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We had the same experience with Wells Fargo. Appraisal turned up a "declining market"......which has been declining for a long time now. But, Wells Fargo was apparantly *surprised* by this....they told us that the area we are buying on doesn't show up as declining on their list and the appraisal was the first information that they had that it was declining! They increased our down payment from 20% to 25% only after the appraisal came back and underwriting was subsequently completed.
Still waiting to close.......should happen soon (with 25% down)......hopefully there are no new issues for us.
See what I mean? I hate Wells fargo. So sorry you have to deal with this.
I was under the impression that once everything has gone through underwriting, as long as the home appraises at or over the purchase price, then everything is ok...How many times does underwriting evaluate the file? Or is this the case when underwriting gets the file after the appraisal, only?
The way it works for most lenders is once the file is underwritten you get a list of conditions (the loan officer does) Usually the lender will specify if they want further proof of value by ordering one of these two items 1) Desk review where the lender pulls a report called an AVM. It is a report with an avergae value for homes in your area. Many credit unions use this when determining your home value for an equity lkine of credit 2) Field review- the lender pays an independent appraiser to write up their own opinion of value.
For some reason WF doesn't notify the LO that they have issues with the appraisal. I actually had (4years ago -last deal I ever sent WF) a couple who signed their final loan documents. They were ready to fund and WF said they did not like the loan. Can you imagine? I ended up sending it to another bank and lost $1,000 to give the the rate we agreed on (the rates had gone up at this point). Thank goodness the bank had the loan approved and docs ready in 3 days. I had sent WF about 15 loans at that point and had problems with EVERY SINGLE ONE OF THEM. I finally learned my lesson.
I talked to the LO today and he had sent our info to a guy in the appraisal department that he said he would describe as a "appraisal mediator". He is the middle man between the LO and the appraiser. I guess the LO cannot take the issue up directly with the appraiser. Today the LO said he was compiling his own statistics with a real estate agent to back up his defense that the appraisal should not have been marked as it was, increasing our required down payment. The loan officer said that the city was showing as a "1" on some sort of scale that would indicate that sort of thing and with the appraiser marking that there was an oversupply it put the rating as a "4", which requires the extra down payment.
The real kicker is that he said the exception is if you are a first time home buyer and this is your primary residence then you don't need to put the extra down, you can still do it for 5%. He said it seems backwards to him - do you think?
Right now we are locked at 4.875 with the seller buying it down to 4.75. Wouldn't we lose that rate if we went with FHA? I assume we would almost be starting over making sure we meet the FHA requirements. We can do the 10% but I hope not to, because we would like to keep a larger backup in savings with the way things are in the ecomomy. I hope things are figured out by tomorrow (our contracted closing date). The only thing we have going for us is the sellers don't know about this and as of Wednesday, they needed a letter of occupancy for the new build that they are getting into. They couldn't get it Wednesday so they said there might be a chance that they will have to close Monday - so we just told them to plan on Monday. I thought this was going too smoothe on our end. Headache.
Well, good luck with all of this. We actually were able to close today with Wells Fargo (with the increased 5% down payment....thank goodness we were in a position to just pay it and close this thing).
We considered going with the LO suggestion to fight the appraisal because that was screwed up as well (they never used one home in the subdivision we purchased in -- even though some of those closed sales were more similiar in nature and more recent than the other ones they chose). We really felt that the appraiser just hit the low number we offered on the house rather than really look at the value of very similiar homes in our neighborhood. But, we realized that declining market meant declining market....and even if we came back with a higher appraisal, we were still going to end up paying 5% more down on the sales price. Then, when we checked with a mortgage broker -- he also indicated that we'd need 25% down in that particular market. So, what WF did was consistent with what other lenders are doing in this area....it just stinks that they could not be more up front about it. It should not have come as a surprise at the end of this process.
I did complain (politely). I told them that I only chose WF because of the rate/20% down payment...and they actually lowered our rate a bit. Not significant on a monthly basis...but over 30 years it matters a lot.
Ultimately, we decided to get this thing closed versus potentially lose the house and a great interest rate (4.675%).
Well, good luck with all of this. We actually were able to close today with Wells Fargo (with the increased 5% down payment....thank goodness we were in a position to just pay it and close this thing).
