Lender admits appraisal is for "liquidation" value!

[Jayson H.]

I'm under contract to purchase a SFR for $135k. I'd conservatively estimate FMV at $145k to $150k. The local credit union I'm working with to finance the deal has performed a $450 "real estate evaluation" (i.e. off-site, desk appraisal) on the property and arrived at a value of $110k.

I questioned my LO about the appraised value and they admitted the scope of the appraisal was to formulate a "liquidation value," not a FMV. WHAT?!? Furthermore, when I requested a copy of the evaluation I was told the evaluation is proprietary property... WHAT?!?

I reminded the CU that Regulation B §1002.14 applies in this case and now my LO is requesting permission to release the evaluation to me.

That said, I've never heard of a "liquidation value" appraisal being used for a purchase money transaction. Is this common?

I'm thinking this is a convenient way for the CU to limit their exposure, at my equity expense! If this was a BRRRR, I'd be in trouble.

[Chris Mason]

@Jayson H. I'm not a lawyer, but my training has been such that if you pay for the thing, you get a copy.