We refinanced our house in September 2010 to get a lower interest rate and shorten our loan term. At that time, our LTV was slightly higher than 80% resulting in PMI. Our original loan documents included a Private Mortgage Insurance Disclosure Fixed Rate Mortgage document that stated PMI would be cancelled (upon our request) when our LTV reached 80% on July 1, 2012. The document goes on to state that PMI would be automatically terminated on March 1, 2013, when our LTV reaches 78%. We contacted our current lender, Wells Fargo Home Mortgage, to request cancellation of PMI. We were told that the PMI could not be cancelled until our LTV reaches 75% despite the terms set forth in our legally binding contract. Keep in mind that our payment history is 100% on time with automatic payments through Wells Fargo and our loan is not high risk. Also, Wells Fargo even included these same guidelines, citing the Homeowner's Protection Act of 1998, when it sent out our projected escrow balance and payments for the year! Yet they refuse to cancel our PMI until we reach 75% LTV!
So, after getting nowhere with Wells Fargo, we filed complaints with the Kansas Attorney General, the Better Business Bureau, the Federal Trade Commission, the Consumer Financial Protection Bureau, and Comptroller of the Currency. Wells Fargo responded twice to these complaints but stand by their insistence that we must reach 75% LTV in order to cancel PMI. Thomas Ellingworth sent a response on June 19, 2012, in which he contradicted himself and included half-truths. The letter stated that we are required to maintain PMI until the LTV reaches 80% but the documents he attached, as well as one of the options in his letter, stated that we need an LTV of 75%. He also stated that an appraisal is "required" when the Homowners Protection Act says the appraisal is needed only if the mortgage company requests it - it is not a requirement.
Two of the options he included require appraisals, which would establish current value. One option would require 75% LTV while the other requires 80% LTV. If that isn't confusing enough, the Appraisal Order Authorization he included in his letter DOES NOT offer the 80% LTV option.
Kelly Wilkins with Wells Fargo called on July 9, 2012, at 5:44 pm to discuss our complaint. She still insists that they can require 75% LTV before cancelling PMI even though the signed Private Mortgage Insurance Disclosure document from our loan contract says 80% LTV is all that is required. She had no explanation as to how the 75% was decided except that it's a requirement of Fannie Mae. (Fannie Mae regs website clearly states 80% LTV http://www.allregs.com/tpl/Main.aspx) I pointed out that we have NO signed contract regarding the 75% LTV so how can they change the terms of our contract without our permission? Further, she attempted to walk back the Automatic Termination of PMI section of the contract that states that PMI will automatically terminate on March 1, 2013 by saying termination is not automatic despite what our contract states. This is breach of contract. Just because Wells Fargo is a huge bank doesn't mean they can treat people like this. They MUST follow the terms of a signed contract – they CANNOT make unauthorized changes! Wells Fargo purchased our loan, we did not seek a loan from them. They purchased our loan in total and must follow the terms of the loan in total. The only protection we have is our signed contract and have every right to expect that the terms of a legally binding contract are honored. Wells Fargo must be held accountable for this breach of contract. We would welcome the opportunity to pursue legal action but, as one customer, we don't have the financial resources it would take to fight them in court. If a class action lawsuit develops, we will immediately join.
What this boils down to is this: we have signed loan documents stating that we can request cancellation of PMI when our LTV reaches 80% on July 1, 2012 and that it will be automatically terminated when our LTV reaches 78% on March 1, 2013. There are NO documents, containing our signatures, that mention anything about a 75% LTV requirement. In addition, we have made our loan payments 100% on time. Nothing Wells Fargo reps say changes these facts. The double-speak, half-truths, and outright lies serve only to confuse borrowers and set up smoke screens these banks hide behind in order to cheat the consumer. The three times I called Wells Fargo regarding this issue, I spoke with customer service people who offered refinancing as a way to remove PMI immediately. Everyone one of them made this offer. However, NONE mentioned the 80% LTV option - all insisted we had to reach 75% LTV. So, they won't cancel our PMI at 80% LTV, but we can pay to refinance and that would take care of the issue. What we are going to do is refinance but with a local bank that does not sell their mortgages. If enough consumers can do this, big banks like Wells Fargo will be forced to change their deceptive practices and begin to value customers once again.
Product or Service Mentioned: Wells Fargo Refinance.