Thanks for all the advice. We are working with a mortgage banker RMG in Minnesota. The REO bank is IndyMac. The problem is that this is our 5th single family home so we are under the 5-10 property investor rules. According to the mortgage banker there is only one lender we can work with who is buying these loans. We have a great credit rating, long term employment and solid tax returns to show our property income. We have been doing this on the side for years. We have our PITI reserves and our 25% down ready to go. We could put more down it we needed to. Right now the REO seller agent is not connecting the mortgage banker up with her IndyMac contact. The have sent in more comps.
We just like this property. May even live there some day. According to the city property is splitable if we wanted to but we actually like the farmhouse just the way it is for now!. It will be an easy rent up because it is so unique and rental of SF is strong right now in this suburb.
My question is:
Do you know who else is buying investor loans for the 5 properties and more? Closing was supposed to by Thursday.
Thanks! Mkolb

Why don't you take the loan to the bank who currently owns the property instead of your own lender.
They think it is worth $350,000 as that's what they've listed it at. They should have their own appraisal that is new and one from when the original loan on the property.

I am surprised every bank REO doesn't require you get preapproved with them. Often I only see this with Wells Fargo properties.

It is possible this can happen as you describe, but you should be all over your loan officer. If the lender is the one who ordered the appraisal within their guidelines of the appraiser pool, I am surprised they don't trust the people they've put in the pool of appraisers. That doesn't make sense. Now if you are using a mortgage broker, it is possible that they have prepared your package and sent it to a 3rd party lender who won't underwrite the loan. If you really feel the property is worthy of the price, you might want to submit the loan package to a direct lender like the REO owner or as an alternative WF, BofA, or Chase or one of your local banks or credit unions.

Good luck and let us know how it turns out.

What you have run into is pretty common problem. Even if you got another appraisal done that was sufficient; your current lender would not be likely be willing to accept that new appraisal. Because it is an REO; the REO owner will not likely be very patient or flexible and allow you to find another lender and start the process over again (REO owner will likely want to just take your earnest money ,and move on, and sell it to a new buyer that is buying with cash or putting down a much larger down payment. You will likely need to put down a larger downpayment to make your current lenders math work to get this one closed (at this point).

Mkolb,

Ask the lender to order a new appraisal from a different appraiser, at their expense. If they refuse, as Thomas already recommended, find a new lender. If they order a second appraisal and that appraiser has roughly the same findings, the lender will be hard pressed to refuse the results of 2 independent appraisals.

Good luck,

Jeffrey
512-913-7480

Mkolb,

I suggest you look for a new lender. Be up front with them and explain the problem that you have with your current lender.


Sincerely,

Thomas Griffin
Keller Williams Realty
512-751-3858
realestate@thomas-griffin.com