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We've had a home loan at a bank for over 5 years at 6%. We have tried to Refi with this bank years ago, but were turned down because it was too hard to find comps (we have a 4plex).
Recently a newer bank member said it shouldn't be a problem, so we tried again. The bank ordered an appraisal at our expense (we were told it would be about 400$ but they changed the price to about 800$ later in the process.) The first appraiser turned down the job because of difficulty in finding comps. The bank ordered a 2nd appraiser who they said was an expert in both commercial and home appraisals.
The appraisal came in over 400,000. We need about 230,000. However, the bank has just turned down our Refi. The loan officer said the appraiser did not follow their banks specific protocol regarding comps. The loan officer said they are not allowed to discuss or try and remedy this matter with the appraiser.
The bank has now sent us official documents detailing the reason we were denied: "Value or Type of Collateral not Sufficient." However, in my opinion this is not a true statement at all. The appraisal is high, we have high income, perfect credit, liquid cash that we are willing to pay into the loan if the appraisal was somehow low. Also, the bank currently owns the original loan.
I did ask the loan officer if I could have the appraisal fee back. It seemed to me that if they pick the appraiser, they should pick someone who knows their protocol. The loan officer said she would give me a copy of the appraisal (she did) and that another bank should accept it, therefore it is valuable and I do not need a refund.
I have now talked to every local bank here. All say that if my appraisal was given to them by an appraiser, we would have gotten the loan. However, all say that they cannot accept the appraisal from me, because they need a randomly selected appraiser to start their loan process.
So my 2 questions are: 1.) Is what happened normal? 2.) Do I have any justification to ask again for the appraisal fee back?
We've had a home loan at a bank for over 5 years at 6%. We have tried to Refi with this bank years ago, but were turned down because it was too hard to find comps (we have a 4plex).
Recently a newer bank member said it shouldn't be a problem, so we tried again. The bank ordered an appraisal at our expense (we were told it would be about 400$ but they changed the price to about 800$ later in the process.) The first appraiser turned down the job because of difficulty in finding comps. The bank ordered a 2nd appraiser who they said was an expert in both commercial and home appraisals.
The appraisal came in over 400,000. We need about 230,000. However, the bank has just turned down our Refi. The loan officer said the appraiser did not follow their banks specific protocol regarding comps. The loan officer said they are not allowed to discuss or try and remedy this matter with the appraiser.
The bank has now sent us official documents detailing the reason we were denied: "Value or Type of Collateral not Sufficient." However, in my opinion this is not a true statement at all. The appraisal is high, we have high income, perfect credit, liquid cash that we are willing to pay into the loan if the appraisal was somehow low. Also, the bank currently owns the original loan.
I did ask the loan officer if I could have the appraisal fee back. It seemed to me that if they pick the appraiser, they should pick someone who knows their protocol. The loan officer said she would give me a copy of the appraisal (she did) and that another bank should accept it, therefore it is valuable and I do not need a refund.
I have now talked to every local bank here. All say that if my appraisal was given to them by an appraiser, we would have gotten the loan. However, all say that they cannot accept the appraisal from me, because they need a randomly selected appraiser to start their loan process.
So my 2 questions are: 1.) Is what happened normal? 2.) Do I have any justification to ask again for the appraisal fee back?
Thank you very much for your thoughts.
Are there *really* not many similar properties in the neighborhood?
Are there *really* not many similar properties in the neighborhood?
Correct. We are a small university town, population under 6,000. There are mostly single family homes here. But of course we have our share of 2plex, 3plex, and 4plex, here, but only a handful or 2 trade hands per year. I think the appraiser used 1 4plex and 2 2plexs for the appraisal.
Last edited by Lewisburg; 12-03-2014 at 01:45 PM..
That is your problem. Banks demand 3 comparable similar properties in an appraisal. The two duplexes, are not similar properties. Duplexes and fourplexes, are valued differently. Depending on the part of the country you live in, and how well the area has recovered from the recent recession, and in some areas the values have not stabilized yet, which makes it difficult to get a loan on a 4 plex or larger property in many parts of the country.
No, you will not get the appraisal fee back, that is done at the buyers expense not the bank's, no matter what the outcome.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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From the bank's point of view "Value or Type of Collateral not Sufficient" is true, if they doubt the validity of the appraisal due to the method used. With what happened in 2008 the banks are gun-shy if everything's not 100% perfect. You might have more luck dealing with a local credit union. We belong to 2, and would not get a bank loan again.
