Lender/Appraiser-Be Careful (appraisal, agent, commissions, mortgage companies)

[Ann Alison]

My realtor is strongly urging me not to use my credit union, but to use some mortgage broker she works with because "we'll be able to contact him on weekends" and because she thinks he might save me 1/8% on what will only be a six or seven-year note. That's it. My credit union, I'm pretty sure, will do a realistic appraisal. The guy she knows will appraise high, hmmm, just a little over the sale price, yeah, take his cut, and sell the loan. Most houses around here are still priced at 2006 levels and I'm not able to sustain a 50-100k loss when I sell, as has happened to so many people. Is anyone else experiencing a similar realtor-lender hookup scam attempt? I know they've always offered the services of their resident broker, but these days it's potentially disastrous.

To you folks newer to homebuying, the lender won't lend more than they appriase the house for, so you have to come up with the rest (which you can chalk up to a loss, unless you live in the house for decades), or ask the seller to drop the price. I'm thinking that's what causes so many "contract fell through" situations. More insidious, however, is the crooked "lender," whether it's someone associated with a real estate company or not, who appraises at or above the sale price just to push the deal through and take his cut. I would urge you to only do business with a reputable lender. Good luck with that.

[chet everett]

There are unscrupulous people employed in every walk of life...

If you are not comfortable with people you should not do business with them.

[Silverfall]

In a declining market, it is very common for the home to appraise for more than sales price. Remember the appraiser has to use SOLD comps for the appraisal. In markets that are declining every month, the two month old comps are "overpriced", but the appraisers need to use those.

Most homes out here appraise "high" not because of crooked appraisers, but because that is where the sold comps indicate the home be appraised.

You should absolutely go with a lender you like and if you like your credit union, then you should use them. The appraisal isn't necessarily going to be any more or less honest than with the other lender. The credit union appraiser has the same criteria for appraising a home.

You also need to remember than an appraisal is one person's opinion and the adjustments they make are subjective. I have seen $150,000 homes that had appraisals as low as $145,000 and as high as $155,000. All within two weeks of each other. An appraisal is not the end all be all.

Whatever you do, make sure YOU are okay with the price you are paying for the home. Honestly, that is the only opinion that really matters anyway.

[middle-aged mom]

Originally Posted by Silverfall

In a declining market, it is very common for the home to appraise for more than sales price. Remember the appraiser has to use SOLD comps for the appraisal. In markets that are declining every month, the two month old comps are "overpriced", but the appraisers need to use those.

Most homes out here appraise "high" not because of crooked appraisers, but because that is where the sold comps indicate the home be appraised.

Let me add, that the contracts were written on closed comps 1-3 months before those sales closed. This means the information can be 6 months away from the current market.

[middle-aged mom]

Buyer and seller agree to price before a lender orders an appraisal.

If the appraisal comes in higher, it does not change your agreed upon price.

It's your loan and you can use anyone you choose.

As an aside, it's a serious RESPA violation for an agent to benefit from a referral to a lender or title company.

[BigDragon]

Your Realtor doesn't want you using the credit union because 1) they won't pay a referral fee, 2) their fees are 50 to 75% less than the Realtor's in-house lender, 3) the credit union is actually available and more accessible than the in-house lender, and 4) many credit unions have their own real estate agents in which you can use to get huge rebates on real estate transactions. Do your homework! There are a pair of downsides. Credit unions don't lend as much money and require higher down payments. My credit union is so much cheaper than the lender I'm going with right now, but I don't have enough of a down payment to qualify for their programs. However, if I'm still house hunting in the fall, then I will eagerly make the switch.

[Brandon Hoffman]

Originally Posted by BigDragon

Your Realtor doesn't want you using the credit union because 1) they won't pay a referral fee, 2) their fees are 50 to 75% less than the Realtor's in-house lender, 3) the credit union is actually available and more accessible than the in-house lender, and 4) many credit unions have their own real estate agents in which you can use to get huge rebates on real estate transactions. Do your homework! There are a pair of downsides. Credit unions don't lend as much money and require higher down payments. My credit union is so much cheaper than the lender I'm going with right now, but I don't have enough of a down payment to qualify for their programs. However, if I'm still house hunting in the fall, then I will eagerly make the switch.

