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NEW question regarding request for Update

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Kevin Darland

Thread Starter
Freshman Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Kentucky
I hope I didnt miss where this may have been covered before, but I am stumped! Last week turned in an appraisal for mortgage company and yesterday received a message from a bank stating that they are working with the borrowers to complete their 2nd mortgage while my client completes a 1st mortgage?? The new loan officer wants a "Recertification of Value" with their name on it so they can complete the 2nd. OK--this is a new situation for me and I am looking for some guidance before calling him back and trying to give the appearance that I know what I'm talking about.

I appreciate any help in how to procede with this one....
 

Judy Whitehead (Florida)

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Florida
This is simply another lender wanting the appraisal and wanting to also become your client. You must get in writing from the first lender permission to assign the appraisal report to another lender. Then you can do so. If they won't do that, then I would ask for a fee to do another appraisal (probably would discount it myself) and do another inspection and start all over again. It is not your fault that the borrower went to another lender and of course you have a fiduciary responsibility to the first lender, as they were your client.

I try to soft pedal the regulations, like, gee, golly whiz, I sure do want to help you out, and really, really hate telling you this, as it might make you angry, but.....I am bound by regulations that prohibit my doing what you ask without certain criteria being followed. Then tell them what needs to be done.

Oh, P.S. I would also (probably) charge a fee for the reassignment. :roll:
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
First: what they are asking for is not a "recert", they are asking for a retype and as Judy said, you cannot do that without written permission from your original client. The original client "owns" that original report, not you. Because of the short amount of time between the two requests, there could be a problem with the confidentiality sections of the Ethics Rule to do a new assignment for a new client on the same property. Unless there have been some changes to the market or the subject in such a short time, you would be disclosing confidential information from the first report to the second client, even if you go back to the property on a differant date. So tread very carefully here. There are times when the first lender does know that the second lender will be making another loan on the subject property and will write a release for a retype. But if the borrower is shopping and #1 lender doesn't know about #2 lender, there could be problems. So make it very clear to #2 lender that you will need written permission from Lender #1 to do a retype. If Lender #1 won't give permission or Lender #2 does not want Lender #1 contacted, unless there have been some changes, they need to contact another appraiser for a new appraisal. If there are some changes to something so that the confidential information from the original report isn't being disclosed to somebody else, then you can do a new assignment for the new client and it is your business decision on what the fee will be. By the way, by dealing with a second client, you now have liability with the second client also!

A "recert" does not change the lender's name on a report, it only states to the original lender that yes the home or remodeling was completed per plans and specs and that yes on the original effective date you did say the value was $$$.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Kevin, .... The clear danger here is the very, very short time span between your first commited working relationship and the persuasion upon you by the second. A really simple answer to provide is...No, sorry, I can not help you with that request. Don't even mention the name of the 1st client you worked for ! Let the new client and the homeowner make those contacts with the first, and send to you that brief yet complete letter of release with both company names mentioned, the person's name granting the release, their signature and the date. You are under no obligation to be the mediator or requester of that release. If your first fee has also been un-paid at that time.....everything is off the table for the new client ! I really dislike the tactic, and the use of that word "Re-Cert". It is such a short-cut taken by those who think they have found a way to get your services cheaply. Of course, if you charge 3 and a half skins for a ReCert, they are likely going to ask for a new full appraisal. That's one good way for us all to bust this nasty habit of ReCert'ing anything ! Like others have stated, the Re-Type is the name change to new client with the additional comments (try placing in the Reconciliation field ) about the existence of the first report, the date it was submitted, the authorized release, and that your letter resides in work file. Future holders of that loan portfolio do want to know how many times "this one" was bounced around before it landed on them ! As for Re-Cert....get very comfortable with clearly stating that there is no such thing. Maybe by the year 2015, such a fact will catch on, but then , maybe not.
 
A

Anonymous

Guest
I wonder if your client knows that a second mortgage is being considered. Some lenders ( the smart ones) won't consider financing a property when a second mortgage is required to complete the transaction.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan


Kevin;

My policy is that if another lender wants to use a report, it is their responsibility to contact the original lender and obtain permission in writing for me to update the report.

Assuming the original lender says yes to using the report, remember that you will have just doubled your liability by putting out the second report for the second mortgage. You have the liability of the first lender and the first mortgage and now you will have a second lender and a second mortgage. This means that the client has little equity position. We all know that as the equity position goes down, the risk of default goes up. This one could be trouble.

If it were me and it appeared that both lenders were going to loan on the property, I would decline to do an update for a modest fee for the second lender. I would require the second lender to order an appraisal from me, giving specific permission in writing to use the first appraisal as the basis for the report, if the second lender can get the first lender to release it. And I would give very serious consideration to a full fee on the second report since you will be exposing yourself to additional liability.
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
Kevin,

Your scenario is done all the time in order to avoid PMI on the first mortgage for the benefit of the borrowers. The first mortgage lender probably works regularly with the bank on such matters and you will have no problem getting the release for the second mortgage lender.

EG: The borrowers only have 10% down on the home, they get a lower rate first mortgage at 80% from Lender A, then a higher rate second for 10% from Lender B. Lender A needs Lender B to close so they will be most helpful to you. :lol: :lol:

Ben
 
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