Help a Poor LO Before She Kills Her Appraiser

[CathCoy]

All properties that are sold to the secondary market must meet HUD's minimum property standards.

Do you mean that even CONVENTIONAL loans must meet HUD standards? And is it HUD standards (I don't think that HUD has standards) or FHA--which this loan is not--standards?

Nawww...I'm not gonna fire her. That's why I'm here, to get some level-headed input before I talk to her, so that I'm level-headed as well.

Thanks to all for your input, but I'm still confused. Can anyone point to Fannie/Freddie appraisal guidelines that address this issue? Or are there broader guidelines that prevail?

 

[Ross (CO)]

So, one states that the home has only 2 bedrooms and that third room is a den....and you move on to the next step. CathCoy, you have not stated about the design style of the home but I will guess that these three rooms are on the main/ground level and this house is a ranch style. Or, are two of these (bed)rooms perhaps down in a basement level ? I have seen numerous homes which put security bars on garden-level windows of the lower-most level of the house to deter entry from behind-the-bushes. Likewise, these barred windows are about 6+ feet above the floor in that base level and usually so much smaller that egress is a major challenge if ever it was necessary. I would wonder if you were able to ascertain any of these possible aspects becoming issues when you visited the homeowners' property and began the loan application with them. Many loan originators in our city will make it a point to see their applicants' home early in the process, kind of like a courtesy visit, and this allows them to have a heads-up to just what the homwoner might do to easily and logically prepare the home for such an appraiser's visit. Sometimes these safety-related issues are noticed and corrected first, and then the appraiser can be called with little to no consequence resulting during their visit. I guess its all part of what some call a good first impression...and it greatly minimizes any surprise factor which comes back as an uncomfortable phone call. Should the appraiser have gotten into any detailed discussion with the h/o about these windows at the time ?......certainly not. I can assure you that the most likely time when I find errant things existing in a home is at those very properties where the homeowner is following me around within arm's reach the entire time, and asking questions and making statements about every 20 seconds. You could have and should have been called with that info first. There is a lot of appropriate tact and interaction with homeowners which comes simply from experience on the job. Hopefully this appraiser, your borrower and you will rebound from the encounter and everything proceeds fine.

 

[CathCoy]

Thanks for the input but I know of NO loan originator who goes out to the property to do a "preview" for the appraiser. I'm not an appraiser, nor do I wish to be. I expect an appraiser to alert me first to any issues so that I can deal with them.

 

[Ross (CO)]

You might ask some of your colleagues about that....and I bet you will learn of some who do. And, the "preview", as you called it, is NOT done for the appraiser ! The pre-view is done for you, and for your applicant, and takes you a quantum step forward in offering more customer service than other loan originators in your market area. Another consideration perhaps, a mere drive-by of the applicant's address will let you know in advance what the appraiser will also be seeing and the two of you will have more knowledge in-common about the home. Less chance for surprises, more chance for smooth-sailing. If that all sounds like hogwash....give my suggestions a toss.

 

[jim farrelly]

cathy,

sounds like this is a safety issue that u dont want to report or deal with. sounds like your appraiser was thorough and looking out for the safety and welfare of your client. what u describe is potentially life threatening. if im the borowwer, i fire u. same with the appraiser, i lose u as a client. i like to sleep at night.

 

[CathCoy]

This is interesting. From the appraiser's perspective, I, the loan originator, should visit the property ahead of the appraiser and see if I can ascertain--although I have no credentials or skills as an appraiser--what problems or issues the appraiser might encounter.

Instead, the appraiser tells the homeowner that she's going to report them for violating the city's building code. But she doesn't call me; I hear it from the homeowner. Instead, over the weekend, I'm trying to figure out if there actually IS a violation (either underwriting guideline or building code) so that I can assuage my borrower's concerns about both the time and expense that correcting such a violation consumes. In the meantime, time's awasting because I have a loan lock expiring (although necessarily that is of no concern to the appraiser).

I see. Well, thanks for the feedback.

