Any experience with complaints for pressure and non payment by Mortgage Brokers?

By
Real Estate Appraiser with Real Estate Valuation Group

What tactics have you used to collect fees from Mortgage Brokers that refuse to pay?  Can you take them to small claims court?  Have you utilized with success any collection agencies?  If so how much did it cost you and how long did it take to get paid? 

Also have any of you filed a complaint against a mortgage broker for pressuring you to report part or all of your appraisal in a manner that was incorrect and would only benefit the borrower?  If so where did you file the complaint and how long did the process take?

Comments (5)

Randall Schrader
Competitive Insurance of Dundee - Dundee, FL

I'm a mortgage broker in Florida and may be able to help you.  Small claims, down here would cost more than it's worth.  Why don't you get a security check from the borrower?  Or put it on someones credit card.  I hate to see appraisers get burned, because when the trust is gone the good mortgage brokers have to pay the price.

You'll lose business by demanding payment up front, but you'll get paid for the ones you do.  In a Re-Fi out of my area, I look for appraisers that will be paid at closing, just like the title company, me, surveyor, FHA inspector and everyone else. 

Also, maybe work with brokers that know what they are doing.  I use the same appraisers over and over and we do well together.  I also refrain from ordering the appraisal until almost everything else has been cleared and then trust my appraiser to give me a fair estimate or a phone call before the inspection if something seems screwy.

 

Jul 08, 2008 05:05 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Hi Adam,

I think what you need to look at is the company you are dealing with. What I have seen is that appraisers that don't know the company are asking for payment up front which we are happy to do. If the broker isn't willing to commit to the loan, why should you? I often have the appraiser collect at the door for refinances, just due to the fact the value can blow the deal. You also need to be able to take credit cards, it is really a business booster.

Fred

Jul 10, 2008 05:07 AM
Sarah Eubanks
Hill Valley Financial Services - Oregon City, OR
Preferred Oregon Loan Consultant & Notary Public

Hi Adam,

Good question.  To be really honest, I always pay my appraiser(s) at the time of closing.  I think that asking for payment up front will not be beneficial for you.  I incur costs as a mortgage broker that I may not be repaid for as well.  Just be picky about who you work with.  Eventually the broker/lender will be out of appraisers to use.  You will still have the same number of clients.  :)  Take care!

Jul 10, 2008 01:32 PM
Adam H. Wise
Real Estate Valuation Group - Portland, OR

Sarah thanks for your response.  I agree it is very hard to collect up front fee's.  I always do if it is an out of state client or a new client that I have not met.  However, this gentlemen was someone I had done a couple of appraisals, with no problem in the past.  I have never before had anyone flat out tell me that they are not going to pay.  From what I have been told it is very hard to put in a small claim against an individual at a mortgage company.  As far as collection agency, I might end up getting half of my fee if I am lucky as the fee for collection is pretty high.  It is very frustrating to me because, I base my appraisals on actual numbers and statistics.  I use these statistics to develop my unbiased opinion of the market factors and use market extracted adjustments and reasearch to arrive at my final value.  I spend a ton of time doing research, keeping my area statistics fresh and then all I do is report what the numbers are indicating.  I think I do a darn good job at it too.  In this instance, I found that in this specific market segment in Beaverton that their is a slight decrease in average sales price and a slight over supply of existing homes available.  Essentially it is a buyers market.  No duh right.  Well the gentlemen that I did this appraisal for doesn't see it this way.  He says no appraiser, underwriter or Realtor he has spoken to has ever even seen or heard of an appraiser marking the declining values box.  That statement alone is enough to tell the story of what is really going on.   I also want to make you aware that prior to even inspecting the property I sent him a warning of potential issues with values in that area.  Faxed a list of zip codes put out by AIG and MGIC(major insurance companies that write mortgage insurance) that indicate areas of decline in value.  They were fully aware, then when I turned in the report that indicated an approximate 1.4% decrease in value over the prior 6 months he flipped.  Mind you he took at leasta week to get back to me with his concerns.  Apparently he did not do his research and the loan program he had these folks on was one that if the declining market box was checked the Max LTV was to be reduced by 5%.  He then told me that instead of $9,000 they would have to come to closing with nearly $19,000.  He then proceeded to try and have me run a set of statistical data that could potentially benefit his client and his loan.  I refused, but I did run them without reporting it to him.  The result was worse for him it showed a decline of 1.9% overthe prior 6 months.  After that conversation I did not hear from him for a month to a month and a half. I called the title company noted on the order and asked if the deal had closed and where my check was.  They reported that they did not receive an appraisal from my company or any invoice and in fact the file had closed and another appraiser was paid. That is what ticked me off the most.   So, he went out and had another appraiser do his dirty work.  This is a huge problem in our industry and it makes it hard for decent honest appraiser to make a living.  Back to the story, then when the fee was over 30 days past due I contacted the gentlemen.  He would not talk to me and said he would respond in an email.  Well two weeks went by and then he faxes me some letter stating he does not intend on paying me as my analysis was wrong.  That he spoke with his underwriter, Realtors in the area and another appraiser.  They all supposedly supported his conclusion that the statistics were flawed and that in fact he was right.  No market in Portland or surrounding areas are experiencing a decrease in value. 

What I did, was file a complaint with the division of finance and corporate securities.  I really didn't want to do this, but he left me no choice.  I was surprised how fast they acted on this issue. However, they stated they could not do anything to this originator as the company he was working for surrendered their license days before I made the complaint.  However, what they would do is let his new employer know of his past unethical behavior.  So last night I received a threatening phone call from an associate of this guy saying he was going to sue me and this and that.  He also informed me that the owner of the the company that had surrendered its license was a big time real estate attorney in Portland and he was going to make it his priority to sue my a**.  I really don't see where they have a case, however with the market the way it is I don't have the extra cash to be throwing at lawyers.  He then went on to call me a total a-hole and that he is going to tell every loan officer he knows about this.  That the company,I won't name has 150 loan officers and they will all know and I am now on the black list with this company.  Oh I forgot to mention, I gave the loan originator fair warning that I was going to report him if he did not take care of the situation. 

This situation has caused major stress in my life and I feel as if it was not worth it.  I hold on to the fact that I am right.  What did I do wrong? Provided an unbiased appraisal report based on extensive market research.  I also feel like if more people do what I did and take action, there will be much less pressureon appraisers to hit numbers or provide a report based on a bias.  As appraisers I also feel we have a certain responsibility to take such action.  I have been in contact withmy state board to alert them that most likely there is going to be a retaliatory complaint against me.  I got my file organized perfectly and I almost invite the complaint.  I am very confident that I did a great appraisal with full support of my conclusions. 

I would love to hear any intelligent comment on this issue and anyones thoughts on it. 

Jul 11, 2008 05:40 AM
Sarah Eubanks
Hill Valley Financial Services - Oregon City, OR
Preferred Oregon Loan Consultant & Notary Public

Wow...I am so sorry to hear this spiraled this way, Adam.  I have had appraisals not appraise out the way my clients (and myself -- sometimes their Realtors) expected them to.  I just say we need to suck it up and still pay as the work was done.  I am sorry, truly, and hope that you can hold on to the fact that you did not handle anything wrong.  In the meantime, just make sure to document all of the conversations you had with this guy.  You will be in my prayers. 

Jul 30, 2008 04:44 PM