Which of the following cannot be required by a creditor when a borrower requests cancellation of private mortgage insurance at 80% LTV?

In the context of private mortgage insurance (PMI) cancellation, certain requirements a creditor imposes must align with established regulatory guidelines. When a borrower requests cancellation of PMI upon reaching an 80% loan-to-value (LTV) ratio, the lender is prohibited from imposing specific excessive requirements.

Requiring an escrow account as a condition for PMI cancellation is not permissible because such a requirement does not directly relate to the loan's valuation or the borrower's payment history. The regulatory framework dictates that a borrower must be able to cancel PMI based primarily on LTV and payment history, rather than having to maintain an escrow account.

On the other hand, requiring 5 years of payments, a second appraisal, or a clean payment record for the last 12 months can be conditions that lenders might include, as they relate to the assessment of the borrower’s risk and the property’s value, which are relevant factors in determining the necessity of PMI. These elements are generally considered valid by lenders to ensure that the circumstances supporting the original loan have not changed substantially.