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What can a Lender demand on conditions?

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TXCBoy36

Thread Starter
Junior Member
Joined
Oct 3, 2007
Professional Status
Certified Residential Appraiser
State
Colorado
I have a SFR appraisal that I performed and all went well. There was some chipped paint on the home and garage, but they repaired that.

The Lender is requesting that I remove one of the comps and that I need to discuss any foreclosured properties used. I am attempting to determine why they want this comparable removed and also what type of discussion of the foreclosures do they want.

I have not heard back from the Lender yet, but i am wondering if a Lender has the right to request me to remove such items off of a FHA Appraisal.

I already disclosed all information in regards to current and/or recent foreclosed properties in the area, so I am not sure what they are looking for.

JC:shrug:
 

Ariba

Senior Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Colorado
The Lender is requesting that I remove one of the comps and that I need to discuss any foreclosured properties used. I am attempting to determine why they want this comparable removed and also what type of discussion of the foreclosures do they want.

They can request and you can decline. :laugh: Get the lender to do it in writing.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I can understand a lender wanting comments about foreclosures in the area. In this market environment I would not consider that an unreasonable request.:new_smile-l:

I cannot understand why they would want you to remove a comp? :shrug:
If they don't like it, that's their prerogative. However, if you like it, then I'd say it stays. As Ron suggests, I'd decline to remove the comp if I thought it was good and they didn't give me a persuasive argument why it isn't.

Good luck!
 

MandTDean

Freshman Member
Joined
Oct 9, 2007
Professional Status
Banking/Mortgage Industry
State
Pennsylvania
The Lender is requesting that I remove one of the comps and that I need to discuss any foreclosured properties used. I am attempting to determine why they want this comparable removed and also what type of discussion of the foreclosures do they want.

I have not heard back from the Lender yet, but i am wondering if a Lender has the right to request me to remove such items off of a FHA Appraisal.

I already disclosed all information in regards to current and/or recent foreclosed properties in the area, so I am not sure what they are looking for.

JC:shrug:

Asking for removal seems highly unethical. They may have information about that specific comp that you were unable to uncover through due diligence. Removal of the comp would be wrong, and they should disclose this additional information to you for further explanation. An addendum with a possible additional comp would be the way I have seen this done.

I had an appraisal about 8 years ago that included an as is sale that had had a car driven through the living room. The appraiser never mentioned this in the original appraisal, and as you can imagine...it affected value.

When presented with this information, the appraiser included a new comp on the amended appraisal that was also an as is sale. Notes in the addendum clarified the reduced value of these two properties, and he was able to raise the value by 10% due to a condition adjustment. Though the appraisal went through additional scrutiny, it all made sense.

We never asked him to remove it, just explain it! A lender can ask you to stand on your hands when you deliver an appraisal. It's a matter of what you decide to do that matters.
 

Roy Courtney

Senior Member
Joined
Dec 8, 2006
Professional Status
Certified General Appraiser
State
Texas
On page 5 of 6 of the 1004 you will find the APPRAISER'S CERTIFICATION. I recommend that you read that page paying attention to Items #1, #7, #11, #16 and #19. If you make the requested changes then the lender, underwriter, etc. selected the comparables, not you. You may want to remove your signature and have one of them sign the appraisal.
 

Lobo Fan

Elite Member
Joined
Nov 28, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
FHA does not want you to use any foreclosed properties as comps even if you are appraising and FHA repo. They want all free market, all arm's length comps. If you use REO comps, you must demonstrate that REO's are the driving force in the marketplace. For example more than 50% of the sales in your market area must be REO's.

So if you used a REO as a comp, they are correct in asking you to replace it with a non-REO comp. Read up on your FHA rules. They have all kinds of restrictions on comp selection.
 

Greg Bell

Senior Member
Joined
Jul 7, 2006
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
You may utilize an REO for a comparable as long as you explain the necessity for not utilizing a market sale.50% REO sales within the are are not required.If the comp. was the best available and reflects market conditions , use it.Provide a lengthy description of why the REO comparable was required.
 

TXCBoy36

Thread Starter
Junior Member
Joined
Oct 3, 2007
Professional Status
Certified Residential Appraiser
State
Colorado
FHA does not want you to use any foreclosed properties as comps even if you are appraising and FHA repo. They want all free market, all arm's length comps. If you use REO comps, you must demonstrate that REO's are the driving force in the marketplace. For example more than 50% of the sales in your market area must be REO's.

So if you used a REO as a comp, they are correct in asking you to replace it with a non-REO comp. Read up on your FHA rules. They have all kinds of restrictions on comp selection.

Actually, this particular property was a foreclosed property prior to this transaction. But, the comp that they wanted removed was a listing that showed to be under contract. So, like I said, I am unclear on why they are asking for this. I know that I can use a Lsiting as a comp, if for no other reason but to demonstrate a future market trend.

JC:blush:
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
Just a couple questions. Based on other threads, we get this confused all the time. When you say "lender" what do you mean? A mortgage broker, or the actual lender who is financing the loan. It sounds like the request could be coming from a broker trying to "clean up" the report before it is submitted to the actual lender. Many brokers have "in-house UW" who are not really UW, and they try to make things look pretty for the lender. Does this comp show anything "negative"? Also, based on other threads, you should not do a thing unless any UW request are submitted in writing, so you can be sure who the request is coming from.
 

Lobo Fan

Elite Member
Joined
Nov 28, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
If your listing was comps 1-3 then it is a problem. Otherwise it looks like a flip which lenders don't like. Even if it is a legitimate flip. Comp selection is always up to the appraiser as long as you go by the original rules. FHA wants 6 months, one mile, and all arm's length for example. After that, it is the appraiser's call.
 
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