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I was preapproved for a loan with Sun Trust. They sent an independent appraiser out to the property. (I paid the tab). The appraisal came in at 20,000 more than the purchase price. Yet, Sun Trust claimed that the comps were too old because no homes have sold in the neighborhood in the past year. The appraiser then provided them with more recent comps, but in different areas of the city. The bank was still not happy. the appraiser held a conference call with the underwriter and then provided him with a six-page narrative explaining the unique nature of the property. After three weeks of this back and forth, the bank rejected the loan. Do I have any recourse? I am struggling to understand why I should pay for a positive appraisal that the bank rejects for no apparent reason?

gmakerley · Posted: Fri Aug 22, 2008 9:42 am Post subject:

unfortunately, cptcu, the bank had apparent reasons for the decline; as you noted in your beginning comments.

first of all, comparables provided need to be recent, to allow the lender to get a good feel for the current marketplace. if the newer comps are in a different area, that can certainly raise another issue. sometimes that can be worked around, but apparently not here.

apparently, the 6 page narrative wasn't received too well - no way to know why, other than that the bank didn't accept the reasoning.

bottom line -yes, the appraisal is part of the origination package. presumably, they collected your money up front. if not, they'll have to bill you, but you asked them to arrange a mortgage and that's part of the cost of trying to do that work.

i'm afraid i don't have any better answer for you.

apexoffice · Posted: Mon Aug 25, 2008 6:45 pm Post subject:

This is often a very tough spot for appraisers. If there are no recent comparable sales in the neighborhood, the appraiser has to start making some decisions on the best way to arrive at an opinion of value, whether it is the use of older sales, those that are not comparable, or those outside of the subjects market area. It sounds as though the appraiser was willing to go the extra mile in explaining his rationale but the bank was not willing to accept it. It is becoming more common since many banks are facing so many foreclosures that they want the security of a solid valuation of the collateral. Obviously the bank felt the risk was outside of their comfort zone. Perhaps you will have better luck with another lender.

gmakerley · Posted: Tue Aug 26, 2008 10:16 am Post subject:

it's good to have an appraiser's input here. i agree, that the appraiser in this instance took into account all that was available; and, as Benjamin said, went that extra mile.

a lot of lenders have become far more conservative, so the acceptance of an appraiser's work might be there with one and not another. again, as Benjamin noted, perhaps another lender would look at the report more favorably.

Guest

This discourse above ignores the presumed hard negotiation between a willing buyer and willing seller - likely with a starting point based on front loaded comparables information to the seller defining recent market sales -so the market price has in fact established. If the bank rejected the appraisal which comes in close to comparables that recently sold - something stinks in the process.

Banks at the present time are not just being "conservative" - banks are choking the life blood out of families and America's economy while the banking industry is bailed out by American tax paymers. Its a deck stacked in the bank's favor.

gmakerley · Posted: Tue Jun 23, 2009 4:33 pm Post subject:

i don't see much stacked in anyone's favor, frankly.

first of all, investors are afraid to buy loans for fear that they'll go bad. that makes banks afraid to make loans that investors won't buy. that makes underwriters afraid to approve loans for fear that they'll be called on the carpet on the loans that get bought, but which the banks have to buy back shortly thereafter. that makes processors confused about what will and what won't work, and down the ladder is the poor originator who isn't kept up to speed on the latest changes in underwriting, only to find out that the loan with 28/36 ratios and 700 credit scores won't work because of something that looks too funny to the underwriter to take a chance on.

a little bit of liberty taken there at the end, but we originators are taking a beating these days.

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bank rejects their own appraisal???