Why do loan officers hire the appraiser?

[Austin]

Speaking of hiring appraisers; what I hate worse than anything is getting a fax order from some lender I have never heard of. Thursday I got a phone call and a woman asked for my fax number. I gave it to her. Friday I glanced at the fax machine and it was out of paper. The tray had about a 15-page appraisal order from some out-of-town mortgage company I have never heard of. They want a conventional appraisal whatever that is, no other instructions, they want it by March 13th, the loan amount is $58,500, and the estimated value is $65,000. They enclosed the tax data card and the new assessment is $34,000 and the new assessments are pretty close. The house was built in 1941, the house has 1,250 square feet with no basement on 1.2 acres in the county. It has a floor furnace, no air conditioning, and is in fair condition. Fair on the tax card means it is a rat nest. Question: Do I owe this company the courtesy of a fax back refusing the request? Another question: Is stating the estimated value is $65,000 an appraisal? Under USPAP, is accepting this assignment accepting an assignment with a predetermined price? Why or why not?

 

[Ross (CO)]

Austin, by now you know that the expression of their estimate of value on the order is simply one really big, bad habit which those folks continue to do. They are addicted to doing it. They know no other way to present an appraisal order. You, on the other hand are absolutely, totally and completely free to fail to "see", recognize or acknowledge what they have written on the order !! That statement of a few words is your evidence of their attempt to coerce your outcome. (Don't toss those orders in the trash too quickly) Every time that sort of stench eminates from an order I hope you are already receiving a c.o.d. payment for your services, or you are going to diplomatically request such a payment from them --- before you go do it all and send it in, and then wait and wonder, since your value just may not close the deal. Some wholeheartedly beleive that an un-closed loan deserves no payment to the appraiser. Since they have to ties to the USPAP stuff, they can say and print anything on their order. How wonderful it is for you to know you have the power to ignore those "estimates" every time. Then again, after thorough observation of subject, data analysis of appropriate comps, and reconciliation to a logical and probable market value --- you just may be at their estimate. So what, it happens, and sometimes they just may be on target with their pre-lim. data mining and AVM's, sometimes. It does not mean that you gave in, and hit their number, it's merely coincidence that their and your numbers are the "same". If you feel it should be $15K less, and magically your report ends up at their number, then that sort of stuff is quite stupid. You can always call them back and ask for a new order to be sent out "with no estimate of value" appearing on the order. The odds are great that they will drill you for all the reasons why, and ask you for verbal "ballpark vaue" stuff, and not very likely that they will send you a no-comment order page a few minutes later.

 

[Blue1]

Austin,

Reply only if you have time. That's my advice. Otherwise put it in your "dead" file. You know they'll be calling you anyway. USPAP says your fee can't be CONTINGENT on a pre-determined value. They can print a value on the order all they want but I stop if told the value has to come in at a certain figure or they can't order an appraisal. That's a direct violation of USPAP in my opinion.

It's been my experience that although LO's order appraisals, you have to be approved by the company the LO works for. Which means your reports have to meet not only USPAP regs but the UW's & investor's guidelines. If you submit a bad report (or reports), you'll be cut from the approved list and the LO will not be able to use you.

An LO can RECOMMEND you but you still have to pass muster with the "powers that be."

 

[Blue1]

Mark,

More to the point, why would a bank have staff appraisers? (Like World Savings) Now there's a conflict of interest!!! How many deals will they let you "kill" before letting you go?

 

[David C. Johnson]

No doubt the following has been discussed here before, but does it not irk residential appraisers to be informed they will be paid at Closing?

HUH?!

Wait a minute. Who the hell said there is going to BE any Closing? -- It's not been appraised yet, Right??

Is this not inherently coercive?

What am I missing here?

dcj

 

[Anonymous]

I work for at least two banks that frequently close loans well before they even order the appraisal. Nothing in Bank regs requires a bank to not make a loan if the real estate does not cover the LTV ratio. That ratio is a guideline that the Bank itself creates as part of their business plan. The bank may also be holding vast other properties but because they have a policy of having an appraisal on file, the examiners may ask them to get one in a file if they have overlooked it. Just finished one. I did 4 million dollars worth of property the man owned in Oklahoma about 3 yr ago, but they forgot to order an appraisal on a 110 ac. he had in Ar. Examiner caught it this year. So they ordered an appraisal...and the bank paid for it. The LTV for the overall property was maybe 30%, probably less. They could not have cared less what it appraised for, just needed it for file.

Every time the examiners go to these two customers I get an order or two from overlooked property. Both banks are extremely healthy, profitable banks owned by families running large profitable businesses.

And like I said above. One banker who made some bad loans is now selling lawnmowers in W. Kansas. He wasn't canned for not making enough loans, just for making a couple where the bank lost their shirt. The other I alluded to above had a $1 mil dollar deal go bad for a Wally World bank. Sam would not have approved and neither did his children.

My brother, one of those Wally World bankers, said their salary bonus is STRICTLY based upon net profitability, and if your loss ratio exceeds a certain amount, you will be asked to explain....i.e.- they might be more lenient with the commercial loan officer over the residential loan officer.

Since secondary market appraising makes up, at most, 5% of my income I don't have to answer to pressure from lenders. My regular bank customers who have a mortgage dept. know very well I will not succumb to pressure and they never ask for me to tweak an appraisal upwards. I never take an outside appraisal from some fly by night outfit that I don't regret it. Last one canceled the appraisal just as the realtor was one-half the way to the place to let me in it. I was just about to step out the door when the fax came in without explanation as to why they canceled. The identical order came in to one of my appraiser buddies two days later.

 

[David C. Johnson]

Thanks, Terrel. Some good infor for me. Is there really a Wally's World Bank (Sam Walton?)?

dcj

 

[bobburnitt]

Loan Officer is a misnomer. It should be loan salesman.

BB in Texas

 

[xmrdfghap]

Is there really a Wally's World Bank (Sam Walton?)?

Arvest Financial is based in Bentonville Arkansas. Among their banks is State Bank in Oklahoma as well as several others in adjoining states. I can only think of one group in Bentonville that has the horsepower to do that.....besides, their banks are in all the Tulsa area super Wal-Marts......of course, Tyson might have an interest in them as well.....

 

[Anonymous]

Nope, Tyson has their own bank. The actual ARVEST is a separate company but the owners are the Walton Family and Jim Walton runs the show, more or less. Sister Alice has an investment corporation called the Llama Group and she now lives in Texas. Arvest is in Fayetteville, Little Rock, and nearly every town in NW Arkansas. Also, Noel, Mo., Westville, Stilwell, Jay, and Kansas (the town, not the state), OK. Additionally to Bartlesville and Tulsa, OK. Newer ones are Duncan, OK (in the west part of the state). No, most of the Arvest banks do not have a branch in Supercenters (in Siloam Springs, there is a branch bank, but it is of a competitor.) They have a separate mortgage company and all your checks come from the title company or the central processing center in Lowell, AR - one of the fastest growing towns in America and recently featured in Realty Times. It had 200 souls not many years ago.