Bank is refusing to remove PMI on 78% LTV mortgage without a home inspection

[aja8888]

Thanks to everyone who responded.

For the record, I am going to pay to have the appraisal done to get rid of the PMI. I'm pretty salty about this, and I truly believe the bank's actions here are predatory and against the spirit of the law.

It's actually not as much about the cost of the appraisal and loss of several months of PMI that I will not get refunded, as the invasion of privacy of having a home appraisal forced upon me.

Right from the beginning, I was up front with the bank that I planned to have the PMI removed within the first year by overpaying. I verified there was no prepayment penalty, and was even told that it would automatically get removed once I hit 78% LTV. Granted, this was told to me verbally (so I don't have a leg to stand on there to fight this), and by the folks from the mortgage department, not the PMI department, who I assume probably thought the same thing I did.

Regardless, I had no reason to expect them to fight me on this.

Funny thing was that I was very happy with the mortgage application process and really like their online service, which is why I chose them a second time for this mortgage (along with competitive rates, of course). I have told several people of my good experiences with the bank up until this point. My coworker is actually in the process of buying his first home, and, of course, I recommended Huntington bank to him. I'll be updating him on my experience with this bank...

One thing to remember about banks.....none of them are your friend.

 

[tfudtuckerpucker]

This reminds me of several decades ago, when my mortgage holder gave me the runaround about removing PMI. I had paid for an appraisal, then they refused to accept the appraisal, because it wasn't from "their" appraiser. I ended filing a complaint with the Comptroller of the Currency, who ordered the bank to remove the PMI. Banks can be real dirtbags. Now there's a website- might be worth trying it. https://www.helpwithmybank.gov/index.html

 

[iloveyoga]

I clearly recall that we had to do an appraisal to get rid of the PMI. This was back in the day, quite a few years ago.

 

[RetMD21]

I purchased my current house last year with about 12% down on a conventional 15 year mortgage. Obviously the bank required PMI. I have aggressively paid it down ....

I had a similar issue almost 30 years ago. I felt like I was getting the run around. I made an extra payment to get below LTV ratio that would suffice for avoiding an appraisal. I think it was 75%. Anyway I developed a taste for making extra payments and paid off early.

 

[dirtbiker]

One thing to remember about banks.....none of them are your friend.

Truth.

 

[Texas Proud]

A couple of points...


I am surprised you can get rid of PMI at 78%... way back when I had dealing with PMI the best you could expect was 70%... and my mortgage was.... we do not drop PMI ever... (back when my discounted rate was 13.5%... I did refi and got rid of PMI)...



Also be aware that the bank might not own the mortgage... if so, then they HAVE to follow whatever trust or other vehicle rules who own it... they cannot give special treatment to a great customer... I have been on the bank side of this conversation...

 

[FlaGator]

As frustrating as this is, don't blame the bank.

It is likely that loan is long gone from their portfolio and they are just the servicer now. That means they have to follow "investor" rules now.

They are going to stick hard to those guidelines. Decades ago when I was in that business, it took a drop in LTV down to 70% from an appraisal to get PMI dropped. So, I'm not surprised they are working off the standard amortization schedule at this point. The recommendation to wait for a rate drop and refi seems like the stress-free way to go. Albeit more expensive.

 

[SecondAttempt]

If we were in a falling interest rate environment, you probably wouldn't have these problems IMHO (ie the ability to refinance and take your business elsewhere that doesn't require PMI)

They probably know that they have you where they want you -- sad.

-gauss

We ARE in a falling rate environment. Maybe slow but falling is the trend.

It's not at all surprising to me that they want an appraisal. Real estate prices have been crazy over the last 3 years. Just pay for it and move on.

 

[dirtbiker]

A couple of points...


I am surprised you can get rid of PMI at 78%... way back when I had dealing with PMI the best you could expect was 70%... and my mortgage was.... we do not drop PMI ever... (back when my discounted rate was 13.5%... I did refi and got rid of PMI)...



Also be aware that the bank might not own the mortgage... if so, then they HAVE to follow whatever trust or other vehicle rules who own it... they cannot give special treatment to a great customer... I have been on the bank side of this conversation...

The Homeowners Protection Act of 1998 requires lenders to remove PMI once LTV is <78%. However, the law was written such that LTV of 78% is based on the amortization schedule, not the amount of principle repaid (hence my issues). If only they had added that provision into the law, which is common sense to include that as well as by amortization schedule... But what can I do...