That's one of the most errant posts I've ever read in so many way...

1-Lenders cannot legally pay referral fees and it is a major RESPA violation. Throw that arguement out.
2-We cannot assume the fees should be lower with a credit union. The buyer should get a good faith estimate from both and throw in one more for good measure.
3-The credit union probably is less available though most of the important work is done week days anyway. Moot point if you're Pre-approved up front.
4-Also not true.
5-Credit unions still lend money to qualified buyers and the DP is the same typically based on loan programs.

Now personally, I haven't had the best experiences with credit unions in that I've seen locally they are normally late to closing, are typically unable to follow through with the original loan offered, are usually less efficient than the big boys like BoA or Wells Fargo. I prefer reputable lenders with mortgage companies over mortgage brokers or credit unions.

Buyers: my advice is to get good faith estimates and go with the best offer. It is a business decision.

[BigDragon]

Originally Posted by Brandon Hoffman

That's one of the most errant posts I've ever read in so many way...

You clearly have no idea what you're talking about then. Go visit Moderator cut: URL removed and you'll find they offer 20% rebates off agent commissions. The credit union I use, a federal credit union, participates but makes it clear they will not pay any sort of referral fees or participate in backdoor attempts to steer clients to specific companies. The closing costs, based on the GFE, from my credit union are 60% less than a Wells Fargo subsidiary because they don't tack on all sorts of ridiculous fees. They're also open 7 days a week and were quick to respond even on a Saturday, unlike Wells Fargo. They won't lend as much and require higher down payments, but the deal there is much better if one can qualify. Maybe the generic average credit union doesn't stand up too well. I'm sure there are some that are better than others. However, to write off all credit unions instantaneously is very foolish.

[Brandon Hoffman]

Originally Posted by BigDragon

You clearly have no idea what you're talking about then.

I think you have it backwards. I never wrote off all credit unions but you wrote off all lenders not credit unions. A credit union can certainly be a good option but I'd say in my area it's usually not. I encourage buyers to shop around. Secondly, as I stated lenders cannot pay agents referral fees because it's a RESPA violation. Thirdly, because one company offers a rebate doesn't mean they all offer it. I stand by my claim that your post is full of incorrect info. Of course, you're buying your first home and I've closed over a 100 homes the last 3 years so what would I know.

[Dee2e]

Originally Posted by Brandon Hoffman

That's one of the most errant posts I've ever read in so many way...

1-Lenders cannot legally pay referral fees and it is a major RESPA violation. Throw that arguement out.
2-We cannot assume the fees should be lower with a credit union. The buyer should get a good faith estimate from both and throw in one more for good measure.
3-The credit union probably is less available though most of the important work is done week days anyway. Moot point if you're Pre-approved up front.
4-Also not true.
5-Credit unions still lend money to qualified buyers and the DP is the same typically based on loan programs.

Now personally, I haven't had the best experiences with credit unions in that I've seen locally they are normally late to closing, are typically unable to follow through with the original loan offered, are usually less efficient than the big boys like BoA or Wells Fargo. I prefer reputable lenders with mortgage companies over mortgage brokers or credit unions.

Buyers: my advice is to get good faith estimates and go with the best offer. It is a business decision.

Often real estate companies pressure customers to use their preferred lender and title company. However, no one can force you to use that lender or title company. In many real estate offices, the Office Manager or Broker gets a bonus based on the volume of loans or title requests an office throws their way. Some companies have a policy that all buyer contracts are approved only if the buyer applies for a loan with their preferred lender. They can't make you close the loan, however. As for title company pressure, often companies dangle agent commissions in exchange for using their title company. There policy might be something like agent's get paid at closing if they get their seller's to use the in house title company but if not, it's ok but you won't get paid for 2 weeks. Then they let the agent decide on the title company. Great practice....NOT!

The advice about a GFE is good advice but be sure the numbers are as close to accurate as possible.