Home Buying in Los Angeles>Question Details

Honesty, Home Buyer in Los Angeles, CA

Where do you report unethical direct lender?

Asked by Honesty, Los Angeles, CA Sat Sep 22, 2012

I am being asked to get a second appraisal through a second lender who is guaranteeing his seller that the home will appraise 4-5% higher than my appraisal. When pose we do second appraisal with my alternate lender they say Oh, no. So I said Oh no. and I want to report the lender. He seems to have some unethical contections. He needs to be audited.

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Trevor Curran’s answer
Good morning Honesty,

I have only a vague idea based on your question of the situation so forgive me if I'm not hitting the details correctly.

Here's what I guess from your question: You're purchasing a home and you applied for a mortgage. Your Lender's appraisal came back less than the agreed upon sales price. Now the Seller or his real estate agent want you to apply to a different Lender who apparently claims his appraisal will meet the sales price.

If that is correct, here is your correct course of action:
1. You do not have to apply to another Lender. Your Lender's appraisal is sufficient.
2. You and your Seller have the option of working out the price: you either bring more down payment into the transaction or your Seller agrees to sell you the home for the lower, appraised value. Or you both split the difference somewhere in the middle. This gets you a closing.
3. If you and Seller cannot agree on the pricing then you cancel the transaction and call it a day.
4. As for reporting the other Lender, there is a mechanism to do that but first you'd actually have to have made the loan application. Reporting someone because he "says" the value is 4-5% higher won't get you anywhere. Mortgage professionals have opinions on property values all the time. It's only an opinion. No one can guarantee a valuation with an appraiser. Even if you switch and the new appraisal matches what the Loan Officer says, you'd still have a difficult time proving malfeasance. Not worth your time or effort. Focus on making your deal work with what you have or move on.

Trevor Curran
NMLS #40140
0 votes Thank Flag Link Thu Sep 27, 2012
This does not sound like an ethics issue. Second appraisals are done often, and besides even if it comes in higher,why do you think that will effect you?
0 votes Thank Flag Link Wed Sep 26, 2012
Hello Honesty,

Appraisals have been coming in VERY CONVERSATIVE lately.

That being said, your main concern has to be that the home appraises for at least what you offered to purchase the home for. If the appraisal does come in higher than your offered price, that does not mean you will have to raise your offer.

As long as the appraisal is at least what you had agreed to pay for the home, you will be ok.

Do not feel pressured to pay more simply based on the appraisal. Remember it is in your best interest not to pay one dime more than the home is worth.

Best of luck to you.

Kawain Payne, Realtor
0 votes Thank Flag Link Mon Sep 24, 2012
I don't know that there is anything being done unethically. If you have been declined from one Lender for some reason or another, your agent may have found another Lender which would require another appraisal fee to have it transfered or a new one. Also if it was a flip , home renovated recently, there are Lenders that require two appraisals. Did the appraisal come in short? If you are having problems qualifying, I specialze in Under 640 Fico Score Loans. I also offer credit repair if there is an issue that needs fixed to raise your scores within 3-4 days. Let me know if it is a fico score issue or appraisal issue, maybe I can help. I can close within 2 weeks with the appraisal.

Sheryl Arndt, Broker – Loan Officer
DRE# 01440252
NMLS# 297251
0 votes Thank Flag Link Mon Sep 24, 2012
There is nothing wrong with requiring a second appraisal.
"guaranteeing" that the second appraisal will come in higher could just be just be a little bravado, to get the business.
I don't see what you would report the lender on, since you said "oh no!" It doesn't seem like they have actually done anything except try to get some business.
0 votes Thank Flag Link Mon Sep 24, 2012
My worst appraisal story is on a probate sale that I had listed. Probate in my area calls for the property to sell for at least 90% of the probate appraised value and they do not over appraise.We listed the home at 95% of probate courts appraised value. The property went pending in the first week and the purchase money mortgage appraisal came in low. The seller, buyer, buyers agent, and buyers lender were all surprised. The appaiser when given comps to modify the appraisal (VA) said that he would not allow anyone to overpay for a property. The buyer came up with extra cash to put down as the seller could not drop the price any lower that early in the marketing of the home.
0 votes Thank Flag Link Sun Sep 23, 2012
I'm not sure if I understand the question. Are you in contract to buy the home? Does it matter if it appraisers higher with a second appraisal? You should hope it does. That would mean instant equity for you. Why is everyone saying "oh no"? If the seller sold you the home at a price you both aggreed upon, even if it appraises higher, he can't cancel the sale without you agreeing to cancel, too. You should be happy, not feeling like you're being cheated. Talk to your agent.
0 votes Thank Flag Link Sat Sep 22, 2012
FYI, individual appraisers have been known to be wrong from time to time, so requesting a second opinion does happen from time to time..
0 votes Thank Flag Link Sat Sep 22, 2012
Do you have an Agent? If so you really need to talk to the Agent. If you don't have an Agent, have you asked for the lender to pay for the second appraisal?

Or is the cost not the issue and you are just trying to use the first appraisal as leverage for why the Seller should come down on your offer price?

Requesting a second appraisal is a common thing. Do you not want to buy the house for the amount you offered? If not, and you have a legal out, then why don't you back out of the deal?

Joe Stone - Realtor ®
Exclusive Homes Realty
0 votes Thank Flag Link Sat Sep 22, 2012
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