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Author: Lauraly One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127262  
Subject: Amerisave appraisal rejection Date: 1/24/2013 3:57 PM
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We are in the process of refinancing our house. Amerisave sent an appraiser out who did a full walk through of our house and submitted an appraised value of $400,000. (We owe 306k).

But yesterday we got an email that an appraisal review had been done and they are adjusting the value of our house to $295,000, which is a huge difference!

Now we don't qualify for a regular loan and they are steering us to HARP, which is a higher rate, of course.

What the frell? How can there be such a huge difference? We have a custom home in a unique location with not a lot of other homes nearby. I just don't understand how they can reject their first appraisal so out of hand.
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Author: crackdclaw Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124580 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/24/2013 5:00 PM
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Hi Lauraly,

You should have the ability to recieve from Amerisave the adjustments they made to reach a value of $295,000. You should also have the opportunity to present additional data that perhaps the appraiser did not use, or Amerisave did not use. Perhaps you have some comparable sales to reinforce the original appraised value, or that may counter Amerisave's viewpoint?

I'm in the mortgage industry and see appraisals daily. At that bank I work at, each appraisal is reviewed by underwriting. For the most part, they are just checking to see if the appraiser followed accepted guidelines. On rare occassion I have seen where the bank's appraisal review process has resulted in lowering the appraiser's submitted value. I hate when that happens. Yet, I do have the results of my bank's u/w review prior to the homeowner receiving a copy of the appraisal. That way, while it's still a difficult phone call to make, I do alert the homeowner of the appraiser's value, the bank's view, and the reason why adjustments were made. This phone call is then well received by the homeowner. Not. I hate making phone calls on lowered appraisals.

But if I had inside info, perhaps it may be an easier phone call to make. At the beginning of each loan application I always ask the homeowner what they have as a ballpark guess on their home's value, and how they are coming up with that guess. I keep notes of this conversation.

I do very much understand your frustration. But, then again, what do you think is a fair appraised value? On your last post to this board, you suggested what your home may only be worth. Here it is:

http://boards.fool.com/refi-while-underwater-30074515.aspx

We have a mortgage at 4.5% through B of A owing $310k. Our home is probably worth about $290k (maybe less).

Being approved for a mortgage now a days has so many moving parts, so many paths to navigate, so many phone calls to make that are not fun. I would guess your best option right now is to try and negotiate with Amerisave on the value. HARP is an alternative, you may also want to run a scenario by your current servicing company, BofA. Have fun, make sure the end result is worth the effort.

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124581 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/24/2013 6:19 PM
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We are in the process of refinancing our house. Amerisave sent an appraiser out who did a full walk through of our house and submitted an appraised value of $400,000. (We owe 306k).

But yesterday we got an email that an appraisal review had been done and they are adjusting the value of our house to $295,000, which is a huge difference!


I assume that you have a copy of the appraisal that was submitted with the $400k valuation? (If not, that valuation is probably worth the paper it's written on.) I would agree with crackdclaw that you need to get the information from Amerisave as to why they adjusted the valuation.

However, given that about 7 1/2 months ago, you suggested that you were underwater and your home was worth $290k, I'm not sure why you think that a valuation of $295k is out of line and a valuation of $400k is reasonable. $400k would be a 38% increase over $290k. Even during the bubble, prices rarely increased that quickly.

Yes, $400k is probably closer to what you paid, and therefore, it's probably what you wanted to hear. But if you put it on the market tomorrow for $400k, how long would it take to sell? And would you really end up getting $400k? Having just purchased a custom home in a unique location for 60% of what it was originally listed at 2 1/2 years before my purchase (for sale most of that time - off the market a few times to switch realtors) - my guess is that you would probably sell for something closer to $295k if you wanted to sell in a reasonable amount of time. If that's the case, Amerisave is trying to do what lenders were widely criticized for not doing during the bubble - being conservative and lending responsibly.

Now we don't qualify for a regular loan and they are steering us to HARP, which is a higher rate, of course.

How much higher is the rate? Typically, I've seen HARP rates about 0.25% above regular rates. That's still going to be a better deal than your current loan, right? So, it will save you money, just not as much as you had hoped.

