the previous poster is correct--a lot of banks are not allowing you to use market value change only to remove the PMI since the recession. They are trying to keep the insurance on so they get paid in the event of default or people walking away from homes which are now worth thousands less than their mortgage balance.
You said you had 2 years of PMI left? 370*24=$8880. If you refinanced, how much would the closing costs be? You already have an appraisal--if its $3K or so, you're still coming out ahead, assuming similar interest rates. I'd say screw WF and move to another company. I plug Quicken Loans--they do an outstanding job IMO.
There are three options we were given: 1. Wait until 78% LTV from original purchase 2. Before 2 years, show proof of structural improvements that raise value of the home to be at 75% LTV (May be 78% but thought for sure 75%) 3. After 2 years, have the house reappraised and show 80% LTV. The appraisal must be ordered AFTER 2 years (I tried to order now because 2 years is sept 10).
So I'm not sure if you are at 2 years or not, but the 2 year reappraisal option should be in your closing paperwork from the refi.
My understanding is that the [mortgage reform act?] requires the bank drop pmi at 78% (your first option) but you can request it be removed at 80% (and they need comply with no strings).
More importantly, did anyone read that bolded paragraph the same as I did? It said "IF the improvements are the sole reason for the increased value." Doesn't that mean that the appraiser has to state WHAT the improvements were and what the value of each improvement was? I only told him of 2 improvements. Flooring (N/A) and a covered patio in our backyard. Who would ever guess they'd have to come up with $45K of receipts to prove that?
I read it as they will only remove PMI if the increased value was due to structural improvements. They will not remove PMI if the increased value is due to market fluctuations. Reason being easy come easy go on the market value, but structural improvements are an investment. PMI is there to protect the lender if the market crashes again and you walk away. It makes sense they only want to let you out of it if the property has changed since the original deal.
I would look into refinancing with a different bank. It's a PITA but you said you have $13,000 in PMI left to pay and you can refi for much less than that.
Ok so I figured out the biggest issue. I ordered the appraisal 3 weeks early of our 2yr. Now why the f wouldn't the bank tell me that when I called to get the paperwork!? My assumption was that I could get the "ball rolling" like my mortgage guy told me to do. Now I'm being penalized for it! Ugh!!!
So I can either pay for another appraisal and cross my fingers that I get the $590k or start over at another bank and get a refi somewhere else.
I hate big banks. I do not understand why an increase in market value -- performed by an apprasier the bank selects -- is not sufficient to remove PMI. If you stopped paying on the loan, the bank would be able to recoup its appraised value. Furthermore, structural improvement do not increase a home value dollar-for-dollar. Is this a WF policy? I would think that federal regulation govern when PMI can be removed.
If you do not get anywhere with WF, I would look into refinancing with another company. Even if you only break even it would seem worth to be free of WF.
I agree with this wholeheartedly. Although big banks don't bother me so much. I've been with Bank of America since 2002 and never had any problems. We actually just had our PMI removed within the last month, as soon as we reached our 2 year mark I called about having it removed. We also had to have an appraisal done, and apart from painting the kids rooms and putting in SS appliances, we haven't done anything to our house, and certainly not structurally. BOA required a minimum of 2 years before PMI removal would even be considered and it was removed based on the appraised value, which was solely due to the shift in the market.
Paying that much per month for PMI is a waste and I think it is worth it to look into refinancing if they won't value the appraisal you had done and remove the PMI based on that. I think to require you to have had 45k in structural improvements done is ridiculous, and like barefoot said, improvements never increase home value dollar for dollar.
Sorry you are going through this and I hope you can speak to someone who will help you get this resolved so you don't have that payment anymore!
I had a loan close once because the buyer finally went over her (incompetent) loan officer's head and called corporate. A VP called her back and had a clear to close within 90 minutes. (Don't try this if you are on day 32 of a 30 day closing, but we were on something like day 95!) Your friend's dad is right. Sometimes you totally have to be the squeaky wheel.
Per the recommendation of my Mortgage Broker, I wrote a very sincere letter outlining my experience with the whole process to remove PMI to the president of WF. I sent the letter along with my appraisal via UPS Overnight and I received a phone call the day after it delivered from my case manager. I was then sent a follow up letter that they received my complaint and were looking into the matter. That was last Wednesday. Fast forward to yesterday we got a letter that we were approved to remove PMI and it went into effect Aug 31st. Just like that! AND, an accompanying letter from the Mortgage Insurance Co with a check refunding last months PMI payment.
So my advice, If you are having any problems with Wells Fargo, write a letter to the president. They will take you seriously. SO STOKED RIGHT NOW!!!
OP:
Sorry so long! I could seriously scream right now.
Some background: I live in HCOL area of So Cal.
2007 -We bought our house for $670k, loan on house was $470K ($200K DP) (30yr fixed 6.25%)
2012 -We had a refinance done valuing our home at $525K (30yr Fixed 4%)
Fast forward to last month. I get a call from our Mortgage broker who works for WF who says we might want to get the ball rolling on having PMI removed. He thinks our area is exploding in value and it's worth a shot to get our house reappraised. The expense would be on us ($350 for appraisal) but PMI is $370/month so it would be a nice reduction. He tells me to call WF CS and start the paperwork process. They send me a letter and this is what the investor requirements were for the eligibility of removal.
"Order an appraisal to verify the current value of your property. The appraisal must show the value of structural improvements made to the property. If the improvements are the sole reason for the increased value of $565,792.79, your LTV will be 80% and the appraisal can be used to delete the PMI. The value of improvements must equal $45,792.79." (The bolded is deceptive and I'll explain why.)
Ok so now reading this I know that I don't have structural improvements worth that much and I know the value of our home has gone up significantly since 2012 just by the market conditions and comparable comps in our area. So I go ahead and order the appraisal and away we go.
