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Help a Poor LO Before She Kills Her Appraiser
- Thread starter CathCoy
- Start date
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A
Anonymous
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Luckily, we had several offices in the state. If it wasn't located within about 2 1/2 hours driving distance from our office, we referred the loan to one of our other offices.
Nope. My work request said, as always, "Refinance for $X. Please call me if you have any questions or comments." Although some LOs do, I never put any pressure on any appraiser to "meet value."
But you're right, the greatest upset comes from being blind-sided by the issue through the homeowner, not the health and safety issue, if any, itself.
Since there seems to be no consensus about whether the bars should stay or go, I'll ask a few underwriters about this issue.
Thanks to all.
Pamela Crowley (Florida)
Elite Member
- Joined
- Jan 13, 2002
- Professional Status
- Retired Appraiser
- State
- Florida
CathCoy,
Glad you appear to have calmed down a bit. My additional take on this after reading all the previous posts is:
The appraiser probably should not have said anything to the homeowner.
The appraiser should include this existing condition that does constitute a safety hazard in the appraisal report. The underwriter will handle it from there. To ask the appraiser to leave it out would be extremely unethical on your part and would put the appraiser in liability danger.
IF this room would be considered a bedroom by most people and meets the criteria necessary for it to be a bedroom - IT IS A BEDROOM - it doesn't matter AT ALL what the current use is. IF it would typically NOT be considered a bedroom, then it would lower the total bedroom count - which could possibly constitute a functional obsolescense. You can't have it both ways.
Please do not take this next discussion as a personal attack because it is not. You, as the loan officer, can't win them all. What you do have to deal with are the facts as reported by the appraiser, which is what the appraiser is supposed to do. Loan officers are not the real client of the appraiser - the lender/investor purchasing the loan is. ie: whoever is loaning the real money on this property. The appraiser is in this process to supply facts regarding the subject property, comparable sales that are the <u>"newest, nearest, most similar qualified and verifiable"</u> that provide support for the appraiser's opinion of the subject market value, for the lender/investor to decide, through an underwriter, whether or not they want to loan their money with this property as collateral. (quite often with our federal tax dollars backing up that loan which affects all of us)
Sometimes, any person can go a bit overboard in attempting to do their job. I hope you do call the appraiser and calmly discuss this with her. You both will probably learn from this experience and be better at your respective jobs for it. I know that loan officers are always under pressure to get the loan closed as fast as possible with no problems. Please do not pressure the appraiser to not disclose something that the appraiser must - it's her butt, not yours. I don't know of any appraisers that try to mess up a loan. Most of us actually agonize over something that we must disclose that we know will possibly kill the deal. It's not what we want to do - it's what we must do. In this extremely litigious society, we must cover our butts. Most of us have become very thick skinned because we do get most of the blame whether it's our fault or not. The facts regarding the subject property are just that - facts.
I wish you well and hope this situation works out beneficial for all. 8)
Glad you appear to have calmed down a bit. My additional take on this after reading all the previous posts is:
The appraiser probably should not have said anything to the homeowner.
The appraiser should include this existing condition that does constitute a safety hazard in the appraisal report. The underwriter will handle it from there. To ask the appraiser to leave it out would be extremely unethical on your part and would put the appraiser in liability danger.
IF this room would be considered a bedroom by most people and meets the criteria necessary for it to be a bedroom - IT IS A BEDROOM - it doesn't matter AT ALL what the current use is. IF it would typically NOT be considered a bedroom, then it would lower the total bedroom count - which could possibly constitute a functional obsolescense. You can't have it both ways.
Please do not take this next discussion as a personal attack because it is not. You, as the loan officer, can't win them all. What you do have to deal with are the facts as reported by the appraiser, which is what the appraiser is supposed to do. Loan officers are not the real client of the appraiser - the lender/investor purchasing the loan is. ie: whoever is loaning the real money on this property. The appraiser is in this process to supply facts regarding the subject property, comparable sales that are the <u>"newest, nearest, most similar qualified and verifiable"</u> that provide support for the appraiser's opinion of the subject market value, for the lender/investor to decide, through an underwriter, whether or not they want to loan their money with this property as collateral. (quite often with our federal tax dollars backing up that loan which affects all of us)
Sometimes, any person can go a bit overboard in attempting to do their job. I hope you do call the appraiser and calmly discuss this with her. You both will probably learn from this experience and be better at your respective jobs for it. I know that loan officers are always under pressure to get the loan closed as fast as possible with no problems. Please do not pressure the appraiser to not disclose something that the appraiser must - it's her butt, not yours. I don't know of any appraisers that try to mess up a loan. Most of us actually agonize over something that we must disclose that we know will possibly kill the deal. It's not what we want to do - it's what we must do. In this extremely litigious society, we must cover our butts. Most of us have become very thick skinned because we do get most of the blame whether it's our fault or not. The facts regarding the subject property are just that - facts.
