Bad Appraisal now what!!

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Hello,

I recently purchased SFH home for 33k it needed 15k in repairs. ARV came back from the hard money lender at 88K my estimated value was 91k so I was pretty close on my own comp values. This was in March 09'. After completing the rehab we put the property up for sale by owner for 80k within in 2 weeks with had a potential buyer, loved the house very eager to close. We were still marketing the house but after seeing his credit report we felt good that he was qualified to purchase. Time kept going by and by and still no answer for the lender while our holding cost keeps going up. Bottom line he fell through no closing.
So we were pretty much screwed on selling it at the point because our loan was due in 6 months from march with our HML. So we decided to do a refi and to do a lease option screened several tenant buyers and found a good match with a good consideration fee 3K so let me break down the numbers now
purchase price 33K
rehab 15K
All holding cost inculding interest on HML was 19K ( there is also other business expense in with this number)
puts us in the property for 67K with a selling price of 84K
refi at 69K with P&I taxes and insurance was at $650/month currently leasing for $950/month decent cash flow

However we were going with Bank of America and the appraisal only came back at $56K

Hard money is now due Nov.1 (we had to extend) we can refi with them interest only

What to do now
Help

[Jon Holdman]

How much do you actually owe the HML? I'm surprised BofA will do the loan at all, using a new appraised value. Its my understanding all FDIC insured banks are required to wait one year from the purchase date before they can use a new appraisal.

Can you bring in some cash to wrap up the deal with the HML?

Did you provide the appraiser with comps that justified the higher value? Did he or she use those comps or others? Are the comps used good comps? There is supposedly some process for protesting the appraisal if you feel it was done incorrectly and have evidence to support that contention.