Disputing Low House Appraisals
by Chandra from Cumming, Georgia, USA
Ask Kate about disputing low house appraisals: Do I have any chance to sue this bank? I purchased my home in 2007 for $440K and refinanced in 2009. Now I am working with a mortgage broker to refinance once more.
I applied for the refinance more than 3 months ago and locked 4.125% on a 30 year fixed rate loan with no closing costs. I paid for the appraisal and credit check fee up front with an agreement that I will be reimbursed upon closing the loan.
An appraiser came who was assigned by the bank where my mortgage is being brokered. I was given an appraisal value of $470K, which is way above the amount required. I am refinancing for $330K.
However the bank is not approving my loan application, stating the value of my home is not more than $350K. But they haven't provided any documentation supporting their claim.
Per my mortgage broker, bank loan officers were provided with additional comparables by the original appraiser upon request from the loan officers. I also furnished additional documentation (again requested by bank loan officers) proving that there are two tiers of prices in our subdivision.
In spite of providing the demanded documentation, bank officers are still denying my loan. When I demanded a written documentation supporting their appraisal of $350K, the bank came back and said they are reviewing the documentation provided by me and the appraiser.
In the meantime, I received a Good Faith Estimate from the bank stating that my current lock rate of 4.125% will expire in a couple of days.
So, I am concerned that I may be brushed off by the bank one way the other. I am wondering do I have any chance to sue the lender.
Kate Answers: Disputing Low House Appraisals
It riles me up too when I see a bank taking the cookie cutter approach to appraising.
On a personal side, I once owned a home that was originally the builder's personal residence. Our house was significantly larger and on a bigger lot then surrounding homes.
But only a couple of blocks away, within the neighborhood, were comparable properties. I also had to endure what you are going through to convince the bank that our house was worth $150,000 more than their appraisal. So I understand your frustration.
Disputing Low House Appraisals
But the problem is no matter how logically you present the facts, the first Rule Of Banking is going to apply.
He who holds the gold makes the rules.
And if the bank has been burned lately over an appraisal or two, I doubt you are going to change their mind. But as you also noted, your locked-in interest rate is about to expire. So the bank apparently holds all of the cards.
If you spend much time on my website, you know I'm a fighter and don't give up easily. Even so, I don't advocate suing the bank and here's why. They have too much money and can outlast a fight much longer than you.
But here's what I WOULD do! I'd pursue getting a free rate lock extension - in writing - while they drag their heels during the appraisal review.Mortgage Tip:
Learn how to get a mortgage rate lock in writing even when locking over the phone at Mortgage Broker Fees - Get 'Em In Writing
This will give you time to apply the second Rule Of Banking.
The squeaky wheel gets the grease.
It's a fact that your mortgage approval has taken a turn for the worse, like another homeowner who couldn't close on the last day of his refinance. Find out what I told him to ask his lender at How To Cure Mortgage Approval Hiccups
. Be prepared to squeak!
Chandra, one more thing. I'd like to hear the outcome of the appraisal and rate lock extension. Let me know if this page is helpful to you or if you have more questions. Anyone can Comment on Disputing Low House Appraisals
. Or Ask Kate another question here
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