AJ

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Author: Lauraly One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124582 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/24/2013 6:36 PM
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aj,
they haven't gotten back to us, but based on their front page calculator, instead of 3.375% it will be 4%. That's a saving of just under $50 a month. We are at 4.5% now.
When we first went to Amerisave we thought we would be doing HARP, but rates were quoted as 3.75 then. A quarter point higher puts us in "not worth it" territory.

Zillow has us at $306k, but our area is semi-rural custom homes. When the appraisal came back much higher we figured that our house didn't fall into the normal algorithm and the appraiser got it right. It's been disappointing to get the lower appraisal, and now rates are higher.

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124583 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/24/2013 7:16 PM
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they haven't gotten back to us, but based on their front page calculator, instead of 3.375% it will be 4%. That's a saving of just under $50 a month. We are at 4.5% now.

Are you focusing on the change in the monthly payment, instead of on the actual savings in interest? Because on a $300k loan, a 0.5% interest rate change would save you $125 in the first month. It would drop a little each month, as the principal balance decreased, but it's a lot more than $50.

Changes in your monthly payment are not 'savings' - they are improvements to your cash flow, but the only 'savings' you get from refinancing a mortgage is the decrease in the amount of interest you will pay.

When we first went to Amerisave we thought we would be doing HARP, but rates were quoted as 3.75 then. A quarter point higher puts us in "not worth it" territory.

Especially if you went to them expecting to do a HARP refi, and they didn't sign you up for that right away, I would push them to give you the rates that were posted when you first approached them.

In looking at their website, it looks like the HARP rates drop substantially for a 20 year loan vs. a 30 year and 25 year loans, so you might want to look at that, too.

AJ

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124584 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/25/2013 1:55 AM
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How much higher is the rate? Typically, I've seen HARP rates about 0.25% above regular rates. That's still going to be a better deal than your current loan, right? So, it will save you money, just not as much as you had hoped.

At Interbank Wholesale Mortgage, they go to 95% LTV on DU Refi Plus at the same rate that a regular conforming loan would offer at 80% LTV.

Here's their retail site.

http://www.interbanklending.com

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Author: Lauraly One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124590 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/25/2013 11:28 AM
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Thank you crackdclaw for suggesting we get a list of reasons why the appraisal was lower!

We own a 1 acre parcel of unimproved land which adjoins our property that we bought in 2011 for $19k. Turns out it is recorded with the county under our same address. The appraisal re-do had all the stats from that piece of land instead of our actual house. I bet that is what was happening in Zillow too (how I was guessing at our value before).

Also, all the added comps were short sales and foreclosures, almost all of them with dirt front and back yards, while we are fully landscaped with a 2000 sq ft paver patio in back.

We have contacted Amerisave and our guy has passed this info on to their appraiser team. Maybe we can get an adjustment? Does that ever happen?

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Author: crackdclaw Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124599 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/25/2013 4:10 PM
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Thank you crackdclaw for suggesting we get a list of reasons why the appraisal was lower!

Absolutely. Don't give up the fight, you paid for the appraisal, you should receive a copy of the appraisal and a list of reasons why it was adjusted.

We own a 1 acre parcel of unimproved land which adjoins our property that we bought in 2011 for $19k. Turns out it is recorded with the county under our same address. The appraisal re-do had all the stats from that piece of land instead of our actual house. I bet that is what was happening in Zillow too (how I was guessing at our value before).

Even more reason to discuss with Amerisave what is going on with appraisal. Personally, I find zillow values worthless.

Also, all the added comps were short sales and foreclosures,

The comps are the comps. The fact that many were short sales only speaks to the point that property values have declined in this area.

almost all of them with dirt front and back yards, while we are fully landscaped with a 2000 sq ft paver patio in back.

The biggest driver of value on an appraisal is square footage, and then condition of home, updated kitchen & baths. Landscaping and a patio may be given $5,000 to $10,000. toward value. Drives me crazy and I discussed with a few appraisers. My own home, I put a little over $30,000. in the back yard for hardscape and landscape. When I had an appraisal done for a refinance the appraiser gave me an adjustment increasing value by $5,000. for flagstone patio. Basically, having an awesome back yard may not increase value dollar for dollar, but when it was time to sell, the home was on market for 3 days and the buyers specifically stated they decided on my home vs. a comparable one in the neighborhood because of the backyard. Landscaping is important to many home buyers, it will alllow your home to sell quicker, but it really doesn't drive value that much.

