Consumer complaint received 2018-07-09
Company: U.S. BANCORP
State: OR
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
I would like to file a complaint against US Bank specifically related to their processes and practices for reviewing requests for removal of private mortgage insurance ( PMI ). We purchased our house in XX/XX/XXXX for {$450000.00} with a down payment of just under 10 %. Because our down payment was less than 20 %, weve been paying $ XXXX/month in PMI. 

In early XXXX, I knew our home had appreciated substantially in value XXXX estimates were around $ 570k and XXXX was around $ 540k. I frequently track sales in our area against XXXX and XXXX estimates and found that homes often sold for somewhere between the two estimates but rarely much below XXXX. 

In XX/XX/XXXX I contacted US Bank about the process for removing our PMI. They sent me a letter explaining the process. Wed need to send {$650.00} for an appraisal, and the loan to current value ( LTCV ) ratio would need to be 75 % or lower for the PMI to be removed. Wed also have 4 months to pay any additional principal needed get below that value if the appraisal was not high enough. Based on our loan value at the time, I knew the house would need to appraise for around $ 520k to qualify for automatic PMI removal. I was confident that it would and ordered the appraisal. 

US Bank works with what they present as a 3rd party company to perform the appraisal XXXX XXXX XXXX XXXX. More on this later. The appraiser visited our home on XX/XX/XXXX. I explained to the gentleman doing the appraisal that wed replaced all of the floors in the entire house since buying it carpet upstairs and in the basement, hardwoods on the main. 

After a couple of weeks, in early XXXX, we hadnt heard anything so I called US Bank. Their customer service rep told me that based on the appraisal our LTCV was above 75 % and thus they would not be removing PMI. They sent me a letter with the appraisal and a description of next steps. I reviewed the appraisal and immediately had some major concerns. Letter and appraisal are attached. I contacted US Bank about contesting the appraisal. They sent me a letter outlining the process ( attached ). Ive also attached our letter contesting the appraisal. My main concern was that the appraisers measurement of the square footage was too low. I provided 2 separate sources with higher square footage both the appraisal from when we purchased the house and county records had higher square footage numbers. Applying the difference ( ~170sq ft ) to the per-square-foot value from the XXXX XXXX appraisal gave us enough extra value to qualify for immediate PMI removal. 

When I started digging into the details, I noticed another oddity about the appraisal that led me to believe US Bank intentionally misstated the appraisal to prevent us from removing our PMI. The appraisal letter was dated XX/XX/XXXX, meaning wed have until XX/XX/XXXX to pay enough principal to reduce our LTCV below 75 % based on the appraised value. Using our mortgage amortization schedule and the principal balance after we make our XX/XX/XXXX mortgage payment, the house would have needed to appraise for {$510000.00} to qualify for automatic PMI removal within the 4 month window ( i.e. without us making any additional payments outside of our normal monthly amortization ). 

The appraisal was based on comparing our house to 3 comparable home sales. Adjusting our home value based on how it stacked up against the 3 comps came up with an average value of {$510000.00}. Yet for some reason, the appraiser rounded down to {$510000.00}, which meant that we did not qualify for automatic PMI removal. When I called US Bank, I told the customer service representative that it seemed like they worked with the appraiser to get a value that was advantageous to US Bank. They told me that was impossible because they work with a 3rd party. 

I sent my appraisal contest letter on XX/XX/XXXX. On XX/XX/XXXX, I hadnt heard anything back so I called US Bank. The US Bank Customer Service Rep told me that she was going to send the contest letter over to their 3rd party firm to review but that they may ask for new comparable homes. I explained to her that I thought the comparable homes the appraiser selected were appropriate. The square footage for our house was wrong and thus the appraised value was too low. Adding back the missed square footage still left our house within the same ranking of the other 3 homes in terms of square footage. In other words, it did not suddenly make our home too large to be compared to these other 3 homes so they were still fine comparables. The US Bank rep told me Id hear back in a couple of weeks.

