Lender Pressure?

[Colleague]

I recently received an Appraisal Request from a mortgage broker to do a cash out refi appraisal for a home that was listed in MLS for $320,000. The "estimated value" on the appraisal request was $320,000.

The lender wanted me to do a comp check which I said I couldn't do. However, I advised the client that there was no way I could appraise it for $320,000 or higher since the market had proven it was not worth this much because no one was willing to pay $320,000 for the subject.

In a seperate email she said "the lender can move forward on these types of loans...but the thing that concerns me is if you have a "tainted view" going into this...I will contact another appraiser. What I'm looking for is a value as close to the $320,000 as possible to help my customer accomplish their financial goals".

I filed a complaint with the North Carolina Banking Commission citing lender pressure. After they completed their investigation, they concluded that the lender was not guilty of lender pressure.

According to N.C. General Statue 53-243.11(11), it is a prohibited activity to influence or attempt to influence through coercion, extortionn, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan.

So what I want to know is do you think this lender is guilty of demonstrating lender pressure?

 

[Kevin Mc]

I understand that......

Mike, there is nothing wrong with cash out refi. However, more often than not, the mortgage brokers (as in this case) are pushing to appraisers to appraise homes for more than they are worth. Everthing is fine unless the home goes into forclosure and then we start talking about what is happening in Colorado and Florida right now.

and I will take that into consideration AFTER I INSPECT THE SUBJECT. You seem to think you are capable of determining this prior to inspection and while there may be some validity to your case, your behaviour and attitude prior to actually accepting the assignment leaves some doubt. You are dealing with some serious appraisal folks here, don't push it, you were wrong.

 

[Mike Boyd]

Yes. What most people NOT directly in the business of appraisal on an everyday basis do not understand is that this type of pressure is insidious.

First of all, it is our livlihood. If we don't do appraisals on a regular basis we can't pay out bills, make our house and car payments, buy groceries, etc.

This type of pressure is the worst kind. It implies that if the appraiser plays their game they will have an endless source of business. They might not NEED $320,000 to get the loan but they have planted in your head that $320,000 figure and you would search for comps that would support that value. Your adjustments could be made to support a valuation that makes their deal fly.

I think you should send what you have to Patricia.

 

[Colleague]

Who is Patricia? To no surprise, this lender hates me now and is no longer a client. My wife said, based on the Banking Commission's position, the only thing to be accomplished by turning in lenders who pressure appraisers in North Carolina is loosing business. So you are damned if you do and damned if you don't. It is easy to see how appraisers in Colorado got caught up in inflating appraised values.

 

[Mr Rex]

I think he means Pam.

 

[Mike Boyd]

Patricia Crowley. She is a member of our forum who has selflessly taken it upon herself to assist other members who suspect mortgage fraud which includes lender pressure. She has a direct line to the FBI, I think.

 

[TC]

Mike, it's Pam, the Pamster, or as she is known to skippies, The Pamanator!

TC

 

[TC]

Ok, I voted yes, but how do you prove it? Anyone can send an email, unless you have truly documented evidence of pressure, signature and all, I don't think anyone is going to nail a lender. And even if they take off the Borrower's Estimate of Value from the form, that won't stop a wink and a nod from the homeowner while at the property. The only way to stop lender pressure is for every appraiser to do an honest job. Easier said than done.

TC

 

[PL1957]

The lender wanted me to do a comp check which I said I couldn't do. However, I advised the client that there was no way I could appraise it for $320,000 or higher since the market had proven it was not worth this much because no one was willing to pay $320,000 for the subject.

When you made that statement, you essentially indicated you could not have an unbiased opinion regarding the property. Numerous factors could have entered into the fact that the property hasn't sold at the $320,000 level. Off the top of my head, here are a couple:

1. The seller can't close for 6 months because he's building another house;
2. The seller is insisting on being present for all showings and he's NEVER available;
3. The seller is insisting on an "all cash" sale because he doesn't believe people should take out loans;
4. The seller has received several offers but has refused them because of buyer ethnicity;

While NONE of these may be true, by telling the lender the house isn't worth it because nobody's bought it yet you have shown a predisposition to a value before completing your assignment. Until you are involved in the assignment, you don't have a basis for your opinion.

 

[Kevin Mc]

Sucks dealing with this.....

and most appraisers are dealing with it daily. I have alienated more MBs than I can count due to the same scenario...I'm waiting for a return call as I sit here typing to deal with the same thing(she will ask for a comp check, I will tell her no,she will go elsewhere etc....good riddance). Typically when I get such orders w/ values etc.... I ignore them go about my business and do the appraisal .If the sun,moon and stars are in alignment great, if they aren't, not my problem. The MB either has to go to plan B(like offering the borrower less cash out) or he/she can pay for a skippy to do what they need to complete the fraudulent transaction. I'm sick of losing sleep over this crap and no one other than the folks on this board seem to care(until the foreclosures skyrocket anyway)....do the work, get your fee and let the other folks involved work a little harder trying to fit the square pegs in round holes.