Bethietune, Home Seller in 90031

We are selling our home. I just learned that the buyer and the loan officer are roommates and old friends. We got a really bad appraisal ($120k under

Asked by Bethietune, 90031 Tue Jan 5, 2010

agreed sale price) and they refused to get a second appraisal despite numerous mistakes in the comps. We think the loan officer may have influenced the appraisal process. Should the relationship have been disclosed? What CA agency should I notify?

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12
Bethietune, Home Seller, 90031
Fri Jan 8, 2010
We canceled on the buyer and have 2 new offers and will hopefully go into escrow soon. With all due respect Mack Mccoy think these two lose out. Buyer was unsophisticated and i think her roomie (the lender) thought she could hustle us. Fortunately we are not desperate to sell and it's a gorgeous home priced at a good value for the general area. The lender is emblematic, in my opinion, of an unsavory minority (I'm sure all present company excluded) of the industry, The same ones who nearly brought down our banking system in the last couple years. Next I will tell you about the mortgage broker several years ago who tried to shanghai us into an ARM loan. Consumer beware.
1 vote
Bethietune, Home Seller, 90031
Thu Jan 7, 2010
Thanks all for the input.
I forgot one piece of information which is that it was an FHA loan, and I believe the loan officer and the appraiser can communicate when it's an FHA loan. Anyone know if that's true?
We got multiple offers on the home within days of putting it on the market, so I believe it was priced at market value.
The appraiser was not from the area...friends from the area who know about real estate think we listed our home way too low...
I still suspect that something improper went on when they refused to get a second appraisal despite overwhleming evidence of problems with the comps. Outright errors.
We canceled the sale.
1 vote
j, , San Acacia, NM
Fri Jan 8, 2010
Bethietune,

It is always a good idea to be as cautious as possible. That being said, there is a good probability that once you accept another offer and it goes into escrow, it could again appraise for well below asking price. This is by no means an uncommon thing in today's market.



Mark DeWitt
Bank of America Home Loans
San Diego, Ca.
858-212-7054
Mark.DeWitt@bankofamerica.com
0 votes
Mack McCoy, Agent, Seattle, WA
Thu Jan 7, 2010
I know you think that, but if your buyer walks away, then there is no deal. So it's not just that these guys can conspire to hustle you, there's the real risk that you send them away, the buyer gets no house and the loan officer gets no commission.

Better to put aside your suspicions and have your agent - or your own loan rep - advise you on a more, dare I say, direct approach to solving this problem.
0 votes
Voices Member, , Benton County, OR
Thu Jan 7, 2010
Bethietune

I think you are most likely right for whatever that is worth.....The coincidence of their relationship and a low appraisal would raise questions in any Consumers mind IMO especially if you feel there were outright errors ect. The idea that a loan officer or buyer may try to game the situation does not seem like such a outlandish suspicion. http://www.mortgagefraud.org/

Doing some research and finding a reputable Appraiser to have one done may provide you some comfort plus also give you a realistic view of the current Market value of your home....

Dunes
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0 votes
j, , San Acacia, NM
Thu Jan 7, 2010
Bethietune,

Even if it is FHA no contact is allowed. Maybe you should consider ordering your own independent appraisal for a piece of mind, and see what value it comes in at.

Mark DeWitt
Bank of America Home Loans
San Diego, Ca.
858-212-7054
Mark.DeWitt@bankofamerica.com
0 votes
Bethietune, Home Seller, 90031
Thu Jan 7, 2010
and to answer Mr Mccoy.
Yes. I think they were trying to get a lower price on the home.
0 votes
Mack McCoy, Agent, Seattle, WA
Tue Jan 5, 2010
Relationship?

C'mon, really? Do you think the loan officer would risk the buyer losing the place by "influencing" the process?
0 votes
Anna M Brocco, Agent, Williston Park, NY
Tue Jan 5, 2010
Was your house priced on target for today's market--what does your Realtor suggest--and have you looked at recently closed similar properties in the immediate area--anyway, I don't believe the loan officer influenced the appraiser--he probably didn't even know who it was -- a third party(management company) sets up appraisals--Was the appraiser from out of area I wonder--what does your contract state if you back away because of the appraisal,etc.--you may also want to speak to an attorney specializing in real estate to best protect you legally in this situation. As far as the relationship is concerned--keep in mind that relationships can quickly be developed with anyone with similar interests, backgrounds, etc., --so as to should it have been disclosed not sure. Again your Realtor and or attorney will best advise you.

Anna
0 votes
Grace Morioka, Agent, San Jose, CA
Tue Jan 5, 2010
Hello Bethie and thanks for your post.

As Robin noted below, as of July 1, 2009, the institution of a new law called the Home Valuation Code of Conduct (or HVCC) requires a third party called an Appraisal Management Company (or AMC or AMS) to be the only contact that may assign an appraisal job to an appraiser. The intent of the laws (which affect Fannie and Freddie loans) is to remove anyone with an "interest" in the loan from being able to influence the price of the home. These new procedures have, in many cases, resulted in some very low and questionnable appraisals due to the unfamiliarity of the appraiser to the general area and there are many stories even here on Trulia regarding problems in selling or financing homes as a result of the new HVCC rules. However, the very thing you are worried about (that the mortgage broker and buyer somehow manipulated the appraisal) can no longer happen under the new laws.

Regarding your second question about relationships, a loan officer and a buyer will, in many cases, have preexisting relationships. When you are trying to buy something as big as a home, it is often more comfortable to work with a friend than a stranger--this holds true both for Realtors as well as loan officers and mortgage brokers, and there is no reason that the relationship must be disclosed. Even without the HVCC, such relationships were not considered noteworthy of disclosure. So, unfortunately, there is no agency that will handle this complaint at this time.

Finally, as to your options, speak with your Realtor, but you do have at least two options that you might wish to explore: 1) Hire your own appraiser and get your own appraisal. If the buyer chooses not to get a second appraisal, your own appraisal might refute the price or provide additional information that the lender might reconsider; and/or 2) choose not to sell your home to this buyer. Unless your contract specifically requires you, as the seller, to reset your price to the appraised price, there is no imperative that forces you to take a financial "bath" on the home if you feel that such a loss would be unwarranted or unaffordable at this time. Again, speak with your Realtor about the pros and cons of any decision for your home.

Good luck!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty

Web Reference: http://gracemorioka.areaprorealty.com
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Jan 5, 2010
What does your listing agent state? Appraiser have to be truthful in matter due professional code of ethics, lender won't do 2nd appraisals, you don't like the document have your own done for personal piece of mind.

You can cancel the sales offer based on terms of contract review with listing agent. how to proceed. No lender will approve a mortgage on an over valued home.

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
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Lynn911

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0 votes
Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Tue Jan 5, 2010
I have done loans for both friends and family members, and there would be no reason for me to influence an appraiser because of that relationship, and there is no need for disclosing this friendship. In this business, this is one of the ways we develop our business. Aside from that, your government instituted a regulation back in July whereby a loan officer is not allowed to have contact with an appraiser, and all appraisals are ordered through management companies. We have all had problems with appraisers lately, and it is more likely because the appraiser came in from out of your area, and is not familiar with certain differences between your neighborhood and another nearby. However, they are the appraiser who will take the lower fee that the management company is offering. The loan officer would have no reason to do something like this, because it would most likely make the deal die, and a loan officer only gets paid when a loan closes.
0 votes
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