Now view will drive value. The home I purchased is about 60 yards from the water and the community marina. I can see the river from my front yard. The row of homes facing the river, same sq footage, same condition, sell for about $110,000. more than mine. Personally I don't see the $110,000. in value being able to see the river from your living room, I would rather put that money into a boat, that provides a real nice river view as well.

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124605 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/25/2013 5:06 PM
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Now view will drive value. The home I purchased is about 60 yards from the water and the community marina. I can see the river from my front yard. The row of homes facing the river, same sq footage, same condition, sell for about $110,000. more than mine.

Is it view or water frontage that is improving the value? When we bought our waterfront last year, it was nearly impossible to find any comps due to the rarity of waterfront homes sold or even available. Unfortunately, because our house was unusual, the comps were too dissimilar and the appraisal was rejected out of hand. Worked in our favor, but it would have been nice to be able to get a mortgage. As we increase the square footage hopefully we will be able to get a refi and get some of our cash back out.

We of course have the view too, but it was frontage that seemed to drive the appraisal.

IP

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Author: crackdclaw Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124609 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/25/2013 5:23 PM
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Is it view or water frontage that is improving the value?

View only. Which is why I don't think it's worth that $110,000. There is a swimming pool and a large green space that abuts the river.

Spent a year looking at homes within a 15 mile radius. Value on water is determined by: water front (riparion or non-riparion) dock or no dock, water depth at dock, a grandfathered boat garage, water view, seasonal water view, or my favorite advertisment, water glimpse.

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124611 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/25/2013 5:36 PM
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crackdclaw: "or my favorite advertisment, water glimpse."

At least is sounds like truthful advertising. Once stayed at a resort that advertised "ocean view" but only learned later that meant you coudl see the ocean if you were outside on the balcony, properly aligned, you might see the ocean.

Regards, JAFO

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124617 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/26/2013 12:48 PM
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Don't give up the fight, you paid for the appraisal, you should receive a copy of the appraisal and a list of reasons why it was adjusted.

I attended a talk by an appraiser of 24 years on Thursday night. His talk was about how I, as a loan originator, can assist an appraiser to provide a complete and comprehensive appraisal. Why is it up to the homeowner (or loan originator) to assist the appraiser? Because whereas an appraiser might have earned $350-450 for an appraisal in the past, they now earn $250, the difference going to AMCs (appraisal management companies), the middleman inserted into the process pursuant to HVCC (Home Valuation Code of Conduct).

http://en.wikipedia.org/wiki/Home_valuation_code_of_conduct

He said at $250, appraisers have practically uniformly adopted a "quick 'n dirty" approach to appraising; otherwise, they can't make a decent living. If a homeowner wants adjustments made to his work product, it's up to the homeowner or loan originator to provide the reasons why the appraisal should be adjusted, not the other way around. In other words, don't expect an appraiser to provide you with a copy of his appraisal and a list of reasons why he appraised your home as he did. Ain't gonna happen.

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124621 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/27/2013 11:19 AM
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Maybe this depends upon area? We recently had our house appraised for a refinance less than a year after buying the house. It was a traditional appraisal. Appraiser was very familiar with the area, came to the house and spent quite a bit of time going through, asked us about the upgrades we put into the house, asked about pricing when we bought the house (it was a divorce situation which the appraiser ultimately noted in the appraisal). She wanted to know if we knew of any other comps not in MLS (for example, any FSBOs) and sought any other information we could give on value. The ultimate appraisal was for more than we had paid for the house and was quite fair. We were given a copy of the appraisal and it was quite thorough....

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Author: Lauraly One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124630 of 127262
Subject: Re: Amerisave appraisal rejection Date: 1/29/2013 4:59 PM
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Well, we did get a copy of the appraisal review. It had the wrong address originally, which caused it to fail the automated reviews and go to a human. The second appraiser pulled different comps than the guy who actually came to our house. We have tried to dispute the comps to no avail.

I wonder if it would have gone to a second reviewer if they had gotten our address right. Would it have still failed the automated process. Does it get reviewed by another person as procedure?

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