Why Loan Officers Should Order Appraisals

[AirBourne32603]

Ahmen!

Its not just direct cash driven. The pressure on the players involved is also career driven. This mess is WIDE SPREAD its not isolated to certain areas or brokers only or sub prime only. Its spread across the industry because thats how coruption manifests itself. I'm an ethical appraiser . I go to a home with no floors, no kitchen , no baths, missing drywall and ,,,,, you get the Idea. I call the lender and tell them I can't apprais the property as is. It is not livable. ,,,, and so on. The LO says ok sorry can't pay you then, I say pay me for the trip at least, they say we will ...one week later I get a copy of the appraisal done by an "I'll do anything " appraiser scumbag. Total fraud. complete with fake photos the works....I call DLLR to report and get no responce I go through the process of reporting get nothing. file a complaint no help. Now I can't get any work from that client not that I want it but you get the Idea.... If they won't enforce the rules we allready have what hope do we have????? I'm waitin for this mess to shake itself out till then I got a paying gig I don't have to cheat to compete at....good luck

 

[Ken B]

Not necessarily. In certain residential segments (non-GSE), financing for residential properties can be similar to that of commercial properties.

LOs that make money for their employer get bonuses and recognition. LOs that lose money get shown the door.

Closing the loan and losing a few hundred grand for the employer isn't "making the deal work."

Have any examples of LOs who were fired because a deal they made went bad after the fact? If not, you are speculating about the risks to the LO when closed deals subsequently go bad.

Again, when I was a staff appraiser, I observed the process the lender took when they were required to buy back the loan. Yes, the file was audited. Yes, the LO, LP, and branch manager were sweating bullets. I don't know the results of the audit, but no one lost their job.

 

[SANDY]

Don't drink the kool-aid!!!

 

[Lost Cause]

In General, Not A Good Idea

We don't permit loan officers to order appraisals here. All appraisals are ordered by the Appraisal Department, which is part of the credit risk department. That way, any questions can be handled by people who will understand those questions and issues.

It may make sense in smaller banks where there is no appraisal department to allow loan officers to order appraisals, but while they would be more knowledgeable concerning real estate, on the other hand, they do have an interest in the value conclusion (even if they aren't commissioned).

 

[Terrel L. Shields]

Have any examples of LOs who were fired because a deal they made went bad after the fact?

Sure. I don't like to name names, but one local Arvest banker lent money to a party which went south near 100%...it was a fraud.. It wasn't like he was a low on totem pole LO. He was a VP. He resigned. Later popped up at a new bank and probably is a lot harder to fool.
Another one made a series of bad loan decisions which led to repossession of a number of properties or restructuring the loans. He, too, was asked to leave. Ended up selling lawn mowers in Kansas. He was bitter about it and offered to testify against us when some poultry farmer sued that bank and me. But he wasn't the commercial / Ag lender and didn't know beans about what that division did.
Another one lasted about 6 months when he started making a series of loans to high risk builder. He was told to make no more such loans. He then moved to another bank taking the borrowers with him...which as one officer put it to me, "We were glad to see him go...and take the baggage as well." When that same borrrower came back to his old bank, he was told that he "had a better deal" where he was at, they didn't want him back. I assure you a conventional bank lending their own money has no truck with a loan officer who loses money. Making a loan is NOT the name of the game. That is only applicable to fools and Mortgage brokers.

they do have an interest in the value conclusion

Dang right. No value, bad loan, lose job

 

[TC]

I agree.

I think in my entire appraisal career I've had one pressure-incident with an LO.

I agree with you and Terrell both, 100%.

TC

 

[Pamela Crowley (Florida)]

I did have a bank LO in Orange Park, FL, a few years ago, stated I could get plenty of work from him if I would include personal extra-curricular activities with him...
What a jerk - never did do any appraisals for that bank.

 

[Financially Feasible]

I did have a bank LO in Orange Park, FL, a few years ago, stated I could get plenty of work from him if I would include personal extra-curricular activities with him...
What a jerk - never did do any appraisals for that bank.

There are appraisers out there who would take that in a heart beat. I mean... c'mon... $125 for a URAR AND some "extra-curricular activities"?!?! That might be a gold mind.

m2:

 

[Pamela Crowley (Florida)]

Must be gender specific, huh, Ed? LOL

 

[aussie ken]

Communication is the key always............learn how to handle your responses to the LO and MB can go a long way to getting continued work even when a particular deal falls over ..........have empathy for them.........Yup it can go against the grain but do it with ethics and a sense of dignity.