Can I Switch Mortgage Lenders if an Appraisal is already done?
In a word, YES. You can. In an explanation, like so many things in the mortgage world, it's a gray area. Some lenders won't accept them at all. Others will require a borrower use a certain loan product if they want to use another lender's appraisal.
For what sounds like a very simple process (using an appraisal that's already done), there can be a lot that goes into it, and what is needed varies from lender to lender.
When dealing with lending staff that knows what they're talking about, this can be a very easy and fast process. The problem is, many of the customer service staff or loan officers at lenders don't always know what they're talking about because this isn't a common occurrence for everyone. To meet our guidelines, for example, we need the transferred appraisal in a very specific format (.xml). Not every staff member at a lender knows what that is, so sometimes when asking for the .xml file, we get a .pdf file or a .txt file. Though they're trying to be helpful, this causes delays and several requests for the same information.
We also need an appraisal transfer or appraisal release from the previous lender, since technically, even though borrowers pay for appraisals, the lender is the client and owner of the report. Can a lender refuse to release an appraisal? They can try, and often do try, mostly out of spite for losing the loan, but with a threat to notify the CFPB and take other action against them, usually the appraisal is released right away. Most lenders have a templated appraisal transfer form that needs to be completed and this is usually a quick process.
The wildcard in an appraisal transfer is the appraiser. An appraiser needs to list the new lender as a client (which is why we obtain the appraisal release, to show them it's OK to do so), and also address any clerical issues or updates that the new lender wants to see. Most times, appraisers are happy to help, but some don't want to be bothered, and this can cause major headaches, especially since MLO's have to tread very, very carefully when dealing with appraisers - usually this part of the process is left up to support staff.
Sometimes people feel trapped after paying a lender an appraisal fee, and mistakenly think they'll need to pay for another appraisal if they switch lenders, so they'll put up with poor service, but in reality, there's no need for that. If a borrower wants to switch lenders, they have plenty of options and ways to do so, and an appraisal payment isn't going to prevent anyone from going where they want to get their loan closed. It's not an immediate process, but with a few days notice and cooperation between lenders, an appraisal transfer is a pretty quick & painless process.
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