If lender can’t provide copy of appraisal, demand a refund
Q: We had several unsuccessful attempts to refinance with two mortgage brokers because our house is located in a risky ZIP code and the appraiser said that he was unable to get two comps to complete the deal. Finally, we found another bank who said “no problem” right off the bat.
Well, it’s been almost three months now and we’ve turned in all necessary papers and have an 800-plus credit rating and we’re still waiting. But that’s not the problem.
Here is my concern: When we applied, we paid a $400 appraisal charge. That is fair given an appraiser was actually doing something. There was no walk-through inspection (which is OK by me) and only a drive-by according to the bank. The home value was done electronically. All the calculations seemed to be acceptable by the bank for the refi to go through, but why are we being charged $400 for this? There was no outside appraiser.
I asked for a copy of our appraisal and was told there is none, only the value amount could be told. Shouldn’t the bank just say that it will cost $400 for a refi — take it or leave it? Do we have any recourse?
A: This is a very common problem not only with appraisers but with other charges imposed by mortgage lenders. I recall several years ago when lenders were sued for charging upward of $75 for a credit report, which cost them (if at all) less than $20. From my experience, most lenders no longer pad the credit report charge.
Under federal law, you are entitled to receive a copy of the appraisal for which you were charged. If the lender has advised you that there is no such document, it is my opinion that you should demand a refund for the $400.
While no one likes to file suit, you should consider filing a lawsuit in your local small claims court. I suspect — but cannot guarantee — that the lender will quickly refund your $400, rather than spend the time and the money defending its position.
My experience with small claims courts is that most of the staff are very helpful and will provide you forms and guidance as to how to file.
Q: What can I do when my lender refuses to work with me? I have tried to work something out with them and they flat out refused. I had equity in my home and it was never underwater. I tried to get a loan modification, but that didn’t work either! What can I do?
A: I need more information as to why your loan application was denied. Was it because of your financial status (FICO score too low)? Was it because the loan-to-value ratio did not work? Or are you in a condominium where the FHA has imposed very strict loan requirements?
Is your lender included in the recent mortgage settlement? If so, you may be able to get some relief. Alternatively, don’t just stick with one potential lender; shop around. You may find an aggressive lender who will be willing to work with you, assuming of course that you can qualify.
We have to understand and recognize that even though mortgage interest rates are at an all-time low, lenders have been burned badly as a result of the mortgage meltdown, which has yet to rebound. And even though to a large extent the meltdown was created by those same mortgage lenders, the restrictions and requirements nowadays for getting just a simple loan are mind-boggling.
For example, a reader wrote me that the potential lender required a copy of a bank statement; the reader sent only the first page of the statement, as the second page was just consumer information about the bank. Nevertheless, the lender demanded the entire document or the loan would not go through.
Finally, your state may have some assistance programs, but if you are not underwater, you are low on the priority lists.