Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
How do you guys protect yourself from lenders that fail to move files through underwriting in a timely fashion? I have had loans slip past lock periods in the past where the lender held my appraisal hostage after they goofed up and missed the lock date on the loan. This seems to be quite common when rates rise in the interim and borrowers have already paid for appraisals. It is especially troublesome for purchases, but I have had similar problems with refinances too. I know that banks are busy, but it is reckless and unscrupulous to hold someone’s appraisal hostage if they screw up and don’t issue the loan in time for the lock period.
Is there really any remedy for this problem other than to do due diligence on the lender? It seems the cards are stacked against the borrower in these scenarios. I guess having a fallback lender to lock jump is okay too, but they can’t use the appraisal you paid for in most cases.
Real Estate Broker · Fort Pierce, FL · Member since 2009 · 221 posts · 95 votes
15y
Originally posted by Darryl Dahlen:
Unless things have changed, the lender is not holding the appraisal hostage as it is theirs, not yours. I know that doesn't seem fair since it is the borrower who almost always pays to have it done, but it is almost always done in the name of the lender. That makes it their appraisal, not the borrowers.
But, at least now with the SAFE Act, the borrower can request a copy (in writing) of the appraisal and the lender must provide one within a certain timeframe.
Real Estate Investor · Miami, FL · Member since 2009 · 45 posts · 1 vote
15y
I wish I knew the answer to your question, in this case I am beyond caring about the rate lock... I have had a loan in underwriting for 1 month... and they have yet to approve or deny it. I am refinancing out of a hard money loan, and the final balloon date is looming. They will not talk to me, only the broker.
Yes it is reckless and unscrupulous but I just don't know what to do next on this.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
15y
Do you find lenders that go past lock dates due to their own foot dragging, increasing rates?
I was working with someone who had a lock with BofA that seemed open ended with the loan taking probably 4 mo's. Her rate lock was 4.3% and rates went to 4.75%. They gave her 4.3%
Banker · Chicago, IL · Member since 2009 · 5 posts · 1 vote
15y
Let your mortgage broker know your priorities before he submits your loan to a lender. If you're not going to be upset about .125% rate difference, there are several lenders that pride themselves on two day turn around. Also, lenders post their current turn times daily, so your broker should have some type of expectation.
When you "double app" (line up more than one lender) each lender can see the other on your credit report, they all see the other's inquiry. Once they realize you may go with somebody else they slow down even more.
Involved In Real Estate · Hyattsville , MD · Member since 2011 · 298 posts · 256 votes
15y
I actually work for the lender mentioned in one of the above posts and its quite diffrent working with a lender than it is with a broker. We have to keep your rate at what you lock it in at even if the market increases and we most of the time do it at a cost to us not to the borrower.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
The underwriters drag their feet and then ask for a mountain of extra information 2 days before you want to close. The usual crap!
I have had locks where I am convinced the lender intentionally tried to weasel out of it at the last minute. There really isn't a great way to protect against this that I know of.
Commercial Loan Officer · Southern Maine, ME · Member since 2009 · 782 posts · 415 votes
15y
Unless things have changed, the lender is not holding the appraisal hostage as it is theirs, not yours. I know that doesn't seem fair since it is the borrower who almost always pays to have it done, but it is almost always done in the name of the lender. That makes it their appraisal, not the borrowers.
Real Estate Investor · Miami, FL · Member since 2009 · 45 posts · 1 vote
15y
Originally posted by Bryan Hancock:
In Texas when you pay for something it is yours. Call me old-fashioned or simple-minded!
Yes I know that feeling too... I had a WF loan app, appraisal was done for about $425 or so. They then proceeded to turn down the loan app, but infuriatingly it was not because of the appraisal, that was fine. I was upset because if they knew they were not going to approve it for a different reason, then they should not make me pay for the appraisal. Then to add insult to injury they are refusing to allow another lender to use same appraisal.... ! I started this refi process in october,and it's now March!!!
Real Estate Investor · Miami, FL · Member since 2009 · 45 posts · 1 vote
15y
Originally posted by Lesley J.:
Originally posted by Bryan Hancock:
In Texas when you pay for something it is yours. Call me old-fashioned or simple-minded!
Yes I know that feeling too... I had a WF loan app, appraisal was done for about $425 or so. They then proceeded to turn down the loan app, but infuriatingly it was not because of the appraisal, that was fine. I was upset because if they knew they were not going to approve it for a different reason, then they should not make me pay for the appraisal. Then to add insult to injury they are refusing to allow another lender to use same appraisal.... ! I started this refi process in october,and it's now March!!!
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
No worries Lesley...I can understand the frustration! I have had to pay for more than one appraisal for the same reasons. It is just nasty not to "release" something that someone else paid for. Where I come from that is called THEFT!
Commercial Loan Officer · Southern Maine, ME · Member since 2009 · 782 posts · 415 votes
15y
I sympathize. If for some reason I couldn't/can't do the loan, I don't have a problem assigning the appraisal to someone else. Sadly, people often let pride get in the way of doing what is best for the client.