Appraisal comes in at $590K. REJOICE! We are so happy!
BUT. I then get a letter from WF that says that because the appraiser said that my increase of value was $45K in structural improvements, I must now show receipts for that $45K of work. That's BS. We had a patio put in and some flooring done (which they don't even count as SI). Where did this appraiser GET that we had that much done to the house when we clearly didn't. Doesn't that mean he did something wrong?
I call WF and ask them basically WTF. They are telling me I have no recourse. Basically I am screwed and unless I sent them a check for $45K OR RECEIPTS, the PMI removable is denied. I argued with them about their verbiage that I bolded and underlined above. To me that is deceptive. Also, why is your Mortgage Broker calling me to get the ball rolling but leave out the Most important part? Shouldn't market conditions decide the value of your home too? I ended up talking to a supervisor and she regurgitated the same thing. "These are Freddy mac ( your investors) requirements." And my argument was "Then why have the wording "IF the improvements are the sole reason for increased value?" WHY even put that in the requirements letter? She agreed that the wording was confusing to the average person. I had even called last month (they record conversations right) and asked this same question and the woman on the phone said that if I just wait until the official 2 year mark, I can resubmit the appraisal and all will be ok." That's exactly what I did and I am still sitting in the same boat.
I am so frustrated, I could scream. What would you do? Is there anyone else I can call outside of WF to dispute this? Am I totally wrong in feeling frustrated? My reading comprehension is pretty good but did I miss something obvious to you?
Thanks for getting through this!
wow we are going through this exact thing, I am at the end of my rope. could you please share things like the address for the president so i can write to him, what keywords that may have been effective, et ceteral thanks for any help
wow we are going through this exact thing, I am at the end of my rope. could you please share things like the address for the president so i can write to him, what keywords that may have been effective, et ceteral thanks for any help
September 9, 2014
Mr. John Stumph President Wells Fargo Corporate Office Headquarters HQ 420 Montgomery Street San Francisco, California 94163
RE: Home Loan # Address: Owners: 8675309's full names on loan
Dear Mr. Stumph:
Thank you in advance for taking the time to read my letter. My husband and I bought our home in X City, California in 2007 and paid $670,000 ($200,000 down). We lost value during the housing crisis but stood strong and kept our commitment and have paid on time for over 7 years. We refinanced in 2012 from 6.25% to 4% and PMI was added onto our mortgage due to our house dropping in value. We knew it was temporary and that eventually in 2yrs we could have it removed per our WFB mortgage broker by providing an appraisal showing 80% LTV.
What I am requesting from you, is that you personally look into my loan and re-evaluate the removal of PMI. I feel that I was misdirected from the beginning and that the WFB Customer Service Representative did not assist me therefore causing us hardship.
June/14: I contacted WFB to inquire about the removal of our PMI. I was assured that it would be simple. At no time during our conversation was I told I was premature to begin the process. The Customer Service Representative told me that she would send me the paperwork.
06/18/14: I received the paperwork to order the appraisal and remove PMI. Under the investor requirements of the letter, it states that when ordering the appraisal “IF the improvements are the sole reason for the increased value of $565,792.79, your LTV will be 80% and the appraisal can be used to delete PMI.” I knew the value of our property had increased due to the market conditions in our area. So I proceeded with the appraisal and paid $350.00.
07/08/14: Our appraisal came back at $590,000. We were pleased it came in at 76.7% LTV.
07/11/14: We were all excited, knowing that what the appraisal was, that we’d get a letter from WFB and our PMI would be removed. Instead, we received a letter from WFB that we didn’t meet the investor requirements. According to the letter, my options were to provide receipts for $XYZ for structural improvements or mail WFB a check for $XYZ. Nothing in the letter indicated I had submitted this appraisal a few weeks early. I wouldn’t find out about that until calling WFB customer service again.
07/14/14: I contacted WFB Customer Service and a very nice lady stated on the phone that I should disregard the letter and call back in a month when my 2yrs was up to resubmit my appraisal. She said I was too early. Up until this point no one had told me I was early. However, she was very pleasant and eased my worries.
08/18/14: Following the direction of your customer service agent, I called WFB Customer service once again. This time speaking to an agent named Chastity. Chastity claimed that whomever I spoke to before was incorrect. She said that my options were that I could either pay WFB $36,634 or order another appraisal because my application was before the 2yrs. I was so disappointed. My appraisal was done in July. Appraisals are good for 6 months so I should be able to resubmit my paper work. I would have never spent $350 to have an appraisal done that would have never mattered. I then asked for her manager whose name was Michelle. She reiterated everything that Chastity had said and at one point I was told that I could write a letter to Freddy Mac. This just doesn’t seem right.
I understand WFB’s process & protocol’s; however we were never told we were too early. We are very surprised and frustrated due to a simple error in timing. We cannot have PMI removed without ordering another appraisal. It would have been really nice to have someone at WFB looking out for us by warning us of this small error. WFB Customer Service agents should be better trained in helping the consumer such as myself, navigate through the process. We have been an excellent paying HAPPY customers for over 7 years and plan to be a customer for a VERY long time. We have referred friends and family to WFB. I’m hoping you can help us.
I have attached a copy of our Appraisal for your review. There is absolutely no reason why we can’t get this taken care of amicably and promptly. Thank you for taking the time to read my letter and helping our family.
Basically as you can see above. I gave his office a timeline of our correspondence but I was very polite even when I wanted to scream on paper.
Thank you for the reminder to be nice even when you want to tell people to go stuff it where he sun don't shine.... I needed that, as I was about to send a very sarcastic email to my son's school.
Congrats on the dropping of PMI. Enjoy investing your extra cash!