No, you will not get the appraisal fee back, that is done at the buyers expense not the bank's, no matter what the outcome.
Thank you oldtrader,
This is a rough lesson. I won't bore you all with my grumbling and ranting... but, grrrrrrrrr.
Quote:
From the bank's point of view "Value or Type of Collateral not Sufficient" is true, if they doubt the validity of the appraisal due to the method used. With what happened in 2008 the banks are gun-shy if everything's not 100% perfect. You might have more luck dealing with a local credit union. We belong to 2, and would not get a bank loan again.
Thank you Hemlock140,
We have a local bank who we have been talking to. They say that they do not resell all their loans, and that allows them to do special case loans. Despite a lack of comparables for us, this bank says it is obvious that our property / situation is favorable and we can be a special case refinance. With that said, they will not honor the other appraisal (because they want a randomly picked appraiser), so we will be out of pocket for one more. We have started the process and have a rate locked in a little lower than the first bank. Please wish us luck with this! But, I admit I'm still sore about the cost of first appraisal.
Last edited by Lewisburg; 12-03-2014 at 04:44 PM..
This is why it is important to build a relationship with your local bank. I like the idea, I can just walk into the officer area and the president waves me into his office, and lets me know that if I need anything he will help me in any way he can. I went in to get a paper notarized just yesterday which is done by the receptionist in the officer section. He waves me and my wife in, just to say hello and let us know they like our accounts.
I liked it back in my real estate brokerage days, knowing my bankers, when they would grant me very large lines of credit, that allowed me to write checks against the line of credit. Both banks limited me to $500,000 without first having to get approval to go higher. It made it nice when someone wanted to sell me a middle price house at way under market value to get a quick sale. I could just write a check to buy it, and then quickly resell it for a good profit.
I can suggest you file a complaint with the CFPB - not so much for there being any wrong-doing, but for what I consider an unintended consequence. Had the lender been able to contact the appraiser, not to coerce value, your money may not have been wasted. Another step could have been added in here, and that would have been a desktop appraisal. It certainly would have discovered the lack of comps before you got way up there in the high 100's.
The other side of the coin is business is so slow right now, your LO, wherever they are from, could be under so much stress to bring a loan in - they are in it for survival mode only. And that's what's scary. How many loan applications are being taken when the end results are already known.......as in they know it won't make it to the table?
I can suggest you file a complaint with the CFPB - not so much for there being any wrong-doing, but for what I consider an unintended consequence. Had the lender been able to contact the appraiser, not to coerce value, your money may not have been wasted. Another step could have been added in here, and that would have been a desktop appraisal. It certainly would have discovered the lack of comps before you got way up there in the high 100's.
The lender is not allowed to contact the appraiser, and that is set in stone by laws since the housing bubble burst. The appraiser does not know what type of loan is involved. They are to make an appraisal using the best information available, (which in this case there was only one 4 plex sold to use as a comp so as 3 comps are required the appraiser used the only ones available) with no knowledge of the details of why they are making an appraisal. The appraisal would have been acceptable with a 30% down payment, but not for an under 20% down. The lenders the banks sell their loans to, would not accept it, nor would the mortgage insurance company that is involved.
It is amazing on these threads, people say report this to the authorities, of go get a lawyer and sue someone when no one has done anything wrong. There are times for one or both of those solutions is appropriate, but not in this situation.
And there is no such thing as a desktop appraisal. What that is, is an estimate of fair market value, but is not an appraisal. An appraisal is much more complicated and much more information is needed, including a visit to the subject property prior to doing comps. The appraiser has to actually personally gather the information on the property being appraised.
Reason Why. About 30 years ago, someone wanted to exchange a 3,600 sq. ft. home as a down payment on a 6 unit apartment. It turned out to be 1,200 sq ft first floor, a 1,200 sq. ft unfinished basement, and a 4 car garage of 1200 sq. ft. You do not count the garage as part of the sq. footage of a home, and the multiple listing service had the home as all finished. The home was worth less than half of what the property was listed for. Turned out, the listing was done by a brand new agent, that had no idea of what she was doing. I am not picking on women agents, because I have seen men do way worse than this when listing property.
they just want your 6% interest rates...they want the $ long term. Refi is a loss to the bank (in numbers). Try seek another mortgage company who is willing to take your business. I usually refi with another lender, not the exact same one that the loan was originated. There's always something they come up with in as a reason to make you give up. I can't speak for all lenders but from my experiences only.
good luck!
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