If you are dealing directly with the lender you are likely to have a much harder time getting them to release the appraisal. One of the downsides of going direct.
Real Estate Broker · Fort Pierce, FL · Member since 2009 · 221 posts · 95 votes
15y
Originally posted by Darryl Dahlen:
Unless things have changed, the lender is not holding the appraisal hostage as it is theirs, not yours. I know that doesn't seem fair since it is the borrower who almost always pays to have it done, but it is almost always done in the name of the lender. That makes it their appraisal, not the borrowers.
But, at least now with the SAFE Act, the borrower can request a copy (in writing) of the appraisal and the lender must provide one within a certain timeframe.
Real Estate Broker · Fort Pierce, FL · Member since 2009 · 221 posts · 95 votes
15y
Which brings to question, what is the purpose of the SAFE Act now requriing lenders to give a copy of the appraisal to the borrower?
Is the appraisal certified? From my experience, the appraisal are electronically sent to the lender, so only the appraiser has a true paper original. Pretty much like to rest of the loan process!
Commercial Loan Officer · Southern Maine, ME · Member since 2009 · 782 posts · 415 votes
15y
The primary reason for the SAFE act was to create a national standard that brokers have to adhere to. An additional benefit is to reduce fraud while increasing borrower awareness.
By giving borrowers a copy of their appraisal, they can at least see how the value for their home was determined. I know in a lot of cases before the SAFE act, the borrower would never even see the appraisal which is crazy if you ask me.
I think the reason a lender won't accept a paper copy of an appraisal is obvious. It eliminates the chance for tampering. Just like credit reports, they're only good if they come from the source.
I'm not sure about this, but I think if an appraiser is going to re-certify the appraisal to another broker/lender they have to go out and check the property again to make sure nothing has changed. Most often, this incurs another small fee, but it's better than paying for another brand new appraisal.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
That is completely stupid though. The appraiser is, by definition, independent. Why should there be a fee to the borrower if the lender fails to fulfill their end of the bargain post lock? THE LENDER should either:
1. Be forced to release the appraisal
and/or
2. Be forced to pay for the fee to re-certify
As the system now stands the borrower has money at risk with absolutely no recourse other than complaining.
I know $400 or so is a small fee, but that isn't the main source of frustration. You have to go through underwriting ALL OVER AGAIN with a new lender, which is a huge deal if you own a lot of property. You also lose the rate you locked if rates tick up, which can cost a lot of money over the course of the loan.
Commercial Loan Officer · Southern Maine, ME · Member since 2009 · 782 posts · 415 votes
15y
I agree that if the lender is to blame for a loan not closing due to their lack of performance that they should at the very least be willing to release the appraisal.
I doubt they would pay for any fees associated with getting the appraisal re-certified, but in the scope of things it could be worse. At least they are releasing the appraisal which saves you $400 (this of course is providing the new lender will accept a re-certified appraisal).
This is one of those issues that boils down to relationships. If you have a good relationship with your broker/lender(s) they are far more likely to act in your best interest when they can't get the job done. If you go after what appears to be a good deal with an unknown, it can blow up in your face leaving you out in the cold when things go south.
Real Estate Investor · Miami, FL · Member since 2009 · 45 posts · 1 vote
15y
Well maybe my rant had a magical effect because the loan got approved this morning!! :) still gotta get the new appraisal though...but better than no loan..
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
I have had good relationships with brokers that have claimed THE LENDER wouldn't release the appraisal Darrell. Am I missing something?
The broker normally doesn't disclose all of the lenders they are shopping. Once they lock with one and I pay for an appraisal we are both at their mercy...no?
Commercial Loan Officer · Southern Maine, ME · Member since 2009 · 782 posts · 415 votes
15y
I'm a little rusty on my residential lending, so bare with me.
If you are applying for an FHA loan, most lenders will accept another lender's appraisal. If you are dealing with a conventional loan product, or a portfolio lender, you may run into issues since most of those lenders will want to order their own appraisal.
In the case where the lender, not the broker, and I don't think brokers order appraisals much anymore, ordered the appraisal, it is at the underwriter's discretion if they want to release the appraisal, and to honest, an UW doesn't care about saving you any money.
Again, I'm a little out of touch when it comes to residential lending, but I did a little checking into this issue, and from my digging around, this is the condensed version of the info I read.
As far as your broker not telling you who they're dealing with, that's an issue between you two. If you have a good working relationship with them it really shouldn't be an issue to disclose to you who the lender is.
Many borrowers don't care who the lender is as long as they're getting what they want, but in your case, perhaps there's more to a loan than just the rate.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
Well even if they told me who the lender is I may or may not know whether or not the underwriting department has hired idiots at the time. I am sure my broker would tell me who the lender(s) are and they have several times.
If the lender wants to screw you I guess there is little you can do to save the cost of the appraisal and the headache of re-underwriting.