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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Thu Sep 27, 2012
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
Sona Gallatin, Agent, Santa Clarita, CA
Wed Sep 26, 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
Kawain Payne, Agent, Seal Beach, CA
Mon Sep 24, 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
carlos parra…, Other Pro, Monrovia, CA
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
James Gordon…, Agent, Hamilton, OH
Sun Sep 23, 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
Brian Byhower, Agent, Hermosa Beach, CA
Sat Sep 22, 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
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