Consumer complaint received 2021-10-14
Company: Caliber Home Loans, Inc.
State: CO
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
Introduction : We were advised to get a mortgage with a feature called recast, knowing that we would utilize the recast as soon as possible to significantly reduce our principal balance within approximately 6 months after originating our mortgage. 
We were charged PMI premiums when our LTV was less than 40 % for an entire year, totaling {$2000.00}. 
We were told by the Mortgage company that we should have read the fine print or asked about it. We feel like we are ordinary consumers with average intelligence, and there is no way we could have been expected to know this without guidance from our Loan Officer or the people or processes in place at Caliber Home Loans. We also feel like this situation could be easily remedied going forward and should be in order to protect other consumers. We feel like it is common knowledge that PMI isnt required below 80 %, and we assumed PMI would be removed once our LTV went below that. 

What we attempted : We called/emailed both our Loan Officer and Caliber Home Loans several times over the course of 6 months trying to get resolution. We explained the situation and asked for reimbursement of PMI premiums paid during the time when our LTV was lower than the threshold required. Caliber Home Loans was the originator and is the servicer of our home loan. In almost every contact, we urged Caliber to reach out to the Mortgage Insurance company to ask about premium reimbursement, and to our knowledge they never did inquire. We dont know which of the 6 Mortgage Insurance companies they use, or we would have inquired directly. We also were never provided an opportunity to speak with anyone in the PMI Department at Caliber Home Loans. 

Why we think this is important : We think there is an easy remedy to future situations like this. Calibers claim is that there is no way for them to know when LTV goes below the required threshold, and thus the consumer needs to request removal. In their stated opinion, the only automated way to remove PMI is to get to the exact payment in the amortization schedule that originally established 78 % LTV. 
My wife happens to be a XXXX XXXX at a XXXX XXXX company. She is of the opinion that it would be easy to code any number of different solutions that would keep the consumer in the loop and prevent them from paying unnecessary PMI premium payments. 

An additional important consideration : I have a friend who is in XXXX at one of the 6 Mortgage Insurance companies in the US. When I explained the details of our situation, he suggested that we should go through the process of asking for reimbursement because the insurance company would want to make the situation right. He looked to see if his company was the one that had our policy as he would be able to authorize the refund. Unfortunately, his company did not write our policy. He gave me specific steps to follow and told me that the company would cooperate because they consider it important to be transparent and act in the consumers best interest. He also suggested that I file a formal complaint with the CFPB if I didnt get resolution. 

Pertinent Questions : Is PMI necessary at 40 % LTV? 
Would anyone recommend PMI with a 40 % LTV? 
Would there be any benefit to the consumer to keep paying for PMI on a loan that goes below the PMI threshold? 
Is it possible or even likely that a consumer who initiates a recast could go below the PMI threshold? 
Would it be easy for a servicer to notify a consumer who initiates a recast that their PMI situation could change? 
Would it be easy for a servicer to determine when LTV may have gone below the PMI threshold? IF so, would it be easy for them to notify the consumer? 

Detailed description, timeline, and documents : We wanted to sell our current home in one town and purchase a condo in a different town. Our Loan Officer that was referred by our Real Estate agent advised us that there was a newer loan product feature on the market called a recast. This would allow us to purchase the condo prior to the sale of our current home. We would finance the new condo at an LTV of 95 % ( which requires PMI ), and then after the sale of the original home, we could recast the loan by paying down any amount of the principle without having to refinance the loan, thus saving the cost of a refinance. Our Loan Officer knew we only wanted to carry a $ XXXX mortgage on the new condo as soon as we could ( the purchase price was {$580000.00} in a rapidly rising real estate market and our original loan amount was {$550.00} ). The cost to recast our loan was {$250.00}. Nowhere in any of the communications from the Loan Officer or Caliber was there any suggestion or advice about the state of our PMI going forward. We just assumed that once our LTV went below the 80 % threshold that the PMI payments would be dropped. 
We discovered we were still paying PMI one year after the recast. Once discovered, we called Caliber and emailed our loan officer. Here is a rough timeline of our attempts : XX/XX/2021 Called Caliber after noticing PMI was still being charged. Asked about having it removed, initiated that process, and then asked about premium payments being refunded. Was told I needed to read the fine print. 
XX/XX/XXXX XX/XX/2021 Email conversation with Loan Officer ( All pertinent emails attached ). 
Talked with several people at Caliber between XXXX and XX/XX/2021 : Started with a customer service person who escalated to XXXX XXXX ( employee # XXXX ) He basically said I should have read the fine print or asked about it. We had several conversations that went nowhere. I asked him if he could just tell me who the Mortgage Insurance company was, and he told me he couldnt. Im guessing our conversations were recorded. He escalated me to XXXX. 
XXXX ( employee # XXXX, not sure if spelling is correct ) This is the person XXXX elevated our situation to. She told me I needed to submit a formal letter requesting the Premium refund ( attached ) by uploading it through the Caliber system online. This conversation took place on XX/XX/2021 and she told me she would watch for it, submit it to the PMI Department, and get back to me at the beginning of XXXX. 
Never heard back so I called again in XXXX and asked for XXXX by her employee number. Was told she was in a meeting but that the person I was talking to could help me ( XXXX??? ). She looked in the notes for my account and said there was a response from the PMI Department dated XX/XX/XXXX saying no to our request. We were never contacted or informed. I asked her to please let XXXX know that I was going to file a formal complaint with the CFPB. She said ok.

Company response to consumer: Closed with explanation