Appraisal with different Borrower and different Client

[Webbed Feet]

No, we were not charged. It appears that the developer gave the bank the appraisal. The bank was the developer's lender as well as our lender - on both sides of the transaction. I was an employee of the builder (an insider). They originally told me they couldnt use it "per bank policy" and listed $400 charge on the GFE for an appraisal - though the closing statement omits this charge (i.e. we were never charged). Then it "appeared" in response to my recent document request. Does the nature of the buyer (insider vs arms-length) affect the scope of work and thus require a new appraisal per USPAP?

USPAP has nothing at all to do with this. USPAP is a set of standards for real estate appraisers, not lenders. You're lender using an appraisal for which they were not the writing appraiser's client nor any intended user is on them and has absolutely nothing to do with any standards on appraisers.

On the editorial side, buying a condo and using the same lender as the builder/developer used for your loan is pure insanity. You might as well make a deal with Rumplestiltskin and his brother.

 

[cwm]

If it is a FHA loan the appraisal goes with the property. FHA does not care about the borrowers name or the lender. The appraisal is good on the property for 120 days.

 

[mahonmg35]

USPAP has nothing at all to do with this. USPAP is a set of standards for real estate appraisers, not lenders. You're lender using an appraisal for which they were not the writing appraiser's client nor any intended user is on them and has absolutely nothing to do with any standards on appraisers.

On the editorial side, buying a condo and using the same lender as the builder/developer used for your loan is pure insanity. You might as well make a deal with Rumplestiltskin and his brother.

Agreed - it is pure insanity. I was a much more naive individual back then. The developer and the builder are two separate individuals - though the builder was an investor in the building. The bank knew all of this of course. I was asked to step in by my boss for the buyer who backed out (the builder), who made a down payment on my behalf and arranged the bank financing for me - all I had to do was sign. The builder is my brother-in-law as well and promised to buy back the unit in the event I no longer worked for the company. I suspect you can imagine where all of this is headed. Live an learn.

I agree with you that USPAP has little do with this other than that the banking regs require that appraisals be done consistent with USPAP. Not being an appraiser, I was trying to understand the relevant body of regulation that governs banks behavior in this particular situation.

 

[Bob Ipock]

If you went in and signed documents that falsely indicated where the down payment came from or was coming from........well. Not saying you did...but it sounds like it.


This sounds like a shady deal from the start.

 

[mahonmg35]

If you went in and signed documents that falsely indicated where the down payment came from or was coming from........well. Not saying you did...but it sounds like it.


This sounds like a shady deal from the start.

I did not misrepresent the source of the funds. The loan app was never fully filled out - the loan officer selectively filled out the 1003 - missing property address, expenses, job info etc. None of it is in our handwriting - in fact my wife was living/working out of the country at the time and never saw the initial app until they sent closing docs. They also left out the portion of the app dealing with the down payment. Of course they marked her as using the unit as her primary residence as well.

The check was cut on company check stock and handed to the loan officer. Of course I understand that we signed the loan app, but I didn't pay much attention to it frankly as the loan officer told me not to worry about it... again - stupid, I agree.

They held this loan for their own portfolio - i.e. this transaction would of never met the GSE criteria for purchase.

All of this would never of been a huge deal if we had been able to sell it 10 months after buying it, but as you might imagine there was no equity (even with the 20% down payment) left - we were upside down. And the builder wont buy it back of course per their agreement. So I get to pay legal bills as well to try and sort all of this out.

I have found the commentary on this forum to be helpful - i.e. bank regulatory issue not a USPAP issue. In particular I have reached out to Fed Reserve Board, which supervises my bank to inquire about the Bank's use of this appraisal. I will certainly let everyone know what they say.