How can they have it both ways?

[Tim Hicks (Texas)]

I received an appraisal order from First Greensboro Home Equity in Austin, TX. He called first and was fishing for a value. I explained I don't operate that way. He started discussing a home in an addition that happened to be in the same addition as a file on my desk. He said they were needing $320,000. I looked in the file and calmly explained that the highest sale ever in that addition was $320,000 and it had a pool/spa. He calmly stated that he didn't know if his has a pool (it doesn't),but he could make it work at $300,000. I explained that I am not guaranteeing any value, because I have not seen the home. I then told him I would not take his assignment without "pay at the door". He said he would get back to me. Instead, they faxed an order to me.

The order has two consecutive paragraphs:

The fee of this transaction is tp be picked-up at the door. It is the responsibliity of the clients to pay for the appraisal. First Greensboro Home Equity, Inc. and/or its assigns accept no responsiblity for payment of any cost incurred for this transaction.


next paragraph:

We not wish to have our clients pay for an appraisal that will not result in the satisfactory completion of the Home Equity loan for which they have applied. If for any reason, you believe that the value stated by the owner is incorrect, or when you arrive to complete the appraisal, the property is not as described as above, please do not proceed.

How is that for bold.

1. My crystal ball is much more cloudy than their crystal clear ball.

2. I don't know what a property is worth until I have fully inspected it and have performed all the appraisal process, so I don't give discounts for value below their estimates.

3. I doubt that I will be anywhere near his projected value, but how should I know until I do the appraisal. I might find out it is bigger than advertised or something esle. If I stop, I would be performing an appraisal based upon a pre-determined value or cause him not to get the loan because of inferior appraisal performance.

4. I am not about to give the owner the option of refundable fees just because he needs his home to be worth something it is not. How much do you think I will get out of him if I tell him his home is only worth $250k, 260k, 270k, but I deserve some kind of fee.

5. I will take their money because my assignment has nothing to do with any hopes and dreams of a borrower or the hopes and dreams of some wet behind the ears loan officer. They actually have experience with dunderhead appraisers who accept these terms?

6. Not a regular client, no history with them. To hell with them and their double talking standards.

7. They will get what they paid for. An honest, unbiased appraisal supported by true market data.

8. I can count on no more orders from them, which suits me fine.

 

[Terrel L. Shields]

Forward the fax to your state Mortgage lending regulators

 

[Ross (CO)]

Terrel, ..... That would be a good suggestion for Tim, but his state may just be like so many of the others, as they reply with....."We are not really so sure that there is lender coercion going on out there. Not until we really know can we make any broad statements of warning to the loan origination community". This is very much in line with the comments from some.....saying that they need real proof that Saddam has weapons of mass destruction before we go after him for having weapons of mass destruction. Makes no sense at all. Oooops, should that be said at the Watercooler ?

 

[BenLuby]

Time for the dumb rookie comment. I thought our job was just to find fair market value. They want a guaranteed value, before anyone sees the property?
Isn't that kind of like me asking how fat my mom is?
Until you actually see her, you are just making a WAG. Take their fee, do the appraisal, and let the end result be a solid appraisal. Our job is to perform an unbiased appraisal without coercion, so, give them one. If it makes their number, good. If it doesn't, so much for that. If the neighborhood had absolutely no way of making value that would be one thing, but now they are actually trying to get you to do charity work. I thought that was what the salvation army did.

 

[Steve Owen]

Tim, let me share an interesting assignment I had a few months ago. The loan officer used similar language to yours and I explained my policy vis a vis USPAP in about the same way you did.

Loan officer, "Well, we had another appraiser who didn't think this would appraise, but the homeowner is adamant..."

Me, "Then order the appraisal and I'll give you my honest opinion of market value."

They were looking for $90k and when I pulled up in front of the house I thought there was no way it could be more than $65k.

What a surprise. It was achallenging assignment. The interior had been completely remodeled. Also new heat and air. The rear of the home had an extention not visible from the front - about an extra 300 sq. ft. Etc., etc.

To make a long story short, I didn't get the $90k, but wasn't that far off of it either. The homeowner is happy, the LO is happy, and I have the satisfaction of knowing I did the best job I could.

This may not change that LO's MO. He will probably still try to get appraiser's to precommit to value. On the other hand, the next time he has an order for my neck of the woods who do you think he'll call? Probably not the appraiser who caved and told him it wouldn't appraise based on exterior front view. (Are any of you 2055 advocates starting to get the picture?)

 

[Tim Hicks (Texas)]

Mr. Humphrey,

I have included this letter with your appraisal to address some very important issues. There is one conflicting issue with your appraisal order.

“We not wish to have our clients pay for an appraisal that will not result in the satisfactory completion of the Home Equity loan for which they have applied. If for any reason, you believe that the value stated by the owner is incorrect, or when you arrive to complete the appraisal, the property is not as described as above, please do not proceed.”

This is honorable, but a highly suspect request. In this case, the owner says 3,200 SF. The tax records say 2,874 SF. So, your reasoning says that I should decline the assignment, because a 2,874 SF home will not reach your desired value. However, what if the home owner is correct. I would have performed a disservice to the home owner and the value may be achieved. In this case, they are both wrong, it is 3,037 SF and the value can not be achieved. However, my time is worth compensation and I really can not state that the value can not be achieved until I have completed the appraisal process and I deserve my fee regardless of your company policies which violate appraisal ethics and standards. I have included a copy of the statement of limiting conditions and certification that must be included with every appraisal report per USPAP (Uniform Standards of Professional Appraisal Practice). But, I believe you are fully aware of these standards and expect me to ignore them. I have over 11 years experience in the appraisal business and I have learned that you can not predict what value you will arrive at unless you actually perform the appraisal. In this case, $300,000 was a stretch, but what if the home had been 3,400 SF or had just been remodeled. $300,000 would have been easily obtained then. This scenario has been proven many times before. The $265,000 value I achieved is an unbiased, fact based value from the subject’s market area. I am sorry if you can not do the loan, but I can not accept any assignment with any contingency regarding value. Your inability to guarantee payment from your company leaves me with no alternative, but to perform the assignment and charge the borrower the appropriate fee. If you don’t want them to pay the fee for an appraisal, then it should be your responsibility to reimburse the borrower, not mine. I suspect the borrower knows the truth, or he would not have made 10+ calls to my office regarding the appraisal since I left. Your office led him to believe it could be done. Since I can not discuss the appraisal with him, because you are my client, please inform him appropriately. I am contemplating sending your appraisal request to the Texas Savings and Loan Department so they can see the “suspect” appraisal requirements. I suggest you contact them regarding the wording on your appraisal request.
If you should have questions on the above mentioned appraisal, please feel free to call.

Sincerely,


Whadyathink?

 

[Mike Garrett RAA]

I think that is way to many words to say "Hell No!"

 

[Pamela Crowley (Florida)]

Hey Tim,

I take it you enjoyed writing that. I've done similar letters or emails and enjoyed every second of it. It's just something I need to do once in a while.

Probably won't change the way they do business, but probably will scare them for a moment about the Texas Savings and Loan Department.

Now if we could just get the state and federal agencies to enforce the already existing laws - or simply take the appraisal ordering process out of the hands of lenders and/or loan officers like this......

Oooops, I was dreaming again.