Private mortgage insurance (PMI) is required to be automatically removed by a lender/servicer when which of the following events occur?

While borrowers can request PMI cancellation, this does not guarantee automatic removal. The lender must review the request and ensure that the necessary equity has been achieved, which may not necessarily be at 78% of the original value.

This option incorrectly mixes two criteria. Although being current on payments for five years is beneficial, PMI will only be removed automatically when the loan balance reaches 78% of the original value, not just when the loan-to-value ratio reaches 80%. Thus, this does not fulfill the PMI removal requirements.

While an appraisal showing more than 20% equity can support a request for PMI cancellation, it does not trigger automatic removal of PMI. The lender must still evaluate other factors, including the original loan amount and the loan balance, before deciding on PMI cancellation.