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Posted on: 27th Oct, 2013 03:36 pm
Property values in our neighborhood have started to rise dramatically in the past six months, so we decided to refinance and consolidate a good loan with a bad one. We called our real estate agent and asked for comps before we refinanced to ensure that we would qualify.

We paid upfront fees with a commercial lender that I found online. I know you will respond that this was a bad idea, but the company is well-known and reputable, and the closing costs were the lowest I saw, so I thought that I was doing a good job of shopping.

To say that the appraisal came back low is an understatement. It would represent a decline in the value of our home from 2001 through 2013. . . which doesn't correspond with real estate trends in this part of California.

The appraiser drove over an hour from a city located 50 miles away from where we live. (I've map-quested this, so I know.) The comparables she found are from the worst parts of the city, a mile away from our house. One is a house that recently burned down and is boarded up.

Her credentials say that she has been doing appraisals for eight years and that she is within 40 miles of our house. . . but that's not true. Her company's website says they specialize in cities around Oakley, CA. (Brentwood, Antioch, etc.) I hypothesized that the mortgage company might have confused Oakley and Oakland. . . is that even possible?

We also don't understand the depreciation value that was used on our appraisal. It's ten times higher than the depreciation value that was used in 2001 when we purchased our house. (I still have that appraisal.)

We've provided a bunch of information to the lender, including graphs indicating the real estate trends, median home prices, a list of improvements (which I know don't guarantee an increase in price) about a dozen comps that are actually in our neighborhood and substantially higher than what we need to refinance, but I haven't heard back yet from the lender. I don't think they are under any obligation to pursue this further, and seem happy to pocket the difference in fees.

Could these low cost loan brokers be out to scam people for upfront fees without advocating on behalf of their clients? Are interest rates so low that the margin on selling these loans is no longer profitable?

It doesn't seem likely, I agree. But we don't understand the appraisal and don't feel that we're being treated fairly. Do I have ANY recourse?
Hi Fletcher,

Well, it will be difficult to say that it will be a scam. I will suggest you to take a second opinion before you come to a decision in this regard.
Posted on: 27th Oct, 2013 08:04 pm
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