A warning about Chase mortgages and South Tampa (Lakeland: short sales, foreclosures)

[roblu]

Just in case someone is thinking about buying a house through Chase in South Tampa. We applied for a mortgage through Chase and were pre-approved. Everything was going fine until the appraisal came through, the appraisal came in at around 15% less than the sales price. We were pretty shocked until we looked at the appraisal - the appraiser was from a location quite far away from South Tampa, apparently Chase (and other large banks) work with large appraisal companies that sometimes assign people with little geographic knowledge of the area they are appraising. Our appraiser had used several comps that made little sense, on lots half the size or less (land is very expensive in South Tampa) with little to no adjustment for lot size!

Anyways, long story short. I would highly recommend using a local lender around here rather than Chase. They still do their appraisals through vendors, but at least through vendors that use local appraisers!

[NYmikef]

So what happens when the appraial comes in 15% below the selling price? Do you need more of a down payment, is PMI rquired?

[Just add saltwater]

Most of the time the loan will be denied for insufficient collateral. The big thing for most all banks is protecting themselves as well as the shareholders/stock holders to make sure they are not lending outside the regulators guidelines.

[housingcrashsurvivor]

It's not just Chase.

These days land value seems hardly considered. Many houses still go for less than the cost of the construction with land and infrastructure free. I've noticed that in selling (though we did manage to bump the price on one I sold based on extensive gardens we inventoried), in buying (I bought a large parcel at zero cost for the land, and paid less than replacement cost for the structures), in appraisals, in values determined by the county for tax purposes, by Zillow even, pretty much anywhere you look this is going one these days.

We've had empty lots sold around here recently and both Zillow & the county continue to value them at about 60% below the sold price. More than 2.5 times less than real market value at the bottom of the bubble. If they valued the land for what the land sold for, then all their housing prices would make even less sense. This market is still crazy with prices being kept depressed by such practices.

[bentlebee]

Any appraisal can be appealed with good decent proof and they have to adjust it and/or there can be another appraisal ordered.

Many times home owners forget or don't like that foreclosures and short sales are included and over improvements can be included but not weighted the way owners want it to be.

It is true that often appraisers from far away are used and therefore a good realtor will be present for an appraisal and provide all info that can be given and even comps can be provided.

We had an appraisal performed and ordered by a previous listing agent for an owner and it came back for $479,900 while we were convinced it was way too low and within 4 months which incl. taking over the listing and getting multiple offers but listing the property for $559,900 and many other agents stating we were nuts and we should take a cash offer of $509,900 or $500,000 while non of these agents knew anything about the existing appraisal other than list price was $499,900 previously.

We closed within 4 months after that other appraisal with a buyer with a mortgage for a price of 549,900 and the house appraised with an appraiser all the way from Lakeland and who didn't know the area. There had not been any more sales but we provided comps. Even some a little bit further out there, bills of improvements and there were lots of over improvements but quality improvements and not just cosmetic improvements only, but both.

The main error many buyers make is having an agent who is not present at important times or not even working with an agent and than later finding out that things can be different.

If you have cash things are different now as well since not all REO's prefer cash any longer since cash offers usually are lower.

We fought successfully many appraisals if we thought they were wrong and when you have proof to back up than you will win since they can't get away from facts but some people value a house higher than they should because they decide with their heart and not their brain.

Some buyers have paid additional cash above the appraised value lately since they liked the house so much and believe the value will come back or they just want to live there.

Overall Chase has been better and easier with short sales than many other lenders and don't get me wrong...I'm not affiliated with any lender but we always were happy if we heard Chase was the lender involved.

Only once we had a bad experience wi Chase but later found out that the seller who we represented was not honest with us and had filed for bankruptcy and kept it from us and not one lender can speak to anyone unless the attorney for the seller will give approval and usually in cases like that these lawyers will not even call back.

In the end we sold that house too since that lawyer messed up and the entire bankruptcy case had to be done from the start and we already had a buyer who was waiting so a short sale was faster and it is not smart to have a bankruptcy prior to the closing but I'm not a lawyer and case by case can be different.

If the OP feels they have proof than fight it and tell Chase you want a new appraisal and it may have to be paid for but maybe both sides are willing to share the cost for that or if seller is convinced that the property is worth it than ask them to pay for it.

It is no longer 2005 when appraisers write up anything and last week we dealt with an appraiser who appraised the property $2000 lower and he was right. The owner put in a roof without a permit and that makes the roof not being a new roof unless it is officially permitted so the owner was lucky that it was only $2000 and that the VA will allow a closing without that permit being pulled, but the roof passed inspections.

There were too many appraisal scams so say thanks to all the sellers/owners and appraisers who scammed so much that there was an overhaul needed.

Lenders now have a list and they go by the next one on the list.

I don't think Chase didn't want the house not to appraise...they just don't want to loan money if it isn't worth it and take the risk.

Again I have no affiliation with any lender and if this appraiser is wrong it should be appealed.

[PhotoProIP]

Originally Posted by NYmikef

So what happens when the appraial comes in 15% below the selling price? Do you need more of a down payment, is PMI rquired?

The selling price needs to DROP.

[PhotoProIP]

It is true that often appraisers from far away are used and therefore a good realtor will be present for an appraisal and provide all info that can be given and even comps can be provided.

^^^ That is how the bubble started back in 2005...and exploded in 2007-2008....yeah, let's not do THAT again!

[Restrain]

Be aware that the Big Banks actually either fully (Bank of America - Landsafe, etc) or partially own the Appraisal Management Companies they use. They charge $600, pull part off into their pockets, then the AMC pays about 50% of the fee of what is left to the appraiser. The result is a declining number of appraisers in the business, and appraisers refusing to work for the worst offenders. As a result, there is becoming a much smaller pool of appraisers working for some of these banks.

As an example of some of the worst offenders, I know of one AMC that pays $125 for an appraisal that will take hours to complete, with the appraiser netting less than minimum wage after expenses.

And why do the banks get away with this? Because federal regulations actually encourage such actions.

Now, the smaller lenders will use such entities as AppraisalPort, LenderX, etc to comply with federal regulations, and can get the better appraisers as they are not skimming off the fee paid for the appraiser.

As to the 'list' of appraisers, only VA has a list. Otherwise the AMCs use the fastest and cheapest. Best appraisers, no they are not interested.

[gulfporter]

I'd run from a home that appraised 15% south of the contract price. Strong-arming the appraiser in an appeal would leave me wondering if any increase in appraisal was truly warranted, or if the appraiser just caved to the realtors and sellers. Bottom line is it's no skin off the appraiser's nose if you pay more for a home than it's worth.

That whole scenario of higher than 'true' appraisals is what set up the last bubble and I for one am glad that banks are using appraisers that aren't just writing up appraisals that meet or exceed the contract price.

BTW, in my former life, I was a Certified Property Tax Assessor.

[Tim Tim Tim]

we actually had the same issue but we are the sellers. We just had a deal fall through due to chase appraising the house way below value. Other homes that are the exact same floor plan with less upgrades sold for 10k more than we were in contract for and the appraisal came back 15k under our contract price (chase valued the house at 270k while others sold for 295k within 3 months of our sale.