Question abt FHA Appraisal

[ko081]

My husband and I were trying to refinance our home (we're not in danger, just seemed silly not to try to take advantage of lower interest rates). I was going thru my mortgage company (GMAC) in order to do this- they said that we would have to do a FHA loan for the refinance and would need an appraisal. The appraisal happened, and came in under what was needed. On the one hand I'm glad that our home has not dropped in value (we moved in 2 years ago), however the appraiser came to the conclusion that it is worth the same amount (171,500)- we needed it to come in at a little over 173,000. When I received a copy of the appraisal, everything looked very kosher, except for the fact that all of the sales used were over two months old- I'm in Iowa, and our market has stayed pretty steady sales wise (at least in my little town). I was also concerned, because our next door neighbors house had sold a few days before the appraisal (same sq footage, built one year after our house, same number of rooms above ground etc) and was not used.

I was completely willing to give the appraiser the benefit of the doubt that because the sale was only a few days old, that was why it was left off (even though there was a sales sign in the yard, and the appraiser is also a real estate agent The mortgage company said my only recourse was to come up with three sales that fit into the criteria used by the appraiser. The appraisal report states that she collected the data from our local MLS site- so the first thing I did was try to do a search on there- and found no data on sales past 8/7/09 (our appraisal was performed on 10/15/09). So I actually went to the appraisal office to see why there was such a delay on reporting- turns out that they are down to one member in the office due to a death and sickness. So that answered my question of why the sales were so old on my appraisal. Anyway, I was able to use the Iowa Land Records site to find 3 more recent sales and submitted them to the mortgage company for review. I found out today that they decided to go with the original appraisal.

So here are my questions:

1) Is it typical of a mortgage company to only let you submit the properties for review, and not let you explain why you are asking for the review? I felt kind of bad, because I didn't want the appraiser to think that I thought she did a bad job-- I just felt (feel) like she didn't use the most up to date data.

2) Because this is an FHA appraisal- am I right in understanding that this sticks with the house for a year i.e. I can't go to my local bank and inquire about refinancing with them b/c they will still have to use this appraisal?

Thank you in advance for reading all of this, and for any answers you can give. I'm an accountant, so I don't understand all of this... I think I just feel bad because I feel like, if I did your taxes and used out date data, and you didn't get a deduction because of my error-- I would have to fix it.

 

[Webbed Feet]

<....snp.....> The appraisal report states that she collected the data from our local MLS site- so the first thing I did was try to do a search on there- and found no data on sales past 8/7/09 (our appraisal was performed on 10/15/09). So I actually went to the appraisal office to see why there was such a delay on reporting- turns out that they are down to one member in the office due to a death and sickness. So that answered my question of why the sales were so old on my appraisal. Anyway, I was able to use the Iowa Land Records site to find 3 more recent sales and submitted them to the mortgage company for review. I found out today that they decided to go with the original appraisal.

So here are my questions:

1) Is it typical of a mortgage company to only let you submit the properties for review, and not let you explain why you are asking for the review? I felt kind of bad, because I didn't want the appraiser to think that I thought she did a bad job-- I just felt (feel) like she didn't use the most up to date data.

2) Because this is an FHA appraisal- am I right in understanding that this sticks with the house for a year i.e. I can't go to my local bank and inquire about refinancing with them b/c they will still have to use this appraisal?

Thank you in advance for reading all of this, and for any answers you can give. I'm an accountant, so I don't understand all of this... I think I just feel bad because I feel like, if I did your taxes and used out date data, and you didn't get a deduction because of my error-- I would have to fix it.

What you posted above, what I turned into red font, made no sense at all. If the most recent sales (closed sales) data on your local MLS had nothing more recent than last August, then what does the appraisal office being short staffed have to do with the dates of closing of the available sales on the MLS? It is as if you meant to say you went to the local MLS office and the local MLS office was short staffed.

Regarding your question number one. The appraiser is to remain unbiased. Your personal reason for wanting a reconsideration of value is not material to the mission of the real estate appraiser. If you only mean you wanted to communicate to the appraiser your selected sale comparable were more recent, that would be apparent to the appraiser anyway. Or should be.

Regarding your question number two. The time period you are stuck with that FHA appraisal on your property is 6 months. And yes, it's true. Your local bank is now also stuck with that FHA appraisal due to the case number from FHA running with your property. This brings up a topic of extreme disservice to the public going on. FHA adopted this stupid rule due to all the property flipping, and the fraud involved with that, that was going on. The entire lending industry is NOT forewarning property owners of this Catch 22 "Gotcha!" of a FHA time bomb sitting there waiting to muck up the public. Finding yourself held hostage, by the only game in town, over one single appraiser's work, good or bad, for a period of 6 months is egregious when absolutely nobody forewarns you of the inherent dangers built into the system that could play out against you like that. Personally, I think copious numbers of the public should all find supportable legal precedence for damages and all start suing their loan originators for not forewarning them about the Catch 22. For example, what if you had been properly forewarned, decided to personally hire an appraiserfor advise, before pulling the FHA trigger, and that appraiser had advised you to wait until more "Active" current listings around you sold and closed? Would you have been serviced better by having been forewarned about the FHA time bomb and it's implications? You decide the answer to that one.

