Converting Appraisal from Purchase to Refinance?

[LCromerPBG]

I'm a Mortgage Broker and just had a client that was forced to close cash due to a delay with the Wholesale Lender clearing a condition, the client couldn't get a few day extension. We are now doing a cash-out refinance and the Lender advised me to order a Form 442 to update for doing so. That was ordered 1/30 and on 2/2 the Lender conditioned the appraisal on revising P1 (I assume of the original 1004 done 1/4) to show refinance & borrower as owner of record, the Appraiser indicated that could not be done as it would be considered a new assignment, but it could be noted on the 442. Now 9 days after instructing to order the 442 the Lender is now requiring new Form 1004 after borrower was required to pay for a Form 442.

We are now 1 month after the original appraisal and the value shouldn't have changed (actually came in at $554,000 on a $525,000 contract price). Under current appraisal guidelines is there a way to update the 1004 without incurring a full fee for the revision of minimal information?

Thanks for any advice/input!

 

[Pilgrum]

Hey! Why don't you just pay for the appraisal and be done with it. Why try to beat the appraiser out of his(her) living.
It seems that the lenders are always trying to weasle some way to avoid paying for an appraisal.

 

[Pilgrum]

And I would like to know what your commission is. One point? Two?

 

[Smokey Bear]

Negotiate with the appraiser. It has to be a new assignement, per USPAP, but can have the same effective date so you could probably get a discount. Providing you've been nice all along. When negotiating, keep in mind that the appraiser is under NO obligation to do this for you.

 

[Terrel L. Shields]

Once a report is complete, it is a done deal. Period. The appraiser can make a business decision about providing a new report using old information. But keep in mind, if that appraiser was ragged to death over the original report, they may want a substantial sum to update the report because GUESS WHAT... this new lender slash client slash purpose will probably get stipped (additional stipulations) to death despite already having been vetted once. ESPECIALLY if the sales price was lower than the appraised value because logically a cash deal is a cash deal...and cash is king. AND therefore, the sale of the property at the value lower than the appraisal has to be considered by the appraiser and he might want to BRING THAT FINAL VALUE DOWN TO THE SALES PRICE....otherwise he/she has to justify why they are still higher than the sales price.

SO that $50 "update" may be a six or seven hour headache for the appraiser...Pay them what they ask and understand, if it were me, and I had gotten a bunch of grief over the first appraisal you can bet you bottom dollar I would not touch the report with a 10 foot pole. Bellyache at the underwriters and lenders- it's their fault.

 

[LCromerPBG]

@ Pilgrim ... not trying to weasle ... I work on .8 as I discount my fee working from a home office, So on the $175,000 loan (34%ltv) the gross is $1,400 - $775 for 2 days moving storage I agreed to reimburse on HUD-1 for the delay, - $135 for the Form 442 I agreed to also reimburse on the HUD-1. I will ultimately end up reimbursing the new fee as well so feel the Lender should work out a lesser fee since they advised to waste the $135 on the 442. I believe if only a few items need to be revised on a "new" appraisal it should be able to be done at somewhat of a reduced fee and believe that to be reasonable.

 

[LCromerPBG]

@ Smokey Bear ... with this Lender I don;t have access to the AVM they use, so have no way to request a negotiated fee. If not for the HVCC I could have used the appraiser I'd used for 10+ years and he would have automatically charged a lesser for the simple changes necessary ... but we got what the govt gave us

 

[Ca Ar Independent]

Once a report is complete, it is a done deal. Period. The appraiser can make a business decision about providing a new report using old information. But keep in mind, if that appraiser was ragged to death over the original report, they may want a substantial sum to update the report because GUESS WHAT... this new lender slash client slash purpose will probably get stipped (additional stipulations) to death despite already having been vetted once. ESPECIALLY if the sales price was lower than the appraised value because logically a cash deal is a cash deal...and cash is king. AND therefore, the sale of the property at the value lower than the appraisal has to be considered by the appraiser and he might want to BRING THAT FINAL VALUE DOWN TO THE SALES PRICE....otherwise he/she has to justify why they are still higher than the sales price.

SO that $50 "update" may be a six or seven hour headache for the appraiser...Pay them what they ask and understand, if it were me, and I had gotten a bunch of grief over the first appraisal you can bet you bottom dollar I would not touch the report with a 10 foot pole. Bellyache at the underwriters and lenders- it's their fault.

Well said. Summarized such that anyone in the industry can understand the issues which are significantly greater "just changing a few things" on the appraisal as frequently requested by a broker in this situation (often through an AMC) . This is not an uncommon request with the demise of portability and increased incident of loan package denials. I feel it is fair for the appraiser to request a fee consistent with the new scope of work, or decline the NEW assignment for any reason they choose.

 

[LCromerPBG]

@ Terrel ... the Lender already did a desk review on the original appraisal and if they did so on the new one it would result the same as there were no issues as a result. The value being higher than the contract has no effect on the loan as the Lender will use the lower of the sales price she paid ... loan is $175,000 based on the $525,000 sales price, not the $554,000 appraised value ... I wouldn't expect a $50 fee, just not the full $405 on top of wasting $135 on the 442 that was requested, then rejected.

 

[LCromerPBG]

@ ca ar ... the only changes necessary are to change purpose from purchase to refinance, owner of record from former owner of record/seller to new owner of record/borrower ... aside from re-inspection to make sure nothing has happened to property to negatively effect value. The original appraisal already passed the lender's desk review with no issues raised.