I wish you well and hope this situation works out beneficial for all. 8)
H. Robert Murray III
Freshman Member
- Joined
- Apr 29, 2002
Hello,
HYPO------A week after closing there is a fire, someone happens to be sleeping in this questionable bedroom, they die because they could not escape.
-Loan officer and mortgage company are busy spending their commision. -
-Appraiser probably has a huge liability problem.
ps.
last time I reported permenantly attached, non-operable security bars in my appraisal report without a repair requirement; the underwriter required them to be removed or to be made operable/able to be opened in case of fire. And at the time of inspection I informed the property owner to expect that the mortgage underwriter would probably require a correction of this possible safety hazard.
Now, I make it a repair requirement, as it is a "SAFETY ISSUE".
HYPO------A week after closing there is a fire, someone happens to be sleeping in this questionable bedroom, they die because they could not escape.
-Loan officer and mortgage company are busy spending their commision. -
-Appraiser probably has a huge liability problem.
ps.
last time I reported permenantly attached, non-operable security bars in my appraisal report without a repair requirement; the underwriter required them to be removed or to be made operable/able to be opened in case of fire. And at the time of inspection I informed the property owner to expect that the mortgage underwriter would probably require a correction of this possible safety hazard.
Now, I make it a repair requirement, as it is a "SAFETY ISSUE".
David S. Roberson
Senior Member
- Joined
- Jan 16, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Tennessee
My vote goes for Goodpasture's response.
larryhaskell
Senior Member
- Joined
- Apr 23, 2002
- Professional Status
- Certified General Appraiser
- State
- Nevada
Cathy:
If your not careful, you will start sounding like a typical loan officer rather than one who I believe is trying to gather necessary information to make a decision. Because this is not an FHA loan, this condition is not automatically made subject to. However, for all appraisals regardless of who the client may be, the appraiser does have a responsibility to identify any potential health or safety hazard. At that point, the appraisal is made "subject to" if for no other reason to make the underwriter aware of the situation. The underwriter always has the option to ignore the subject to condition but rest assured, they don't want the monkey on their back if something happens down the road. In a worst case scenerio, lets assume the appraiser didn't mention the condition and 6 months down the road the house catches on fire and someone in one of the bedrooms with no safety release dies. Now, using your best judgement, considering the litigious mentality in this country, what is the probability that a lawsuit could be forthcoming naming you and your company as well as the appraiser and maybe others? It is fair for you to ask the appraiser to assist in checking with the locale fire department for the current requirements. You might also ask your legal department (if you have one) for their opinion and possibly even requiring that the borrower sign a document indication they were warned of the condition. Regarding the action of the appraiser relative to their discussion with the borrower. As others have indicated, this should never have happened and certainly they should never contact a gov't agency and report a violation. The main reason is because were are not licensed or trained to know what the fire code is. Your appraiser went beyond the scope of their license. Finally, you might refer your appraiser to this forum as an alternative source of information.
If your not careful, you will start sounding like a typical loan officer rather than one who I believe is trying to gather necessary information to make a decision. Because this is not an FHA loan, this condition is not automatically made subject to. However, for all appraisals regardless of who the client may be, the appraiser does have a responsibility to identify any potential health or safety hazard. At that point, the appraisal is made "subject to" if for no other reason to make the underwriter aware of the situation. The underwriter always has the option to ignore the subject to condition but rest assured, they don't want the monkey on their back if something happens down the road. In a worst case scenerio, lets assume the appraiser didn't mention the condition and 6 months down the road the house catches on fire and someone in one of the bedrooms with no safety release dies. Now, using your best judgement, considering the litigious mentality in this country, what is the probability that a lawsuit could be forthcoming naming you and your company as well as the appraiser and maybe others? It is fair for you to ask the appraiser to assist in checking with the locale fire department for the current requirements. You might also ask your legal department (if you have one) for their opinion and possibly even requiring that the borrower sign a document indication they were warned of the condition. Regarding the action of the appraiser relative to their discussion with the borrower. As others have indicated, this should never have happened and certainly they should never contact a gov't agency and report a violation. The main reason is because were are not licensed or trained to know what the fire code is. Your appraiser went beyond the scope of their license. Finally, you might refer your appraiser to this forum as an alternative source of information.
Terrel L. Shields
Elite Member
- Joined
- May 2, 2002
- Professional Status
- Certified General Appraiser
- State
- Arkansas
My 2 cents. Appraiser has no responsibility to call the city concerning code violations, but does have requirement to report same on report as identified.
If I found someone making meth I would not report them....unless children were in the home...then wouldn't I be morally responsible if a meth lab blew up and killed a child? I would report the meth lab by describing items noted. Paint thinner, acetone, lighter fluid, bunsen burners, sudafed, etc. but not otherwise call it a meth lab...let them draw their own inferences.