There may be issues with all your submitted sales that you are unaware of. Such as high seller paid buyer's financing concessions that once accounted for, do not result in any higher value opinion than what was made in the first place. However, that said, I personally would not have provided an appraisal report that failed to discuss an active listing of a very similar property across the street from, or two doors down from, the subject property. If you meant by "Sold" that your neighbor's property accepted an offer, and became a "Pending" status sale a couple of days before "the appraisal," then this certainly could have been information the appraiser may not have had access to information about at that point in time. Many MLS do not require a status change, to be done by the involved real estate broker, about that for 4 to 7 days after it happens.

 

[Thomas Fiehler]

You mentioned that the neighbor's house was sold, but had they closed on the sale? If not, then it could not be used as a sale.

 

[Ted Martin]

Was your home built in a factory and moved to the site?

I ask because GMAC was doing a lot of loans on manufactured homes at that point in time, and also because they are saying you have to go FHA. At the present time FHA is about the only place you can go to get a loan on a manufactured home. How this relates it that if you home was a manufactured home (HUD code) the comparable selection would be limited to other manufactured homes and not to site built or modular homes.

There is no restriction that I know of about only using the same data sources that were used in the original report. As long as the sales are arms length and can be validated, the fact that they were not on the MLS is not relevant.

The appraiser should have been aware of the delay at the MLS office and should have investigated the same sources that you did. The limit on the use of the comparables is that they need to have closed before the effective date of you report. If you think about that it makes since because to use sales that closed after the effective date of the report would have required a crystal ball to look into the future, which most residential appraiser's can't afford.

The appraisals were good for six months, although I remember seeing some sort of a change about the length of time a report is valid in the last couple of months. I just can't remember at the moment. Also if you can find a lender (your local bank) that isn't going to go FHA then a new appraisal can be ordered.

 

[ko081]

Webbed Feet- you're right- I misstated. On the appraisal report it says she used the MLS and County Assessor's site. So that should make sense now. As for the neighbor's house on the MLS site, it was off of there by the time the appraisal happened. What I meant by Sold, is that the house was pending for two weeks before the appraisal, and they actually closed on it right before my appraisal.

Ted- GMAC told me I had to go with FHA because of the fact that we have PMI on our loan. The house is not a manufactured home.

So I'm confused- if I go to one of the local banks here in town, and they can offer a loan that is not FHA, then will the appraisal still be an issue?

 

[Ariba]

I felt kind of bad, because I didn't want the appraiser to think that I thought she did a bad job-- I just felt (feel) like she didn't use the most up to date data.

2) Because this is an FHA appraisal- am I right in understanding that this sticks with the house for a year i.e. I can't go to my local bank and inquire about refinancing with them b/c they will still have to use this appraisal?

Why do you care what the appraiser thinks?

I believe a FHA appraisal sticks to the house for 6 months

So I'm confused- if I go to one of the local banks here in town, and they can offer a loan that is not FHA, then will the appraisal still be an issue?

New lender will order a new appraisal.

 

[Webbed Feet]

Webbed Feet- you're right- I misstated. On the appraisal report it says she used the MLS and County Assessor's site. So that should make sense now. As for the neighbor's house on the MLS site, it was off of there by the time the appraisal happened. What I meant by Sold, is that the house was pending for two weeks before the appraisal, and they actually closed on it right before my appraisal.

Ted- GMAC told me I had to go with FHA because of the fact that we have PMI on our loan. The house is not a manufactured home.

So I'm confused- if I go to one of the local banks here in town, and they can offer a loan that is not FHA, then will the appraisal still be an issue?

Again, I am unsure what "off of there" means. You mean that around the time of your FHA appraisal your neighbor's listing was removed from the local MLS while it was a pending sale? That makes no sense again.

However, IF it was showing on your local MLS as a "Pending" status listing at the time your appraiser would have searched your local MLS for comps, then not discussing your neighbor's pending status sale (if your neighbor's property is really similar to yours) is a significant mistake on the part of your appraiser in my opinion. If it was a similar property, and if it was "Active," or "Pending," at the time of my research, it would have been in my appraisal report. Especially if pending.

