That is what I was leaning toward. However, today I found the "Implementation Guide to PMI Cancellation - Understanding the HPA of 1998" From the Mortgage Bankers Association of America From 1999,2001.
This states, in regard to the Adj. Rate cancellation (80%) date notice, that "The Act's initial disclosure requirements for adjustable rate mortgages require the lender to inform the borrower that the borrower will be notified "when the cancellation date is reached" for his/her loan. PMI Act 4(a)(1)(B)(i). Although the Act does not contain a separate provision requiring that servicers give this notice, it would be reasonable to conclude that servicers should give this notice to adjustable rate mortgage borrowers as close to the cancellation date as is reasonably feasable. A model form "Notice of Cancellation Date for Adjustable Rate Mortgages" is set forth at Appendix C, Form C-9"
So, in my opinion it would be good to send this notice, especially since in the initial disclosure we say "you will be notified". But, would it be a regulatory violation for not notifying the customer with an Adjustable Rate loan that the loan has reached 80%? It says that the Act does not contain a separate provision requiring the notice be given, and just that it would be a good idea to do so.