We considered going with the LO suggestion to fight the appraisal because that was screwed up as well (they never used one home in the subdivision we purchased in -- even though some of those closed sales were more similiar in nature and more recent than the other ones they chose). We really felt that the appraiser just hit the low number we offered on the house rather than really look at the value of very similiar homes in our neighborhood. But, we realized that declining market meant declining market....and even if we came back with a higher appraisal, we were still going to end up paying 5% more down on the sales price. Then, when we checked with a mortgage broker -- he also indicated that we'd need 25% down in that particular market. So, what WF did was consistent with what other lenders are doing in this area....it just stinks that they could not be more up front about it. It should not have come as a surprise at the end of this process.
I did complain (politely). I told them that I only chose WF because of the rate/20% down payment...and they actually lowered our rate a bit. Not significant on a monthly basis...but over 30 years it matters a lot.
Ultimately, we decided to get this thing closed versus potentially lose the house and a great interest rate (4.675%).
Yeah, I was going to go conventional 95% ltv with USAA. When they got the contract on offer acceptance they informed me of declining market and it was going to be 90% ltv or nothing.
Basically, my hand was forced to go FHA. Or not get a home anytime soon.
I don't get it. The bank gets my 10% down. Less risk for them but it takes all of my savings. So, more risk for me not having savings.
Anyways, sorry to hear about this issue so close to your close. I hope you can salvage the situation and not lose the home and the money you have put in so far!
FYI - I am a member at USAA. Everyone talks so highly about them. Truth is I have crushed their rate and fees continuously for years and made a nice profit. I think most if not all brokers could crush their pricing. What I am saying is do some shopping because USAA IMO is not at all competitive.
I'm lucky, all of CA is a declining market, so I don't even have to check, lol. I just tell people it's 10% down or FHA right off the bat.
Like others have said, I'm not surprised that WF retail is coming up with this now. I'm afraid they don't have the highest of hiring standards there.
AMEN Andrew! Whenever I do a refinance or purchase in my home state of Cali I already know it is declining too! I agree wholeheartedly on their hiring standards.
We will be closing Monday wether or not the downpayment is 5% or 10%, it just makes me irritated that this is brought up so late in the game. Our LO is pretty confident that it will be with 5% but I am not putting much stock in his opinion since he was unaware of this rule to begin with. He has told me a few times that this is the first time this has come up in the 18 years he has been a loan officer. 1) should that make me feel better? 2) there has not been such a declining market in the 18 years he has been a LO 3) how many loans does he do a month to not have this come up yet?
Last I heard Friday, "they" were going to the appraiser to change the appraisal so it would not be marked as an oversupply. The stats that the real estate agent came up with that helped our LO was "worst case" 4 month supply - "best case" 77 day supply. We won't know until monday what amount we should make the check out for.
I talked to the LO today and he had sent our info to a guy in the appraisal department that he said he would describe as a "appraisal mediator". He is the middle man between the LO and the appraiser. I guess the LO cannot take the issue up directly with the appraiser. Today the LO said he was compiling his own statistics with a real estate agent to back up his defense that the appraisal should not have been marked as it was, increasing our required down payment. The loan officer said that the city was showing as a "1" on some sort of scale that would indicate that sort of thing and with the appraiser marking that there was an oversupply it put the rating as a "4", which requires the extra down payment.
The real kicker is that he said the exception is if you are a first time home buyer and this is your primary residence then you don't need to put the extra down, you can still do it for 5%. He said it seems backwards to him - do you think?
Right now we are locked at 4.875 with the seller buying it down to 4.75. Wouldn't we lose that rate if we went with FHA? I assume we would almost be starting over making sure we meet the FHA requirements. We can do the 10% but I hope not to, because we would like to keep a larger backup in savings with the way things are in the ecomomy. I hope things are figured out by tomorrow (our contracted closing date). The only thing we have going for us is the sellers don't know about this and as of Wednesday, they needed a letter of occupancy for the new build that they are getting into. They couldn't get it Wednesday so they said there might be a chance that they will have to close Monday - so we just told them to plan on Monday. I thought this was going too smoothe on our end. Headache.
Can anyone explain this to me? Can a seller be asked to pay a fee to get a lower percentage for a buyer??
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Good luck