If you go to a local bank, and they can offer you a non-FHA loan, that FHA appraisal will have no meaning, nor will it affect you getting a conventional loan. If you get stuck, it may be worth your while to find a top-notch local appraiser (and I don't mean top-notch just due to licensing type) to take a look and research those comps you came up with. I do not agree that someone at GMAC simply informing you they are going to go with the prior FHA appraisal as it stands is adequate by itself. If what you mean by your neighbor's sale of "closed on it right before" is that it actually finalized into a closed sale even 24 hours before the "Effective Date" of the FHA appraisal, it should be considered VERY good market data if that property is similar to yours. What this means is your appraiser, typing up the physical report one, two, three, days after the "Effective Date" should have called on that sale and checked to see when it was closing, as it showed as "Pending." Based on your posts so far, the appraiser failed to do so, and failed to explain in the appraisal report why that closed sale was not used. I think a clear explaination as to why not is demanded. Not optional.

 

[ko081]

Webbed Feet- Thank you so much for your input- I'm going to try to explain this clearer for everyone (since I misstated in the first place):

My neighbor (directly next door) put their house on the market in mid August. They received an offer sometime in Sept, and the house was marked as pending, both on the sign in the yard, and also on the MLS site. The house closed (sold)the day before my appraisal. I think it was removed from the MLS site about three days before the actual closing date, and I know the sales data was not available on the assessor's site (because it's still not available today, I checked)

I would also like to add that no where on the original appraisal was anything ever mentioned about this house- as far as I can tell, it's like she didn't realize it was for sale.

I wrote this appraiser an email today, explaining about the house and asked if it was possible for her to be able to review this for me. I realize that she probably can't discuss this with me, because I'm not the client, but figured it was worth a shot, and the worst she can do is say no.

As for GMAC mortgage co- I feel as if I'm at a loss- My main contact there has been a mortgage processor- and I informed her as soon as I got this appraisal that the house was missing- she didn't care. I would love to demand to know why it wasn't used- but unfortunately, I don't see it getting me too far. When I went home for lunch, there was a message on my maching from GMAC to let me know that they have marked this refinance as rejected, and I should receive a letter in 2-3 weeks. So I guess at this point, I'm stuck paying the fee for this appraisal, and have to start looking all over again.

 

[ko081]

I should say- looking for a refinance loan- on the bright side, I already own the house

 

[Webbed Feet]

Webbed Feet- Thank you so much for your input- I'm going to try to explain this clearer for everyone (since I misstated in the first place):

My neighbor (directly next door) put their house on the market in mid August. They received an offer sometime in Sept, and the house was marked as pending, both on the sign in the yard, and also on the MLS site. The house closed (sold)the day before my appraisal. I think it was removed from the MLS site about three days before the actual closing date, and I know the sales data was not available on the assessor's site (because it's still not available today, I checked)

What you describe above is very strange. Off hand, I can think of no legitimate reason that a real estate broker, that is a member of any local MLS, would place a listing on that MLS and then remove the listing from that MLS database AFTER there is a agreed to sales contract, but before that sale from that contract can close. I don't understand that one at all. About the only explanation for that, I can think of at the moment, is the sale failed for some reason and the property owner refused to place the property back on the market for sale with that same real estate broker. IF you have a real estate broker buddy, have them check that address. I would expect to see that the sale never closed, and it now shows on the MLS as either a withdrawn, canceled, or expired listing. If I am correct, then there is no "closed" sale to base an opinion of value on. Just an expired, withdrawn, or canceled listing. Those would be extremely weak indicators of value.

I would also like to add that no where on the original appraisal was anything ever mentioned about this house- as far as I can tell, it's like she didn't realize it was for sale.

I have no idea what to say about an appraiser that visits your property and cannot manage to see a "For Sale" sign directly next door with a "Pending Sale" sticker on it that was present the same day. Again, if this property next door is very similar, NOT discussing the sales activity taking place would be amiss. It makes me think that sign had been removed by the time your appraiser arrived at your property, and that it was already altered to a status of withdrawn, canceled, or expired at the time the appraiser searched for comparable to use.

I wrote this appraiser an email today, explaining about the house and asked if it was possible for her to be able to review this for me. I realize that she probably can't discuss this with me, because I'm not the client, but figured it was worth a shot, and the worst she can do is say no.

I'll venture a prediction. If the appraiser opts to communicate with you, and the appraiser is not obligated to do so, I think my above thoughts might be confirmed.

As for GMAC mortgage co- I feel as if I'm at a loss- My main contact there has been a mortgage processor- and I informed her as soon as I got this appraisal that the house was missing- she didn't care. I would love to demand to know why it wasn't used- but unfortunately, I don't see it getting me too far. When I went home for lunch, there was a message on my maching from GMAC to let me know that they have marked this refinance as rejected, and I should receive a letter in 2-3 weeks. So I guess at this point, I'm stuck paying the fee for this appraisal, and have to start looking all over again.

If GMAC carries your present mortgage, and you were trying to get rid of your PMI.... lenders are not wanting to see things like PMI insurance get removed these days. They WANT to have all the insurance they can get. They don't care what it costs you, and can be a reason they don't seem very cooperative.