Definition of "an est. of value of the property"

Posted By: WHEDA

Definition of "an est. of value of the property" - 01/26/15 08:35 PM

One of the six pieces of data included in the 1024.2(b) definition of an Application is "an estimate of the value of the property". The scenario posed to me is: Consumer meets with LO and states "I'm interested in buying the property at 123 Main St and it is listed at $220,000. I would like to get preapproved before I make an offer." The property is clearly identified but would the listing price qualify as an estimate of the value, thus triggering the need for a GFE?

"Best Practice" would, of course, be to issue a GFE, however, the LO didn't do that. Now, 6 days later, the consumer is back with an accepted offer at a purchase price of $209,000 and she wants to move forward with a full loan application. Is this going to be a "no cost" loan because the LO didn't issue a GFE on January 16th?
Posted By: Dan Persfull

Re: Definition of "an est. of value of the property" - 01/26/15 08:44 PM

I guess I'm curious why one would suggest that a listing price would not be an "estimate" of the property's value.
Posted By: WHEDA

Re: Definition of "an est. of value of the property" - 01/26/15 09:30 PM

That's a good question. In my opinion it is an estimate of value but LO is arguing that the value is what the buyer and seller agree on. In my opinion, both are estimates of the value with the actual value not known until an appraisal is received.

Dan, may I assume from your response that the MLOs in your shop would be, or damned well better be, issuing a GFE within 3 days of the first meeting in my scenario?
Posted By: #Just Jay

Re: Definition of "an est. of value of the property" - 01/26/15 09:50 PM

Your LO is full of it.
Posted By: WHEDA

Re: Definition of "an est. of value of the property" - 01/26/15 09:56 PM

Thanks Jay. I like that response, although I probably can't quote it back at him. ; )

Would you consider this a zero cost loan to the borrower or can a GFE still be issued and fees charged?
Posted By: #Just Jay

Re: Definition of "an est. of value of the property" - 01/26/15 10:06 PM

IMO, no. Well, maybe yes if only to teach him a lesson, but otherwise no, I do not.