Mortgages, Valuation and PMI: Do Your Homework Edition

A year and change ago, we bought a house in Long Beach, CA. Typically, if you put less than 20% down, the bank requires you to pay for PMI (private mortgage insurance).  As you pay down the mortgage, eventually you owe less than 80% of the value of the home, and the PMI goes away.

Immediately upon moving in, my wife began doing renovations.  A few months ago she was confident that the changes she had made had increased the value of the house enough that our equity now exceeded 20% of the home value.  So she contacted the bank and asked them to send someone by to reappraise the house.

Someone was sent.  Long story short, he re-appraised the value of the home about 65K below what we thought it was worth, which meant that PMI would stay.  My wife is the sort of person who looks through paperwork.  Thoroughly.  And she looked through the appraiser's report.  Thoroughly.

She found a number of discrepancies.  The analysis seems to have been done before the appraiser ever came to the house, based on dates written up in the report.  That may go some way toward explaining how the appraiser missed the existence of three rooms in the house.  It doesn't explain why the appraiser selection of comparables included homes in lower-cost neighborhoods, homes that were up to 40% smaller, and homes that were in very different styles.  This made little sense when our own neighborhood has seen numerous recent sales of homes similar to ours in appearance, structure, and size.  

My wife wrote up a counter-report.  Her version made note of the above discrepancies, plus a few others.  The bank apparently had the appraiser do a re-appraisal.  The re-appraisal was 100K higher than the old one.  The PMI is gone.  

Did the appraiser actually re-evaluate (or even put any effort whatsoever into the first evaluation) or is this just another case of the squeaky wheel gets the grease?  Honestly, I don't know.  But if I had to guess, a) the second appraisal is closer to reality than the first, and b) my wife does one heck of a squeaky wheel.  

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