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bright702 · Joined: 13 Oct 2009 Posts: 2 1.67 Dollars($)

Let me start by saying I am a complete dummy when it comes to mortgages, etc. My wife and I have a situation right now that is interesting and I’d appreciate any thoughts.

We are a few weeks away from having our new home finished. We got our construction loan through a local bank. We had to get an appraisal done on the house plans and lot before we got the construction loan sometime back in May. The bank said the appraisal was fine and we were approved for the loan. They also said they would be able to use that appraisal for the regular mortgage. To keep things easy I’ll say the appraisal was $350,000. We can borrow up to 90% of the appraisal on the construction loan ($315,000).

Now that the time is nearing to close on the construction loan and refinance to a regular mortgage, they are saying the appraisal we have is not good because the underwriter does not like the comparable sales used in the appraisal. The appraiser used a couple of homes in the neighboring town since not a lot of homes in our town are sold that compare to the one we built. There are very comparable homes in the neighborhood but most everyone is there to stay. The bank keeps saying the rules changed sometime in July and now a comparable sale in a neighboring town will not work when before July they were fine.

It seems to me that if they said the appraisal was fine in May, we should still be under those same rules that were in place before the July changes? Waiting to tell us at the last minute isn’t very good business in my opinion. We probably would have done a few things different if we would have known.

Is there anything we can say to hold them accountable to the appraisal? I don’t mind putting 80% on first mortgage and 10% on second through an in house loan if the underwriter will agree to 80%. What are the chances of this?

Thanks for your time!

adonis · Posted: Tue Oct 13, 2009 7:27 pm Post subject:

Hi bright,

As far as I can understand your situation, if the rules have changed, then the underwriter would follow the current rules while refinancing the property. As far as your plan about the first and second mortgage is concerned, you will have to contact your lender and discuss about it. It would be the lender's discretion whether or not he would agree to it.

apexoffice · Posted: Tue Oct 13, 2009 8:24 pm Post subject:

I have not heard of any rule changes in that regard, unless it is strictly a lender requirement. There is no hard and fast rule in any official appraisal guidelines that tells us how to select our comparable sales to develop an opinion of value. Some appraisals use comparable properties in different states all over the U.S., much less different towns. I have often used data from other cities with similar markets, particularly for support of conclusions that cannot be found with current data in the neighborhood.

This sounds like the lender is making excuses. If they said it was too old, that would be easier to believe, especially if the market is believed to be declining. Having said that, there is no rule that says they have to honor the previous appraisal. They can make and change the rules as they see fit when it is their own money. It may not seem fair but like my father used to say "Fair is a place with cotton candy and rides".

Are they telling you that you need a new appraisal or just denying the loan? It may just be simple as a new appraisal and go on.

bright702 · Joined: 13 Oct 2009 Posts: 2 1.67 Dollars($)

They are saying I need a new appraisal because the underwriter is not excepting the current one due to the comparable sales used. The appraiser used sales in a town approximately 15 miles away.

The bank I’m using may be just a lot more strict with this stuff than others?

Posted: Thu Oct 15, 2009 1:49 am Post subject:

May be they can get more strict. But I think you should go for another appraisal and check out the value of the property.

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