07-29-2009 08:06 AM
Refi loan was recently approved through Wells. I heard back from LO at Wells that the current appraised value of my house is $178,000. I paid $185,000 in 2004. The house was built in Nov 2003 in growing neighborhood just outside of Fulton Cty, Atlanta, its a 3/2 with granite and SS kitchen, hardwood floors. Since moving in, I landscaped front and back yard, adding 6 ft privacy fence and replaced landing outside kitchen door with a full deck that wraps around and connects to deck in backyard (keeps master bed from being only access point to backyard from inside house).
Although there have been some home sales, neighborhood has been hit with foreclosures and some of the home that sold were picked up for almost nothing. I'm getting an FHA refi, and I was told that that appraisal would not include comparables, but the appraiser would take a look at the condition of my home only to based their assessment. Well, clearly this was not the case.
The LO (who also seem to be taken aback) is requesting a report from the appriaser to see exactly where she got her figure.
What I need to know now is what are my options? Based on the existing number of $178,000 could i qualify for a modifaction?
I have a full-time job with no blemishes. Current scores: TU 697, EQ 681.
Any advice would be hugely appreciated.
07-29-2009 09:35 AM
Assuming you didn't do an Interest only loan your current pay off amount has to be around that amount. You will have to come up with the difference of what the Bank is willing to lend you on top of closing costs.
Loan Modifications are for people severly under water whose payment is more than a certain percentage of their income.
07-29-2009 09:40 AM
07-29-2009 10:26 AM
Thanks for responding. Actually, my current loan is 5 year interest only that I'm looking to refi to a FHA 30 yr fixed. Current loan scheduled to reset this Nov. The LO did tell me that once she's reviewed the report, that we may have the option of getting another appraisal done depending on the information gathered in the first one.
The closing cost is actually going to be rolled into the refi.
07-30-2009 07:06 AM
According to banking regulations, I believe that you should be able to get a copy of your appraisal. The bank is the appraiser's customer, and the bank should give you a copy "within 30 days." There is some confusion as to when the 30 days starts, but, in the end, you should be able to get a copy.
Not sure why an FHA appraisal would NOT include comparables. Appraisals customarily include comparables, which is how the appraiser can tell the bank what is happening to property values in the neighborhood and community.
It is unrealistic to think that a property could be valued in today's market without taking comparable properties into consideration. If you had to sell your home anytime soon, market values of homes in your community would be important in determining your selling price. Condition of your home is only part of the equation.
The theory that appraisal fraud helped propel the real estate market into the state it is in currently has meant tougher appraisal standards in today's mortgage market. New laws have recently come into play that mandate a hands-off approach from bankers. Bankers can request that an appraiser reconsider final value based on information the appraiser may have missed (more appropriate comparables, etc.), but the banker is no longer allowed to pressure the appraiser into meeting a certain property value.
Do you need more than this appraised value to come out whole on the refinance? There are programs out there that allow new mortgages based on more than 100% of appraisal. Those programs are meant for people who are "upside down" on their mortgage. I do not know the specifics.
I don't know if any of this helps, but it's important to keep in mind why appraisal standards have gotten tougher.
07-30-2009 07:33 AM
Thank you so much for your response. What you stated makes a lot of sense and I totally agree. For the neighborhood I live in, and based on comparables used in the appraisal based on when i bought, my house was appraised at a competitive value. That why I really need to see the report to get a clear idea of where this $178,000 came from. The LO told me foreclosures are not supposed to be a factor, so don't know if that's the case here. And if they used comparables, what were the specifics of those properties.
Yes, I do need more than the appraised value to come out whole on the refinance. I have access to $3000 - $4000, so I was also wondering if it would be a good idea to apply that towards my principal to bring the amount owed down. At this point, I'm just trying to think and every angle I can take on this.
Again, thanks for weighing in.
07-30-2009 07:51 AM
Your LO is correct that foreclosures should not be used as comparables. Comparable property values used should be properties that have sold in arms-length transactions. The purpose is to use comparables where a fair, unbiased market price was agreed upon between two unrelated parties. A foreclosure is a distressed sale, and therefore should not be used.
I would work with your LO on options. Paying down the principle may be an option, but I would not do that without asking my LO what ramifications that could have. If that $3,000-4,000 would incur debt on your part, that could throw off your ratios and disqualify you. If paying that amount would run your available cash down to zero, that's not a good position to be in either. Ask your LO about programs that might refinance the present mortgage value, even if that value is above appraised value. My son just did this in Michigan, and his home value had dropped in excess of $60,000. I don't know the details, however.
Good luck...and try to count your blessings. Many people are thousands and thousands of dollars underwater on their mortgage to value ratio. It at least sounds as if you are close to making this work.
07-30-2009 08:03 AM
Thank you so much! Your feedback is actually making me feel a little better about the situation. I agree, all things considered, we're only talking about a 7,000 drop. But that also makes me go, "Hmmmmm." I know there have been properties around the corner from me that have been recently sold as "bank owned" for insanely low amounts. But one is a multi-unit which isn't a true comparison. I also know of two properties in my community (not around the corner, but same subdivision) that were recently purchased (3-4 months ago) that were not foreclosed purchases that are more in line with my property in terms of size, sq. footage, etc. Any additional information you can give me regarding the program your son went thru would be great.
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