Consumer complaint received 2015-10-20
Company: Flagstar Bank, N.A.
State: MI
Product: Mortgage
Sub-product: Conventional fixed mortgage
Issue: Application, originator, mortgage broker

Complaint:
My wife are I purchased a home in XXXX 2015 for $ XXXX with XXXX % down ( $ XXXX appraised value ; XXXX % LTV at closing ). We worked with our mortgage broker on various loan options because we needed to make significant structural repairs to the only full bathroom that had serious plumbing issues. We opted to put XXXX % down so we had cash for improvements ; following completion, we would be able to have PMI removed if our LTV was under XXXX % using a new appraisal. It was our understanding that after the improvements were complete, we would have the house reappraised and have PMI removed. The only requirements we were aware of was the XXXX % LTV requirement ; our mortgage documents only reference the Homeowner Protection Act. Now that we are attempting to have PMI removed, the requirements are different - we were misled and our rights have been violated. 

As of XXXX 2015, our ~ $ XXXX renovation is complete ; improvements include : added an additional master suite , high end, full bathroom with heated floors ; gutted and refinished the original full bathroom ; new plumbing/electrical ; new laundry room ; new master bedroom custom walk-in closet ; new custom linen closet. An appraisal should safely result in a LTV of between XXXX-XXXX % ; given recent market activity, an LTV under XXXX % might be more difficult to attain. 

I have been in communication with my mortgage broker and with loan servicing on 2 separate occasions. Each time I have received different answers for having PMI cancelled. The loan 'seasoning ' and LTV requirements have varied with each response ; none align with what I was told during the mortgage process. Most recently, on XX/XX/XXXX, a loan servicing representative documented PMI cancellation requirements of XXXX % LTV with no seasoning requirement and stated " these requirements were final ''. 

We have been misled and potentially lied to - regarding PMI - to close my loan. We were only told about the Homeowner Protection Act regulation. There was no mention of XXXX regulations that are more stringent and not disclosed, nor discussed. Furthermore, Flagstar representatives have provided us with inconsistent and incorrect information regarding PIM cancellation. Our rights as borrowers have been violated because false and misleading information prevented us from making an informed financial decision. 

To satisfactorily resolve this situation, either : A : Refinance our existing mortgage with an interest rate, less than, or equal our current rate. We received an offer to refinance from my mortgage broker, but the interest rate would be .001 % higher than our current rate ( close to $ 5k of additional interest over life of the loan ). Waive all associated fees for previously stated violations. 
B : Agree to remove PMI, based on a new appraised value, using an XXXX % LTV requirement. Waive all associated fees for previously stated violations. 
C : Propose another option that will reimburse us for current and future PMI costs. 

We have already sought legal advice. If resolution is not satisfactory, we will file complaints with Flagstar Bank 's regulatory agencies and the Attorney General, and seek further legal advice.

Company public response: Company chooses not to provide a public response
Company response to consumer: Closed with explanation