If you have a conventional mortgage with mortgage insurance, your servicer may now contact you when the home's current value suggests you could be close to meeting the rules for cancellation. Fannie Mae announced the change on September 16, 2026, and made it effective that day. The update can make a cancellation opportunity easier to notice, but it does not remove the steps a borrower must complete.
The Fannie Mae lender letter says servicers may proactively reach out about mortgage insurance termination based on current property value. Fannie Mae issued the change at the direction of the Federal Housing Finance Agency and plans to reflect it in a future Servicing Guide update.
What did Fannie Mae change?
Before this update, the process described in Fannie Mae's servicing rules centered on a borrower asking to end mortgage insurance based on the home's current value. The new policy permits a servicer to identify loans that may be near or at the relevant loan-to-value requirements and contact those borrowers.
That outreach can explain the actions needed to request termination. It may prompt a homeowner who did not realize that rising equity could matter. The core test still belongs to the servicing rules, and the servicer still has to determine whether the loan and borrower meet them.
The word may is important. Fannie Mae permits outreach; it does not say every servicer must review every loan or contact every borrower. Silence from your servicer does not prove that you fail the requirements, and a letter from your servicer does not prove that cancellation will happen.
What is mortgage insurance, and why would it end?
Conventional mortgage insurance generally protects the lender or loan owner when a buyer makes a smaller down payment. The borrower usually pays for that protection as part of the housing cost. It is different from homeowners insurance, which covers certain damage or loss involving the property and belongings.
As you pay down the mortgage, your ownership stake in the home can grow. A higher home value can also increase that stake. Loan-to-value compares the amount owed on the first mortgage with the property's value. Fannie Mae's change concerns a cancellation path that uses the home's current value, not simply the value used when the loan closed.
Current value is not whatever a homeowner hopes the property would sell for. A servicer can require a valuation process and other evidence under its rules. The borrower may also need a satisfactory payment record and a property that meets the applicable conditions. Your servicer should tell you what documentation, valuation and review apply to your loan.
Does a servicer message mean mortgage insurance is canceled?
No. The outreach is a notice that you may be near the requirements and can take the listed actions. It is not a cancellation notice, an approval or a promise about the result.
The change also does not apply to every kind of mortgage insurance. Fannie Mae's lender letter addresses conventional mortgage insurance under Fannie Mae servicing requirements. FHA mortgage insurance follows federal rules, while other loans and loan owners can follow different requirements. Ask your servicer who owns your loan and which cancellation rules govern it.
Do not assume that an unsolicited message asking for money or personal information is genuine. Compare its contact details with your mortgage statement or online account. Contact the servicer through a trusted number or secure portal before sending documents or paying for a valuation.
What should you do if your servicer contacts you?
1. Confirm who sent the message
Use the contact information on a recent mortgage statement or your established online account. Ask whether the outreach came from the servicer and whether it concerns borrower-initiated termination based on current value.
2. Ask which requirements apply
Request a plain-language list of every condition the servicer will review. Ask about payment history, property condition, liens, valuation and any fee. Also ask what happens if the valuation does not support cancellation.
3. Compare the cost with the possible benefit
A valuation may carry a cost, while ending mortgage insurance may reduce a future housing expense. Ask the servicer to explain the process before you authorize it. Do not rely on an online home estimate as proof of the value the servicer will accept.
4. Get the outcome in writing
If the servicer approves the request, ask when the charge will stop and check later statements. If it denies the request, ask for the reason and what would need to change before another review makes sense.
How does this interact with down payment assistance?
Mortgage insurance and down payment assistance are separate parts of the financing. Mortgage insurance can protect the first-mortgage lender or owner. Assistance may be structured as a second loan with its own balance, lien and repayment or forgiveness rules.
Ending mortgage insurance does not automatically remove a down payment assistance lien or change what you owe under the assistance agreement. Likewise, having assistance does not by itself answer whether conventional mortgage insurance can end. The servicer must apply the mortgage insurance rules and consider any lien-related requirements that affect the review.
If you used assistance, keep the assistance documents with your first-mortgage records. Before ordering a valuation or changing the loan, ask how the request affects every lien. The North Carolina program map shows reviewed assistance details, but your closing documents and servicer explain the terms attached to your loan.
What should North Carolina buyers ask before closing?
This policy is useful even if you have not bought yet because it highlights a future servicing question that is easy to miss. When comparing conventional loan options, ask whether mortgage insurance applies, how it appears in the payment and who will service the loan after closing.
Then ask how cancellation works under the expected loan terms. Find out whether there are different paths based on the original value and current value, what evidence each path needs, and whether the servicer charges for a valuation. The lender cannot predict your future property value or guarantee that you will meet a cancellation test, but it can explain the rules built into the proposed mortgage.
If your purchase uses down payment assistance, ask the participating lender to explain the first mortgage, the assistance loan and mortgage insurance separately. That conversation helps you understand which obligation a later request could change and which obligations would remain.
The bottom line
Fannie Mae's September 16, 2026 update allows servicers to alert certain borrowers about a possible path to ending conventional mortgage insurance based on current property value. The change may surface an opportunity, but the borrower still has to follow the servicer's process and meet the governing requirements.
Treat any outreach as a reason to ask careful questions, not as a promise of cancellation. If you are planning a purchase, review the mortgage and assistance pieces together on the North Carolina program map, then ask a participating lender how mortgage insurance and future cancellation would work for the loan you are considering. New to assistance? Read what down payment assistance is and how it works in North Carolina.