>Isn't this illegal?

It is not. The law only requires PMI be removed at 78% (or 80% if requested) based on the original amortization schedule. You can also request it if its at 80% based on the original purchase price due to additional payments.

https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/#:~:text=Automatic%20PMI%20termination,original%20value%20of%20your%20home.

If you're relying on an increase in property value, the lenders can set their own restrictions

https://servicing-guide.fanniemae.com/THE-SERVICING-GUIDE/Part-B-Escrow-Taxes-Assessments-and-Insurance/Chapter-B-8-Mortgage-Insurance/Section-B-8-1-Conventional-Mortgage-Insurance-Requirements/B-8-1-04-Termination-of-Conventional-Mortgage-Insurance/1040972451/B-8-1-04-Termination-of-Conventional-Mortgage-Insurance-05-15-2019.htm