Consumer complaint received 2018-09-25
Company: WELLS FARGO & COMPANY
State: NV
Product: Mortgage
Sub-product: Other type of mortgage
Issue: Trouble during payment process

Complaint:
On XX/XX/XXXX, I acquired a residential mortgage for my condominium and made a 10 % down payment. 

On XX/XX/XXXX, Wells Fargo Home Mortgage ( Wells Fargo ) sent a letter in response to my inquiry regarding cancellation of premium mortgage insurance ( PMI ) ( attached as exhibit 1 ). 

On XX/XX/XXXX, I deposited in the U.S. Mail, a certified letter addressed to Wells Fargo and titled " Borrowers Request to Cancel PMI for Loan No : XXXX '' ( attached as exhibit 2 ). The letter entails that : ( i ) I request cancellation of PMI in connection with my residential mortgage ; ( ii ) payments are current since I acquired the loan and I have no late payments ; ( iii ) the property is not encumbered by a subordinate lien ; and ( iv ) the value of the property has not declined below the original value/purchase price. 

The letter further indicates that I did not clearly understand the terms of Wells Fargos PMI cancellation requirements. Specifically, option # 2s requirement to pay {$11000.00} in support of 80/20 loan-to-value ( LTV ) ratio. Prior to expending {$600.00} on Wells Fargo 's exclusive appraiser, I provided a detailed example in my letter requesting clarification on the the formula used to calculate the LTV ratio in option # 2. 

On XX/XX/XXXX, I called the Wells Fargo PMI Department and was verbally advised that even if the appraisal yields a current market value that causes the LTV to be less than 80 %, I am still required to pay {$11000.00} in order to cancel PMI. 

In order to establish the final element of the Homeowner 's Protection Act of 1998, that the value of my property has not declined below the original value, I am required to order an appraisal, which is a non-issue. The issue I am concerned with is Wells Fargos representation that even if the appraisal yields a current market value that causes the LTV to be less than 80 %, I am still required to pay {$11000.00} in order to cancel PMI. Based on this representation, I have not yet purchased the {$600.00} appraisal. 

I believe Wells Fargos policy conflicts with the HPA of 1998 because Wells Fargo refuses to consider the current market value and increased equity of the home in its assessment of LTV. Rather, Wells Fargo has represented that the LTV is based on the original value of the home ( purchase price of {$130000.00} ) compared to the current balance of the loan ( {$120000.00} ). This particular formula causes the LTV to be greater than 80 % and only benefits Wells Fargos interest in maintaining PMI on the property. As a licensed XXXX XXXX XXXX in Nevada, I have examined comparable properties in the same neighborhood yielding a current mean price of {$170000.00}. Based on what appears to be the current market value of my condominium ( {$170000.00} ) compared to the current balance of the loan ( {$120000.00} ), my LTV appears to be less than 80 %, contingent upon appraisal. Here, a dispute has arisen as to whether the LTV should be determined based on the original value of the property or whether the LTV should be determined based on the propertys current market value. The HPA of 1998 does not specify which value to use in determining LTV ratio.

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