In today's market it is tough enough to find a buyer for a property, let alone a qualified buyer. If that is not enough, the banks, even though they "qualify" a potential borrower through a certain program, try to find a way to wiggle out of the deal. Not only do they try to wiggle out, it seems to always happen in the 25th hour.
Certain banks still offer stated / verified loans to qualified buyers. Not only will they offer it, they will issue a commitment stating same; however, the underwriters, who fear for their jobs and do not want to be blamed for not doing their job properly, seem to look for a reason to kill the deal. Or, if it's not the underwriter, it is the appraisal reviewer. They both fear the same thing.
When the stated program was introduced, it was to be a means for the self-employed to obtain financing. As in most cases, the self-employed have business expenses and adjust income accordingly for obvious reasons. So, in most cases, as long as you can show you are self-employed for x amount of years, etc., have an acceptable credit score and have the assets necessary, you qualify.
I just had a matter where the borrower was the ideal candidate for the stated / verified program. All conditions issued were met and were submitted including the appraisal. Banks now, aside from requiring a licensed appraiser and comps within 6 months, also have an internal appraiser review said appraisal. Of course this appraiser is not from around the area of the subject premises and gives his opinion of the appraisal to the underwriter. The underwriter than takes the information and uses in his decision.
In this case, the premises appraised for 320k. The reviewing appraiser knocks the appraisal and states it's worth 225k (a 95k difference). If you could only see his comments. They were ridiculous. I understand that everyone should be more careful in the loan process and should evaluate carefully, but to chop an appraisal by 95k, approximately 30% of the value, because an out-of-state and probably out-of-mind appraiser says the value is different? So, as a result the underwriter counter-offered the loan with a new value of 225k.
Thankfully the appraiser, who at this point was confused and furious, submitted a rebuttal to the reviewers findings. Not only did he rebut, he shredded the reviewer by referencing and negating all points mentioned resulting in a reinstatement of the initial value. It seems the appraiser, now-a-days, plays a very important role in this process, as he/she needs to be an expert in the area and needs to be able to back up his/her report.
Needless to say the deal closed. Thankfully we had an appraiser that cares and takes his work very seriously. This has sparked a concern with this new law that is going in front of law makers. They are considering a law that does not allow realtors or brokers to do business with whom ever they'd like and that there will be some type of pool for appraisers or a third-party who issues jobs to appraisers. It's a shame because all these people who built businesses over the years could have nothing to show for it. Plus, what about theier families? Plus, like in all professions, some appraisers are excellent and specialize in certain areas and some do not know their back from their elbow.
In any event, I can go on; however, it is probably a whole other posting. I just wanted to vent about this issue. Hopefully all the fear stops and let's allow the qualified to be qualified and do business as usual. We need to keep moving forward.