Consumer complaint received 2020-03-02
Company: Flagstar Bank, N.A.
State: OH
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
On XX/XX/XXXX my wife and I closed on a mortgage with Flagstar Bank. In order to obtain the mortgage we were required to may Private Mortgage Insurance ( PMI ) of {$190.00} per month. Before, during and after the closing process we were told multiple times that we would be able to get the PMI removed from the loan after paying down the loan so that we had a principal balance equal to or less than 80 % of the original value of the property. We signed a disclosure confirming this on the same day that we closed the loan, XX/XX/XXXX. 

On XX/XX/XXXX I contacted Flagstar about having an appraisal done to satisfy PMI removal requirements. Again, a Flagstar representative said that I would need 80 % to remove PMI and that I could have an appraisal done for {$450.00}. If the appraisal came back with an increased value from when we purchased the building, we could use that amount towards satisfying their ratio. My wife and I decided to proceed with the appraisal and it was completed on XX/XX/XXXX. A few days later, I received a letter dated XX/XX/XXXX from Flagstar. It stated that my property valuation made my " loan to value ( LTV ) 82 %, instead of the 75 % needed to qualify for PMI cancellation. You may pay down your principal by {$24000.00} to bring your LTV to 75 %. '' This was much different than the mortgage loan contract I signed with Flagstar - not what we contractually agreed to.

At that time we didn't have the money to pay down the loan so I continued to call ( monthly ) to get updates on the amount I would need to pay in order to remove the PMI to satisfy their requirement. They in assured me in these calls that it was an 80 % LTV requirement. 

On XX/XX/XXXX I called Flagstar again for an update on the amount that I would need to pay to bring my loan within correct LTV. The Flagstar representative informed me I would need a LTV of 80 % and pay approx {$14000.00}. That day I initiated a payment of {$14000.00} and it cleared my bank on XX/XX/XXXX. Soon after I filed a Request to Cancel the PMI. 

Next, after I received a letter dated XX/XX/XXXX informing me that the PMI removal request was denied and that we had to pay down the loan to a 65 % LTV. Again, this is not what we agreed to in the mortgage contract, and the first time anybody ever had communicated to us that the 65 % LTV requirement, even after dozens of communications between the mortgage underwriting, closing, and calls back and forth thereafter. 

I had discussion at length with XXXX and XXXX in PMI customer service trying to explain to them what we had agreed to in contract with Flagstar. They both took this to their PMI removal specialists ( who I was not allowed to communicate with directly ) and told me that there was no alternative and nothing they could do to change the requirements even though we had agreed to 80 % LTV in the signed mortgage contract. XXXX told me on XX/XX/XXXX that this was their " final decision. '' On XX/XX/XXXX I notified Flagstar that I was giving them until XX/XX/XXXX to make the situation right by honoring what was agreed to in the mortgage contract we signed. I have not received any communication from Flagstar regarding the issue since we last spoke on XX/XX/XXXX.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation