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Sorry, Your House is Worth TOO Much!

By
Mortgage and Lending with Zenith Mortgage Advisors NMLS# 5016

I've been a lender for 12 years.  I've helped hundreds if not thousands of clients get financing on their homes. I've seen lots of odd and goofy things before.  This one takes the cake.

I have a great client.  A repeat client, many times in fact.  They want to refi, and the numbers make sense.  There is value for them, it's responsible and appropriate.  All systems go...

The loan is approved, they have good stable jobs, great credit, and enough equity to make the loan possible.  They have PMI now, and because the market is what the market is, they'll still have PMI moving forward.  We just need the appraisal done. New HVCC rules, appraisal is a blind draw from the lenders themselves, not my "chosen" company.  I suggest on the application a value for the house.  When the appraisal comes back, it $25,000 higher than I expect!  YAHOO!  Maybe the client can get rid of PMI afterall.

The underwriter comes back and says the appraiser needs to modify and clarify the report.  Ok, done.  Then, the underwriter says the value is too high on the appraisal (There were 8 comps to support value).  The loan is denied.  WHAT??? No "counter offer" of value?  No option to have another HVCC, randomized, chosen by the lender and paid by me appraisal??? Nope.  The new HVCC policy doesnt allow for a second appraisal to support or contest value I am told.  Just S.O.L.

I'm left to explain to a great client that her home is worth too much in the eyes of a non-biased, professionally trained, randomly chosen appraiser.  And the lender won't accept the file.

WOW!  Thank GOD HVCC is here to protect the consumers from unscrupulous mortgage professionals who exert undue influence on the process.

Brian Anderson
Peachtree SEO - Peachtree City, GA
SEO and Social Media Marketin

Bob - I agree completely ....situations like this make me want to unleash a stream of not too nice comments on the UW / wholesale lender.   How arrogant that a "trained" underwriter can disagree with the professionally trained, randomly choosen appraisal expert.  

Feb 17, 2010 04:15 PM
Bob Prevelige
Zenith Mortgage Advisors - Hopkinton, MA
CMPS

It's a bit of a niche loan, but we're still working on it...what a joy!

Feb 18, 2010 06:36 AM
Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

Bob, Hopefully, people will vote new folks into the Congress in the fall:)   They really need to go!

Feb 18, 2010 08:18 AM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

I agree with the comments but the underwriter is looking at possibly more complete info... just think all the information that is being filterer through a few companies that assign the appraisals for the lender... it is being mined andin fact i understand some lenders are merely asking for summaries...point is in pure data they may have more information on your area then you or the appraiser...it is a goofy system and one that barely works...

That said for various reasons my partner and i are backing away from properties over a certain price threshold. In our area of roughly 800 sales last year60% were between 185 and 300K. About 4% were over 500K. So being pragmatic I saw forget ego and go where the business is... (also since 417 is still a jumbo here there is another reason!

Feb 19, 2010 12:26 AM
Bob Prevelige
Zenith Mortgage Advisors - Hopkinton, MA
CMPS

Perrin,

Thanks for the insight and comment. As it stands, we aren't really debating the value, but if there's an issue, there should be some provision for resolving it rather than automatically declining the loan.

My beef is with HVCC policy, or at least my investors interpretation of it, and how it makes look in our clients eyes.

Feb 19, 2010 01:57 AM
Ellie Shorb
Compass Real Estate - Chevy Chase, MD
Realtor DC, MD & VA Luxury Home Expert

Bob: Wow! Thank you for sharing this scenario! I have some very well-qualified buyers who are being hurt in this climate because they actually own (free and clear) other homes. What has happened is the bank is looking at those other homes not as an asset but as a potential liability- what if they don't pay their taxes on these 2 homes that the buyers own free and clear? UGGGGGGHHH...

Mar 10, 2010 11:24 AM
Bob Prevelige
Zenith Mortgage Advisors - Hopkinton, MA
CMPS

Ellie,

Like you , I have seen that scenario play out as well.  It seems like lenders have lost all sense of perspective and risk.  I hope that rational lending guidelines take hold in the very near future.  I think we're almost there...

Mar 11, 2010 01:12 AM