Do you think it's "okay" for the loan officer or the realtor to contact the appraiser if they feel the comps used in the appraisal aren't the best, give the appraiser examples of "better" comps, and request the appraiser to consider adjusting the appraisal?
That's what I thought too, but lending EVP says that is not what the guidance, Q & As, etc. say. He insists that the LO is allowed to contact the appraiser with any additional info the appraiser needs, and this would fall in that category. Grrrrr!
If the appraiser is compentant they already took into account the other properties and decided that they were not the best. I don't think this is information that the appraiser needs.
Often, loan officers or realtors will have sale information that an appraiser does not. A private sale won't show up on the MLS, if the MLS isn't available and the appraiser has to rely on county information, it is easy to miss a sale. Some sales occur under special circumstances (family to family sale) and would not be a true comp. If a loan officer or realtor shares sale information with the appraiser, thats one thing, but they cannot do anything that gives the appearnace of trying to influence the value of the property.
I always ask myself, "Do I want to explain this to an examiner?" If it doesn't pass that test, then I would advise against it.
If this happened here, I would advise against it. We allow the loan officers ZERO contact with the appraisers. Orders for appraisals are done independently by another unrelated party at the bank.
I've asked my FDIC contacts a similar question. They agreed with my recommendation (yay me!) that if the LO doesn't like the appraised value, he can order an appraisal from a second appraiser. Calling and harassing the appraiser was not recommended.
IMHO, private sales, sales to family, etc., are not necessarily representative of the open market and might skew the comparables in a manner that is not in the bank's best interest.
And, after all the recent news regarding sub-prime lending practices, any LO that is still trying to manipulate appraisals to get a larger loan is a problem child and needs to be tended to closely.
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Just another self-proclaimed expert ...
"They agreed with my recommendation (yay me!) that if the LO doesn't like the appraised value, he can order an appraisal from a second appraiser."
I'm sure you didn't mean that the loan officer could order another appraisal, as that is a no-no.
Plus, you either need to drop the original appraiser off of your approved list at this point, or you still have problems. You can't shop appraisals. So either there is something wrong with the first appraiser or you have a valid appraisal.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
I have seen our in-house appraisers review and LOWER outside appraisals, but the reverse would be highly frowned upon, IOW, forbidden. (no difference from ordering a new appraisal in the hopes of receiving a higher value)
As Randy said, you can't shop appraisers, and as MJ said...private sales are not necessarily depictive of true market value.
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My opinion only. Not legal advice.
"They agreed with my recommendation (yay me!) that if the LO doesn't like the appraised value, he can order an appraisal from a second appraiser."
I'm sure you didn't mean that the loan officer could order another appraisal, as that is a no-no.
Plus, you either need to drop the original appraiser off of your approved list at this point, or you still have problems. You can't shop appraisals. So either there is something wrong with the first appraiser or you have a valid appraisal.
Yes, of course, when I said "he can order another" I meant he could call the lady that handles it and request a new appraisal.
However, we didn't remove the first appraiser from our list. There was nothing wrong with the appraisal, the LO just didn't like the value. The second one came back with almost the same figure. At that point the LO had to admit that the home just wasn't worth what he thought it was.
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Just another self-proclaimed expert ...
I have seen our in-house appraisers review and LOWER outside appraisals, but the reverse would be highly frowned upon, IOW, forbidden. (no difference from ordering a new appraisal in the hopes of receiving a higher value)
I recently had a situation where the value of an appraisal was increased by the credit underwriter because a lease was renegotiated for significantly more money (commercial property) post-appraisal/pre-closing. My FDIC contact told us to re-appraise or use the actual value.
Loan Officers are creative and imaginative. They imagine they can create values.
And, I'm trying not to wear out my welcome with my FDIC guys, but they have been very helpful in supporting my recommendations.
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Just another self-proclaimed expert ...