Question: I’ve recently completed a disturbing loan and I was wondering if you could be so kind as to answer a question I have. I refinanced a condo which was purchased for income property and used excess cash from a new home-equity line of credit (also done with the same lender a few months earlier) on my home to eliminate a second mortgage on the condo and get the mortgage at an 80% loan-to-value ratio for the lowest interest rate.
I was shocked when the lender’s handpicked appraiser valued the property at $468,000, which was less than what I purchased the condo for and, as I later found out, was far less than identical units had sold for in the very recent past. I brought this to the lender’s attention. I demanded another appraisal with an appraiser of my choosing. And as I suspected, the valuation came back at an appraised value of $625,000.
Instead of using the $625,000, the lender’s underwriter used the median of the two appraisals for the refinance, knowing full well the funds to make it an 80% LTV loan value were coming out of a line of credit advanced by the same lender. Not knowing how underwriting works and pressured by a closing date which was only a day or two away, I foolishly signed the closing docs.
I later discovered that the lender’s original appraiser did not even do comps from any of the other units in the complex which had sold in the $625,000 range. So I complained about the whole process and the lender’s representative told me it was too late to do anything about it because the loan had already been completed.
What can I do about this? Are there any agencies or watchdogs I can bring a complaint like this to? Something smells fishy here.
Answer: Because I know your lender well — these kinds of things happen with all lenders, so I won’t reveal the name here because I do not want to single the company out — I passed your e-mail along and asked that someone review your situation. I don’t normally do this because I don’t know most lenders well enough. But this one I do, so I thought I’d use my “influence.”
Anyway, as always, there are two sides to every story. And here’s your lender’s:
Yes, mistakes were made by the original appraiser, who, if you are correct about not obtaining accurate comparables, should never be used again and probably never will be. But the lender says that instead of pursuing your grievances with the company prior to closing, as you should have, you went ahead of paid for your own appraisal. When you presented that valuation, the lender accepted it — another error on its part — instead of ordering one of its own by another company-approved and licensed appraiser.
Had you asked the lender to reappraise the condo and presented valid reasons why another valuation was necessary — for example, the comps used in the first one were out of whack with the market — the company says it would have done so at its own expense, not yours. This is what anyone who thinks an appraisal is off-base should do. Find other, better comparables than the ones used by the appraiser and present them along with your request for a new valuation.
According to the company, it accepted your appraisal. I don’t know whether it was at full value or, as you say, the company choose the middle ground. But the people I spoke with — and they jumped through a lot of hoops to research your case for me — say that you were not harmed because you got essentially what you wanted in the first place. “We made mistakes, but the end result worked out in your reader’s favor,” I was told.
But I also was told something else, something that you failed to mention. It seems that now you are making what I consider to be unreasonable demands of your lender, such as restitution and a zero-cost mortgage the next time you choose to refinance one of your properties. Perhaps that is why no one is returning your calls.
Remember, you are the one who failed to proceed with your grievances in the proper manner — whether you were in the right makes no difference. If you had requested the lender to reappraise your condo, it would have done so and you would not been out-of-pocket for the cost of the new valuation.
Secondly, at least according to the company, you ended up with what you wanted in the first place, a loan at an 80% loan-to-value ratio. So no harm, no foul.
Found here.
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