Lender or appraiser disservice?

[Tom Weber]

Problem: studio condo in large project; last studio sale was 5 yrs ago; appraiser used most recent, smallest, 1 bdrm sales in project along with 2 studio sales closest to subject, which was 3-4 miles away. This problem was made known by the mortgage broker at the start. I have had problems like this many times in last 25 years. There is always a lender who will loan on problem properties. Mortgage broker submitted appraisal to his "best" lender who rejected the appraisal. He now wants a refund for "worthless" appraisal and is threatening to file complaint with State Board. In my opinion, he should re-submit to several lenders; someone will loan on it. I think he is providing a disservice to his client. There is nothing wrong with my appraisal. Question: what would you do?; let him contact State? (potential hassle later); send partial refund?; send full refund? Thanks to all who responded!!!

 

[Rudy Canoza]

I'd ask him if he needs the phone number to the state appraisal board complaint hot-line...

/But that's just me...

Look it. He used the appraisal. It's not useless by virtue of that use regardless of the investor outcome. And, in all likely hood, the investor probably sees this property as a white elephant and killed the deal based upon that.

/White elephants are usually DOA...

 

[Lee Lansford]

First, I would remove that client from my list of "approved clients".

Second, if it were my own situation and not yours, I would certainly not offer a refulnd.

 

[George Hatch]

If for some reason the state came calling on this deal later on, how would you go about explaining the return of the fee based on the failure of the deal to fund?

 

[xm39hnu]

1.) Keep the fee. You've earned it, and he used the report.
2.) Fax him the Appraisal Board's information, and send him a complaint form. If he uses them, sue the baxtard for professional slander, using the complaint as evidence. (Use small claims court, and keep the amount sought under the Court's small-claims limit. You'll cost him $5K easily.)

You haven't done anything wrong. The state may inquire, but your report should stifle further action.

 

[Doug Meyer]

Tom, welcome to the outpost!! I just have 1 question, are you sure it is the appraisal that is being turned down or is it a problem with the borrower that the broker is not telling you about? Brokers have a sneaky way of blaming the appraiser when the borrower has a poor credit score, late payments or whatever and when the bank doesn't want the loan, BAM, the appraiser gets the blame. KEEP THE MONEY YOU EARNED IT.

 

[Michael Tipton]

Prior to entering the appraisal field I worked as a mortgage originator, broker and underwriter for a local bank holding company's mortgage subsidiary. It was my practice not to originate a mortgage loan request if I did not have a wholesale lender (or bank/lender willing to portfolio the loan) for the subject dwelling.
As stated in your post, the client was aware the subject property might be difficult to place with a lender. You performed the appraisal as requested by the client. His failure to place the property is a function of mortgage lending, not residential appraisal.
A refund is not warranted. I would place this client on my CAD (Cash at Door) list for any "future" appraisal requests.

 

[Lone Star]

Refund? Not in this lifetime.
The appraisal was used as part of a lending decision. Not your fault the decision was no.

To be USPAP compliant, fees can not be contingent on the loan closing or not.

If the MB doesn't want to be out your fee, then he needs to get his !@# in gear and find another lender to place the loan with. To avoid this problem in the future, he needs to learn to not troll the bottom of the tank looking for "food". Contrary to what many MBs believe, everyone is not entitled to borrow someone else's money to buy something that not no one else wants.

If MBs had levels of licensure like appraisers do, then this loan might very well be a complex assignment, and outside the scope of his qualifications.

 

[Hal Mann]

This appraisal was not "worthless"; the bank used it in its underwriting process. You were paid to give your opinion of the value of this property and you did so. Of course the broker is not entitled to any kind of refund. Furthermore, the fact that your best comps came from another project than the subject unit is hardly a fatal flaw in the appraisal!

 

[J Grant]

HE IS just threatening to complain to the state. for that alone I would fire him as a client. that is a nasty person. Even if he does go to the state, you would be fine. I would not want to do business with someone like that. Tell him to go ...himself? well in a nice way just tell him go ahead, do whatever he wants to do, you did the work and no way is he getting a refund. if he had asked you nicely and was a great client, that might be another matter. it is not our business what happens to the loan after we do the appraisal. when a home inspector inspects a home if the people don't buy it they don't ask him for a refund. appraisers get treated like crap because we allow people like this mortgage broker to push us around. very sad anyway good luck. ps every time I got rid of a horrid client i was glad somehow a new client comes along down the road.