Clearly I'm stuck either paying the PMI for another year and a half or having my house reappraised. I'll choose the option that makes the most financial sense, even if I don't love having my privacy invaded.

I'm waiting for the final letter to arrive in the mail. The bank does not allow this to proceed until I receive the letter by snail mail, which they advised me can take up to 30 days, then I must respond to the letter by snail mail, then they have up to 30 days to then get an appraisal scheduled. All the while, I'm throwing PMI money away.

 

[dirtbiker]

I do understand that maybe the bank does have its hands tied... Maybe they sold the loan. I don't know. What I do know is that they are the ones who are making me jump through these hoops, who are making it as inconvenient and time consuming as possible, and I will blame them to the end. Not that it even matters whether I blame them or not. I'm stuck.

 

[RetMD21]

Clearly I'm stuck either paying the PMI for another year and a half or having my house reappraised. I'll choose the option that makes the most financial sense, even if I don't love having my privacy invaded.

No ideal solution. I wonder if they will make sure to take the full 30 days to send the letter and then to schedule the appraisal.

 

[dirtbiker]

No ideal solution. I wonder if they will make sure to take the full 30 days to send the letter and then to schedule the appraisal.

We'll find out. To be fair, the first letter (at 80%) came pretty quickly, in less than a week. So, I don't expect it take the full 30 days, but we'll see.

Oh, and I think they said they have up to 30 days after the appraisal to respond as well.

 

[rayvt]

Pay the $200. Get rid of the PMI. Then move to another lender when it makes financial sense.

The real lender is probably FNMA and the place you send the payments to is just the servicer. FNMA & the PMI company make the rules, not your bank.

Your bank doesn't really care if you move to another lender or not. Your loan is just one of thousands they service, and they get a lot of turnover each month as sales happen with old mortgages getting paid off and new mortgages getting made.

To them, it's not personal just business.

Refinance when and only when it makes financial sense.

 

[MC Rider]

To them, it's not personal just business.

Exactly. They are not Mr Drysdale to your Jed Clampett.


Or, something.


J/K.

 

[Time2]

My coworker that is currently buying a house, and just made an offer that was accepted, was preapproved by several banks, and was between Huntington Bank (on my recommendation) and another local bank in which one he was going to get financing through. He was leaning toward Huntington because of my personal recommendation. After telling him my experience, he decided against Huntington. This was on a 30 year ~500k mortgage.

Although a bit petty, I can at least smile that I just cost Huntington more money than they'll ever steal from me over this PMI issue.

This also might be the only time in my life I've been able to extract any sort of revenge against a company, particularly in such a short time frame. lol

But you used the leverage wrong. "Here's my friend, they will be deciding whether to get their $500k mortgage with you or ABC bank on how you handle my PMI situation." Your friend could still decide to go with ABC bank, just because of how Huntington thought they would handle the PMI.
Some people have been known to protest on the side walk with descriptive signs, or take the neighborhood kids into the office with large ice cream cones to eat, while you discuss the situation.

 

[rayvt]

But you used the leverage wrong. "Here's my friend, they will be deciding whether to get their $500k mortgage with you or ABC bank on how you handle my PMI situation." Your friend could still decide to go with ABC bank, just because of how Huntington thought they would handle the PMI.

You are making an invalid assumption.
You do not have the leverage you think you have.

Some people have been known to protest on the side walk with descriptive signs, or take the neighborhood kids into the office with large ice cream cones to eat, while you discuss the situation.

Watch some youtube videos where people get trespassed and arrested for pulling stunts like this.

 

[MissMolly]

For Pete's sake, the bank is not the bad guy here. The bank is merely following the law as it was written. They didn't write the law but are required to follow the processes and procedures outlined or suffer sanctions for failing to do so. They can't treat one borrower differently than another as there is no variance allowed in the law and could then be accused of discriminatory practices. You can't fault the bank for following the law. If you don't like the law, take it up with Congress who implemented it in 1998.

 

[athena53]

As frustrating as this is, don't blame the bank.

It is likely that loan is long gone from their portfolio and they are just the servicer now. That means they have to follow "investor" rules now.

I agree. Most banks sell their mortgages almost immediately on the secondary market, which frees up their capital to make more loans. The secondary market has requirements that probably got even stricter after the subprime mortgage crisis. When DH and I downsized in 2015 they pretty much ignored our $2.6 million investment portfolio and fixated on his SS and my $900/month pension because I was only a year post-retirement. We wanted to borrow $150K. They were willing to lend us only $100K.

So, yes, the bank is following rules imposed on them by the secondary market.