Consumer complaint received 2020-06-23
Company: WELLS FARGO & COMPANY
State: CA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Closing on a mortgage

Complaint:
There are five steps to submit your complaint : Step 1 : What is this complaint about? Refund on Borrower-Paid Private Mortgage Insurance ( BPMI ) single premium Step 2 : What type of problem are you having? Wells Fargo would not provide a refund upon termination of BPMI Step 3 : What happened? On XX/XX/XXXX, in order to close the loan on a home purchase, I signed a Private Mortgage Insurance document that discussed Premium refunds. It states under federal law, BPMI can be canceled by you or you can pursue this type of cancellation at any time, regardless of the age of your loan, by paying down your balance sooner if you choose-single premium BPMI, you may receive a partial premium refund if BPMI is canceled, automatically terminated, or you pay your loans in full. To cover the premium mortgage insurance, I paid {$4400.00}. 

In XX/XX/XXXX, I inquired about an estimated refund if I am eligible to cancel Private Mortgage Insurance ( PMI ). Dated XX/XX/XXXX, I received a vital letter summarizing the eligibility to cancel my PMI. It states, You paid your PMI in full when your loan closed. If you meet the requirements to cancel your PMI under the Homeowners Protection Act of 1998 ( HPA ), you may get a refund for the part of your premium  that wont be needed. We can only give you an estimate of your PMI refund now. If your PMI is canceled on XX/XX/XXXX, which is the date of the letter, your estimated refund would be {$3900.00}. On the date your PMI is actually canceled, your exact refund will be determined. Then youll receive a check within 45 days. Canceling your PMI wont impact your monthly payment amount because you paid for your PMI when your loan closed. Heavily relying on this letter, I proceeded to refinance my loan with another lender. 

On XX/XX/XXXX, I have paid my balance in full thus canceling or terminating the mortgage insurance with Wells Fargo. I have requested a refund for the unearned portion. Instead, Wells provided an adverse notice that their PMI policy states the BMPIs are non-refundable. This written language is not disclosed in any of the documents that I signed. Rather they said it is in their written policy which does not align with the disclosures provided. 

To justify their response, they also provided me with a copy of the Deed of Trust. Under Section 10, Mortgage Insurance, any such agreements will not affect the rights Borrower has - if any - with respect to the Mortgage Insurance under the Homeowners Protection Act of 1998 or any other law. These rights may include to receive a refund of any Mortgage Insurance premiums that were unearned at the time of such cancellation or termination. 

As I researched the Homeowners Protection Act of 1998, it states that the final termination occurs when the servicer may not require further payments or premiums of PMI more than thirty days after PMI is terminated. Also, the servicer must return all unearned PMI premiums to the borrower within forty-five days after cancellation or termination of PMI coverage. 
Going by the documents and disclosures provided by Wells Fargo and my own research on HPA of 1998, I believe Wells Fargo owes me a refund. There is a systemic issue with their practice on refunds for BPMIs. 


Step 4 : What company is this complaint about? Wells Fargo Step 5 :  Who are the people involved? Myself vs. the Bank

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