2nd Appraisal Request

[Lesley J.]

I'm in the process of refinancing a hard money loan. I bought a nice property, fixed it up and it is now rented on a 12 month lease. So far so good.

the original appraisal was for 90K, and I borrowed 50K. The lender of course wanted another appraisal and this one came out at 102K. Smiles all around :D....

I am only requesting a loan to pay off the HM loan, no cash out. I am well within the LTV. I have good credit in the 700's and I intend to hold the property so no flipping going on ........

Today the lender informed me that a stop was placed on my loan because it was a flip. He contested that by requesting an exception. This was given and the loan can now proceed but the lender requires yet another appraisal, that I have to pay for.

I have practically had to give over the birth cert for my firstborn child, and have waited a full 60 days to get this far when originally promised a closing by the end of July. I am constantly asked the same question over, ie: to prove that there is no loan on another property I own in Florida.. on which there hase NEVER been a loan, but how do you prove a non existance, its easier to prove something exists.

At the point where I was asked to pay for yet another appraisal I have dug my heels in...... the two appraisals i already have are reasonably close, and i have been given no reason that the appraiser had anything out of line in either appraisal...

i'm considering going to another lender, but since this one has cost me 60 days time loss at the HM loan interest rate and the cost of the appraisal it's hard to start over again...

any thoughts or advice would be helpful.. I repeat I have GOOD credit and have never been turned down for a home loan before ever!!

Lesley

[Scott Hubbard]

There are a number of underlying issues at work here.

1) Your original purchase price was probably much lower than the appraised value. If this is the case, did the underwriter ask for any receipts or work orders? Often times when you buy low, it can cause the underwriter to kick-back for a valuation recheck and justification for the difference between your original purchase price and the new appraisal. When I refi my rentals, I always take before and after pictures, include a list of improvements, and copies of all receipts and workorders. I put it altogether for the appraisers, agents, tenants, and even lenders.

2) Non-owner occupied refinances are some of the most heavily scrutinized loans. The mortgage company has to make sure all is within the guidelines of the investor purchasing the note. Fortuantely, the second appraisal can actually be reimbursed (sometimes) so push your mortgage contact to credit your closing for the appraisal. But, I have yet to do a cashout refi that I have not yet needed a second appraisal.

In the future, you can find a mortgage lender that holds the note (a.k.a. warehousing) for seasoning. You are running into this situation becuase they are going to sell the note and the investors has specific guidelines to which the lender must adhere.

3) Florida's market is one of the worst in terms of risk, so you really should appreciate the risk they are taking and should understand their caution.

As others have stated, it is worthwhile to stick with this lender. Remind your broker that there will be more deals down the road, but he/she needs to help you get this done timely or your going to walk with this deal and your future deals to another mortgage office.

For future deals, it might be a good idea to shop around to a more investor friendly firm.

Good Luck!