Small community bank that does not sell to secondary market.
Borrowers apply for a mortgage in amount of $100,000. Appraisal comes back at $80,000. Bank documents and contacts the borrower. The amount is then crossed out and/or white-out and the new amount is written on the original application. Borrowers do not submit a new application with the revised amount, nor do they initial the change on the application.
I am seeing this frequently and am not sure if this is acceptable and/or the risk that is involved? The bank does not generate a final application at closing. There is one application in the file and it is the original.
I would think that the borrower should at least initial the change on the original application.
Any advice, input, or guidance is appreciated. Thank you in advance.