Five weeks later, on XX/XX/XXXX, I hadnt received anything in the mail so I called US Bank. The US Bank rep told me theyd just received the report back from the 3rd party firm and that they would be running it through their system ( whatever that means ). She said I could call back in a couple of days ( on XX/XX/XXXX ) to get an update or wait for the letter. Later that day on XX/XX/XXXX, the man who performed the appraisal called my wife and asked if he could come back out and take more measurements. We wanted to wait until we heard back from the bank before deciding if it was appropriate to let him take more measurements. On Thursday XX/XX/XXXX, he came by our house and went into the backyard. My wife did not answer the door. He left his business card at the front door. It listed him with XXXX XXXX XXXX Services but his email address XXXX. This confirmed my suspicions that he was not a true third party independent of US Bank. 

On XX/XX/XXXX, I called US Bank for an update. I was told the letter they sent out was the wrong letter and that they would be sending a new one. I still hadnt received a letter. I told them I wanted to know whether or not theyd agreed that the appraised value was too low because of the missing square footage. The rep put me on hold while she talked to someone. She came back on and told me that the third party firm would not review our appraisal contest unless we provided 3 new comparables. At this point I was pretty flabbergasted. First of all, the letter from US Bank outlining what to do when contesting an appraisal said that I could provide new comparables but I didnt have to. I told them that the only issue was the missing square footage and that the comparables were fine. I spoke to two different senior reps at US Bank and they both told me they couldnt do anything the 3rd party firm was requiring 3 new comparables before they would even consider our contest.

I tried to call the 3rd party firm, XXXX XXXX XXXX XXXX. Their website listed a phone number for customers to contact them. It also listed them as a wholly owned subsidiary of US Bank. I called the number but it went to voicemail it instructed US Bank customers to contact the mortgage insurance department at US Bank. When speaking to the 2nd US Bank Senior Rep, I requested to talk to the appraisal firm because I didnt understand why they were requiring 3 new comps. He told me that US Bank didnt allow customers to speak to this firm. 

After this, I contacted US Bank 's consumer advocacy group. They told me that XXXX XXXX XXXX XXXX is an independent source of governance because US Bank uses them for a majority of their appraisal services. As a XXXX formerly employed in the XXXX side of a big XXXX XXXX XXXX, I know that this is not how independence is defined. In fact, it's the opposite.They also said that XXXX XXXX stands by their appraiser 's measurements and those supersede the other evidence I'd provided. They did not explain why the appraiser contacted us to come back for more measurements on XX/XX/XXXX after I called US Bank. 

Here is what I know objectively to be true : The appraisal for PMI removal was done by a wholly owned subsidiary for US Bank, XXXX XXXX XXXX XXXX. Multiple different US Bank Customer Service Reps told me it was done by a 3rd party firm.

The price of {$650.00} for the appraisal was much higher than other firms. 

The appraised value of {$510000.00} was based on an erroneously low square footage measurement. 

We needed an appraised value of {$510000.00} for immediate PMI removal and {$510000.00} for automatic PMI removal within the 4 month window based on our mortgage amortization schedule. 

The appraised value of {$510000.00} was rounded down from an average {$510000.00} in comparables per the appraisal report. 

The appraised value was significantly below external market sources. I understand XXXX / XXXX are not appraisal services but their values for home sale values do follow a certain pattern and are not off by the magnitude that they were off in our case. 

Despite US Bank telling me that XXXX XXXX would not review our appraisal unless we sent 3 new comps, the XXXX XXXX appraiser called us on XX/XX/XXXX and asked to come back and take more measurements. 

We enlisted a realtor to look at selling our house in XX/XX/XXXX and she recommended listing at {$550000.00}. 

On multiple occasions, I had to call US Bank after 2-4 week delays to ask for updates. The 4 month window to pay down additional principal remained fixed. 



Here is what I believe to be true : US Bank and XXXX XXXX XXXX XXXX worked together to perform an appraisal on our house that would guarantee we wouldnt qualify for automatic PMI removal unless we took action to pay down additional principal within the 4 month window. They misstated square footage. They made other adjustments in their comparables approach that had no logic or support. They rounded down for no reason, crossing over a key threshold for automatic PMI removal. 

US Bank and XXXX XXXX XXXX XXXX continually delayed my requests for remedial action, hoping that the 4 month window would close. 

US Bank and XXXX XXXX XXXX misrepresented the remedial actions I could take. 



I believe Ive paid {$650.00} in PMI to US Bank ( XXXX through XXXX payments, $ XXXX/month ) that should be refunded. I would also like a refund of {$650.00} for the appraisal. My wife and I decided to pay additional principal in XXXX to guarantee that the PMI would be removed going forward.

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