The Final Fax and Response

Summary

We've met the Homeowners Protection Act (HPA) of 1998 requirements to request removal of PMI once our loan reaches 80% LTV.  We requested removal from Wells Fargo Home Mortgage (WFHM) in May, 2012.  We were treated with a form letter that did not address our request.  We sent one final fax to appeal to reason before complaining to the Office of the Comptroller of the Currency (OCC).  It looks like it never made it.

Resend the Fax and WFHM Response

The final fax was sent on August 14, 2012.  We received a response on August 27, 2012, which was dated August 23, 2012.  They changed the format of the form letter slightly this time.  It is posted here. 

Analysis of the Response

The response dated August 23, 2012 varied slightly from the first two form letters, which did not address my request about an 80% LTV PMI deletion option, or my request to delete PMI at 80%.  Note that this is the first time that WFHM has acknowledged that there is an option for borrower-initiated cancellation of PMI when LTV reaches 80%, although they list it under Investor Requirements instead of HPA requirements.  It took OVER SIX MONTHS from my original question to get to WFHM to confirm what is written in the law and on their own website. 

In this letter, WFHM states (and I paraphrase):
Thanks for inquiring about removing PMI.  You have two options, as long as you haven't had any late payments.
1) HPA requirements - Pay down to 78% LTV
2) Investor requirements - Order an appraisal to verify that principal is at 80% LTV
You have to use our appraiser.


This seems to be in agreement with the HPA, other than referring to the 80% LTV requirement as an investor requirement rather than an HPA requirement.  This is what I should have been told on February 7, 2012 when I called.

If we had been told this on February 7, when I first called, we would have immediately ordered an appraisal.  Our house had just been appraised less than five months before that, and probably would have been fine.  At this point, six months later, I don't believe that to be the case any more.  The delay has cost us an opportunity to remove PMI for six months.

Homeowners Protection Act Violations?

I believe that there are at least two parts of the HPA that WFHM has violated.  Unfortunately, the HPA doesn't cover negligence or stalling, but there is bad faith law for that.  The HPA does have a notification requirement, though.

Notification Upon  Cancellation or Termination

Section 5 of the HPA states:
(a) IN GENERAL.—Not later than 30 days after the date of cancellation or termination of a private mortgage insurance requirement in accordance with this Act, the servicer shall notify the mortgagor in writing—
(1) that the private mortgage insurance has terminated and that the mortgagor no longer has private mortgage insurance; and
(2) that no further premiums, payments, or other fees shall be due or payable by the mortgagor in connection with the private mortgage insurance.
(b) NOTICE OF GROUNDS.—
(1) IN GENERAL.—If a servicer determines that a mortgage did not meet the requirements for termination or cancellation of private mortgage insurance under subsection (a) or (b) of section 3, the servicer shall provide written notice to the mortgagor of the grounds relied on to make the determination (including the results of any appraisal used to make the determination).
(2) TIMING.—Notice required by paragraph (1) shall be provided—
(A) with respect to cancellation of private mortgage insurance under section 3(a), not later than 30 days after
the later of—
(i) the date on which a request is received under section 3(a)(1); or
(ii) the date on which the mortgagor satisfies any evidence and certification requirements under section 3(a)(3); and
(B) with respect to termination of private mortgage insurance under section 3(b), not later than 30 days after
the scheduled termination date.

That's a mouthful.  The part that applies here is that if the servicer (WFHM) determines that a mortgage does not meet requirements for cancellation, it has to provide written notice to the mortgagor (us) within 30 days of us submitting a request and fulfilling any evidence and certification requirements.

Clearly, WFHM has given us no requirement to provide evidence that the property value has declined until the August 23, 2012 letter.  Until then, they have blissfully ignored my requests for information and request for cancellation.  However, according to the law, they owed me a response within 30 days of the May, 2012 cancellation request, where we had fulfilled all requirements of the HPA.

This is the first time that WFHM has requested an appraisal in conjunction with the 80% LTV requirement.  The PMI disclosure stated that evidence showing that the property value has not declined is only needed if requested by the servicer.  I originally requested PMI deletion in May.  The request for an appraisal did not come until three months later.

 Evidence of a Type Established in Advance

The HPA also requires that the mortgagor (us) provide evidence (of a type established in advance and made known to the mortgagor by the servicer promptly upon receipt of a request under paragraph (1)) that the value of the property securing the mortgage has not declined below the original value of the property (Section 3a3B).  The PMI disclosure did not identify the evidence type, only that it may be required by the servicer.  Despite my best efforts to get servicer requirements for cancelling PMI at 80% LTV (phone call 2/7/12, fax 2/10/12, fax 5/8/12, fax 5/23/12, fax 5/24/12, fax 7/9/12), we were never informed of the evidence type, or even that evidence was required.  Remember that it is optional according to the PMI disclosure.

I believe that WFHM has not followed the HPA in this respect as well.

Complaint Time

At this point (August 27, 2012), I believe that WFHM has violated the HPA by willfully ignoring my requests for borrower-initiated PMI cancellation.  When I threatened to complain to the OCC, they finally (after six months) acknowledged that there is an option to cancel PMI at 80% LTV.  This is the first time that they request an appraisal to prove that property value has not decreased.  At this point, I believe that our property value may have decreased, and we have paid six extra months of PMI trying to get a straight answer.

The next step is a complaint to the OCC.

Summary so Far (8/27/12)

1. We were told at loan origination that we could cancel PMI when we reached 80% LTV
2. We have enough money to pay our loan to 80% LTV
3. I found a statement on the Wells Fargo Home Mortgage website that stated we could request cancellation of PMI when we reached 80% LTV
4. I called a customer service rep to confirm, but was told we needed to get to either 78% LTV or 75% LTV with appraisal (???).  I was told to fax Resolutions to ask about the 80% requirement.
5. I researched the HPA and verified that I could request PMI cancellation at 80% LTV.  I also found that HPA requires evidence of a type established in advance that property value has not declined.  Not only was the evidence type not established in the PMI disclosure, but the requirement to provide evidence was made optional.
6. I prepared a fax that included a printout of the Wells Fargo Home Mortgage website where they acknowledge that a borrow can request cancellation of PMI at 80% LTV.
7. I received a form letter telling us that we could remove PMI at 78% LTV (per HPA) or 75% LTV with structural improvements and an appraisal (per investor requirements).  It neglected to mention the 80% borrower-initiated cancellation option allowed by the HPA.  Must have been an oversight...
8. We made a principal curtailment to 80% LTV on 4/30/12
9. We wrote a letter requesting PMI deletion and faxed on 5/8/12.
10. No response after two weeks, so we faxed another request to delete PMI on 5/23/12 and a third request on 5/24/12.
11. WFHM responds on 5/29/12 with the same form letter as 2/7/12.  It does not acknowledge our written request to cancel PMI.  It does not say anything about the option to request PMI cancellation at 80% LTV.  Willfully disregarding law, inept, or clever? 
12. I sent the final fax threatening to complain to the OCC on 7/9/12.  We went on vacation and did not hear back.  I noticed that the fax might not have gone through in mid-August.  That fax system sucks.
13. I sent another final fax on 8/14/12 saying that we met HPA requirements, cancel PMI, or we'll complain to the OCC.
14. We receive a new response on 8/27/12 (dated 8/23/12) saying that there is an option to delete PMI at 80% (what did they forget for six months?), but they need an appraisal.  That's six months of extra PMI paid trying to get this answer.  Also, property values have been declining while WFHM stalls.  It's a win-win for WFHM.