late within the last year, they do not meet the criteria for a good payment history. (hypothetical example)
Relevant laws & statutes
Pursuant to 12 USCS § 4901 (4), the definition of good payment history is established in the context of mortgage lending and the cancellation of private mortgage insurance. This statute outlines the specific criteria that borrowers must meet to be considered as having a good payment history.
Comparison with related terms
Term
Definition
Good Payment History
A record of timely mortgage payments, with no significant delinquencies.
Credit History
A broader record of a borrower's credit behavior, including all types of debt, not just mortgages.
Loan Default
Failure to meet the legal obligations of a loan, which can result from missed payments.
Common misunderstandings
What to do if this term applies to you
If you believe your good payment history may impact your mortgage or PMI cancellation, review your payment records carefully. Ensure that you have no late payments that exceed the specified timeframes. If you qualify, you can proceed with your cancellation request. For assistance, consider using US Legal Forms to access ready-to-use legal templates, or consult a legal professional if your situation is complex.
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Typical criteria: No payments 60 days late in the last year.
Relevant laws: 12 USCS § 4901 (4).
Importance: Affects PMI cancellation eligibility.
Potential penalties: Higher costs due to PMI if not canceled.
Key takeaways
Frequently asked questions
A good payment history means no mortgage payments were 60 days or more past due in the last year.
It can allow you to cancel private mortgage insurance and may help secure better loan terms in the future.
It depends on the timing and frequency of the late payments. If the late payment was within the last 12 months and meets certain criteria, it may affect your status.