 

[xmrdfghap]

Cath, just my .02 worth, but the appraiser works for YOU and any problems should have been reported to you.....not the homeowner. It is your job to deal with the homeowner and the UW.......my feeling is that the appraiser stepped out of line on this issue.

Second issue is the safety of the home and it's occupants. Not having egress prevents the space being used (legally) as a bedroom, regardless of what it's current use is. If, as is indicated, it is used as other than a bedroom today, fine.....call it a second den.....but if you list it as a bedroom it has to meet minimum fire code requirements....and as someone pointed out, these are not grandfathered in. So, if you insist that it is a 3br home, the appraiser HAS to make the recomendation (to you--not the homeowner), but if you call it a 2br home with two dens, there is no problem.

Third issue is reporting it to the local authorities...........If I see an unsafe environment or an envornment being used unsafely, it is my responsibility, as a citizen, to report that situation. I would do the same if I see a person driving drunk, beating a child, or robbing a bank. Under the circumstances you describe, the room not showing any evidence of being used as a bedroom, I don't think there is any law or code being violated. Had there been a crib, dressers, bed, etc then it would be the appraisers responsibility to notify the appropriate authorities.

 

[CathCoy]

Thanks, Goodpasture. I see your points completely. At this point, I'll call a few underwriters for guidance and gently ask the appraiser why she flapped her jaws while at the residence. :wink:

 

[Anonymous]

CathCoy,

When I was a loan officer, I was required by my company to see every property that was going to be appraised. In fact, we had to take pics with a Polaroid and include them in the file. The pics had to be taken prior to the appraisal being ordered. As you know, your borrowers are not always honest when they describe their property. Going out and walking through the property will give you a better idea of its condition and how it compares to other homes in the neighborhood.

Nobody expects you to be an appraiser. In this particular case, you probably wouldn't have paid any attention to the security bars. However, for future loans, you might consider walking through your client's properties. If the home is in poor condition or you notice something else that would prevent the loan from closing, you will know about it in advance. This will keep you from wasting time.

We also had our own subscription to our local MLS. We were able to pull our own comps and see if a customer's value expectations were realistic. This also kept us from wasting time on loan apps that didn't have a chance.

 

[BarbaraNJ]

CathCoy:

If you can stand one more opinion..........

There have been several posts referring to building codes, safety, CABO, FHA, etc.

Sometimes, "a little knowledge is a dangerous thing". One other universal building code says you cannot have direct ingress/egress from a bedroom to a garage. You can go (directly) from your living rm to an attached garage, from your kitchen, even from a bathroom!!!! But Never a bedroom.

So, when faced with calling a room a bedroom or a "den", the appraiser should keep in mind what is "legal and permissable". For instance, if the appraiser has the knowledge that the subject is in a single family zone and was NEVER given permission (variance) to be a two family, the appraiser CANNOT call/appraise the home as a two family, no matter what it looks like.

Back to YOUR problem. I believe the appraiser, despite the tone of the comment, was attempting to squeeze all the value possible out of the home for you and for the applicant. After all, isn't a 3 bedroom home "worth" more than a 2 bedroom home??? And what would happen to the appraiser's license if she appraised the home as a 3BR (without lock or bar changesl) and the lender took it over and could only get a certificate of re occupancy for a two bedroom home and had to sell it at a loss, or make "expensive" modifications to make it a 3BR when the appraisal report made no adjustments for same???

Truthfully, no comment should have been made to the applicant. The appraiser should have informed you that the home was being appraised as a "2BR W/den" unless the modifications were made and a reinspection were done, OR, as a 3BR "contingent upon repairs" with an adjustment made for modification cost.

I am sure that if it were presented in that manner, and if you were informed that the only way to meet value expectations was to call this home a 3BR, YOU would have been on the phone to the applicant to get her to make the changes.

In retrospect, I think that the greatest amount of upset was caused by the (direct) comment from the appraiser to the applicant, NOT the issue of functionality or safety. As you can tell by most of the prior posts, the general consensus is that this one room cannot be "counted" as a bedroom.


Just my $0.02 along with everyone elses'



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