Escrow deletion

I’m trying to delete my escrow with PennyMac but keep getting denied due to not meeting the current and/or original LTV requirements. My recent appraisal valued my home at $650k with a current loan balance of around $450k, which is well below the 80% LTV ratio. Despite this, my attempts to remove escrow have been unsuccessful. They keep referencing the original loan value, which I find ridiculous. Can anyone shed light on this?

Was the $650k appraisal new or the original one? For changes within 5 years of purchase, you often need 75% LTV based on a new appraisal, not just 80% based on the original value.

Uma said:
Was the $650k appraisal new or the original one? For changes within 5 years of purchase, you often need 75% LTV based on a new appraisal, not just 80% based on the original value.

It was a new appraisal. According to my calculations, I’m at 70% LTV, which should qualify me.

@Haru
If it’s within five years of the purchase and your LTV is at 70%, they should not deny you based on LTV requirements. Consider providing them with documentation or seeking a more detailed explanation of their decision.

You should ask PennyMac directly for their specific requirements for escrow deletion, as it’s typically different from PMI removal. Some lenders require several years of on-time payments and an LTV below 80%, but they are not mandated to allow escrow deletion.

For conventional loans, escrow waiver often requires an LTV below 80% based on the original appraised value. The appraisal for PMI removal doesn’t affect this calculation. Check the LTV against your original appraisal value.

You seem eligible to cancel your escrow account. If you’re facing communication issues, consider submitting a Qualified Written Request (QWR). This formal request forces them to provide a detailed explanation and can be more effective than regular communication.

@Corey
How do I initiate a QWR? Is this done through the mortgage company directly?

Haru said:
@Corey
How do I initiate a QWR? Is this done through the mortgage company directly?

Yes, send the QWR directly to the mortgage company. Your monthly statement should have a specific address for sending QWRs. Include as much detail as possible about your case and request a thorough review of your escrow account and LTV calculations.

Your escrow analysis is based on the original appraisal or loan balance, whichever is lower. A new appraisal won’t affect escrow requirements unless you refinance. If you refinance and the new LTV is <= 80%, you can request escrow removal without issues.

@Lake
This information seems to contradict the OP’s situation where they have already met the lower LTV requirement with a new appraisal. Could there be a misunderstanding with the lender about the applicable guidelines?