We have an application where the appraiser went to appraise the property and notified the bank that he/she did not "believe the property would appraise," and that he/she did not want the customer to be out an appraisal fee. Lender relays that to applicant, applicant "withdraws" - according to the lender. This would still be a denial, wouldn't it? But we have a dilemma in that we have no written appraisal to provide to the applicant or for documentation to support the denial. It seems to me we should type a document with this information for the "written valuation"??

You need to remove this appraiser from your approved list. You gave and I assume they signed an engagement letter. There is no value assigned to the property prior to the completion of the appraisal according to USPAP standards. How in world do you even know what he meant when he called the bank and informed them??

It suggests to me the bank told him a figure up front that was needed??????

You guys created your own troubles on this one and I agree, you have a dilemma.

That does sound like "it won't appraise for the value you want". Not good.

Not saying it's okay, so don't take it that way. But was this a purchase and perhaps the appraiser had the contract? That could be the reason behind his comment.

In my prior life as a processor, when an appraiser called me to state he felt the property was going to come in lower than the sales price, I always required the report to be finished. The bank then has the documentation to back up a denial or the loan may be restructured.

And sometimes the buyer can get a reduced sales price with a lower appraised value.

Exactly... (assuming this is a purchase) everyone did the buyer a disservice here. The buyer is also entitled to the tools to either decide to walk away, put up their own cash, or to renegotiate.

And if this was a refi, as Randy pointed out, way too much table talk going on here. Messy all the way around.