The appraiser may feel in the same boat. Calling the room a non-bedroom is okay, but does the buyer know it is not a bedroom? And what if they use it for same? And a child is trapped inside in a fire? And dies?
We have a development that is fond of engineering houses as "1 bedroom" to avoid high expense septic systems, because the systems are designed based upon the number of bedrooms, not bathrooms. There is a foyer, library, study, sewing room, etc., but only 1 "bedroom". Several suits have resulted when realtors resold the properties as multibedroom houses only to have the septic system plug up (frequently happens) and the developer tell the owners they are using the house rooms illegally as bedrooms.
The appraiser is trying to avoid that delimma, but needs to keep their chops shut about turning anyone in. Put it in your lap. its your call.
ter
If I found someone making meth I would not report them....unless children were in the home...then wouldn't I be morally responsible if a meth lab blew up and killed a child? I would report the meth lab by describing items noted. Paint thinner, acetone, lighter fluid, bunsen burners, sudafed, etc. but not otherwise call it a meth lab...let them draw their own inferences.
The appraiser may feel in the same boat. Calling the room a non-bedroom is okay, but does the buyer know it is not a bedroom? And what if they use it for same? And a child is trapped inside in a fire? And dies?
We have a development that is fond of engineering houses as "1 bedroom" to avoid high expense septic systems, because the systems are designed based upon the number of bedrooms, not bathrooms. There is a foyer, library, study, sewing room, etc., but only 1 "bedroom". Several suits have resulted when realtors resold the properties as multibedroom houses only to have the septic system plug up (frequently happens) and the developer tell the owners they are using the house rooms illegally as bedrooms.
The appraiser is trying to avoid that delimma, but needs to keep their chops shut about turning anyone in. Put it in your lap. its your call.
ter
George Hatch
Elite Member
- Joined
- Jan 15, 2002
- Professional Status
- Certified General Appraiser
- State
- California
Cathy,
On this forum, we don't blindly support an appraiser's actions unless we agree with them. We know there are a lot of nuts out there doing great damage to us and to the public and we don't hesitate to condemn the guilty. But....
In my opinion, the appraiser's actions were entirely correct. Had they done anything different, including restricting those comments to you, the appraiser would be failing their responsibility both as an appraisers and more importantly, as a human being. People die in house fires because of lack of egress in the U.S. almost every week. Who wants to have something like that on their conscience? There comes a time in everyone's life when their responsibilities as a human being outweight their need to earn a fee or keep a client.
The cost to cure on an item like this is going to be less than $500. You can structure your loan properly to affect this cure and everyone's needs will be served, including your own. If it's a violation of a state fire code (in my state it is) it's something that would have to be corrected anyway. There's no way the mortgage insurance would cover a loss if you asked the appraiser to omit this, and professional appraisers shouldn't be omitting items like this anyway. Even if the borrower was using it as a den, the most likely use for the room by participants in the market would be as a bedroom. C'mon, this is a no-brainer.
It may be that the appraiser could have been a little more tactful with your borrower (I don't know, I wasn't there). It is just as likely that his conduct was professional, but the borrower got wound up at being told what to do. Regardless, if the appraiser's warning served to scare them into fixing a potentially dangerous situation then everyone, especially you, should be commending him for his diligence. You wouldn't ask him to keep his mouth shut if he came across a gas leak or an environmental health hazard, would you?
Business is business, but this goes beyond that.
George Hatch
On this forum, we don't blindly support an appraiser's actions unless we agree with them. We know there are a lot of nuts out there doing great damage to us and to the public and we don't hesitate to condemn the guilty. But....
In my opinion, the appraiser's actions were entirely correct. Had they done anything different, including restricting those comments to you, the appraiser would be failing their responsibility both as an appraisers and more importantly, as a human being. People die in house fires because of lack of egress in the U.S. almost every week. Who wants to have something like that on their conscience? There comes a time in everyone's life when their responsibilities as a human being outweight their need to earn a fee or keep a client.
The cost to cure on an item like this is going to be less than $500. You can structure your loan properly to affect this cure and everyone's needs will be served, including your own. If it's a violation of a state fire code (in my state it is) it's something that would have to be corrected anyway. There's no way the mortgage insurance would cover a loss if you asked the appraiser to omit this, and professional appraisers shouldn't be omitting items like this anyway. Even if the borrower was using it as a den, the most likely use for the room by participants in the market would be as a bedroom. C'mon, this is a no-brainer.
It may be that the appraiser could have been a little more tactful with your borrower (I don't know, I wasn't there). It is just as likely that his conduct was professional, but the borrower got wound up at being told what to do. Regardless, if the appraiser's warning served to scare them into fixing a potentially dangerous situation then everyone, especially you, should be commending him for his diligence. You wouldn't ask him to keep his mouth shut if he came across a gas leak or an environmental health hazard, would you?
Business is business, but this goes beyond that.
George Hatch
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