Consumer complaint received 2015-03-25
Company: UNITED SERVICES AUTOMOBILE ASSOCIATION
State: TX
Product: Mortgage
Sub-product: Conventional fixed mortgage
Issue: Loan servicing, payments, escrow account

Complaint:
We purchased our current home while in the process of selling our previous home. Because our closing on our new home was prior to our closing on the old home, our down payment was only 8 %. XXXX months after closing on our new home, we closed on our old home and proceeded to pay an additional {$90000.00} on our new home. Our LTV became approximately 67 % of the loan value and less than that based on the appraised value. I thought that PMI would " roll off '' as we were well under the 80 % threshold. To be sure, I called our lender, USAA, and requested removal. Over XXXX days past the date of the request and when I was told it would be reviewed but " should not be a problem given the LTV '', I received a letter stating that a new appraisal was needed and that I should complete an application and send a check. However, no application or appraisal cost data was supplied. Further, the current appraisal, which was performed for closing, was less than XXXX months old and USAA 's own home value monitoring service placed my home value at {$30000.00} above appraisal. I called USAA and they insisted that the home value had declined in my area significantly and that they needed a new appraisal - despite results of the " service '' they are providing me for home value monitoring. They then stated that XXXX was an investor in my loan and was requiring it independent of USAA. They then stated that USAA was requiring it because it was standard procedure when a loan is " seasoned '' less than XXXX years. I specifically discussed with my loan processor our situation of having the XXXX homes at once and discussed with her prepayment penalties, PMI, etc. and her assurances all along were - that will be no problem. 

In my response emails, I referred USAA to the federal reserve guidance for the removal of PMI, which states that : '' A borrower may initiate cancellation of PMI coverage by submitting a written request to the servicer. The servicer must take action to cancel PMI when the cancellation date occurs, which is when the principal balance of the loan reaches ( based on actual payments ) or is first scheduled to reach 80 percent of the " original value, '' XXXX irrespective of the outstanding balance, based upon the initial amortization schedule ( in the case of a fixed rate loan ) or amortization schedule then in effect ( in the case of an adjustable rate loan ... '' Original value is also defined in the guidance as " '' Original value '' is defined as the lesser of the sales price of the secured property as reflected in the purchase contract or, the appraised value at the time of loan consummation. In the case of a refinancing, the term means the appraised value relied upon by the lender to approve the refinance transaction. 

This guidance clearly states that " [ t ] he servicer '', which would be USAA, must take action to cancel PMI when the cancellation date occurs, which is when the principal balance of the loan reaches ( based on actual payments ) ... 80 percent of the " original value. '' The definition of original value ties directly to the loan amount or the appraisal conducted at loan consummation and does not appear to require a new appraisal to " confirm '' those. 

USAA, however, remains steadfast in their assertion that I must pay approximately {$370.00} - {$400.00} for a new appraisal despite how current the most recent appraisal is and the guidance provided above. I believe that this is a violation of my rights and federal reserve requirements.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with non-monetary relief