Anyone heard of a ss lender ordering a retro appraisal based on 2006 values? Why would they do that?

Why on earth would a lender order a "retro appraisal" for 2006 values?  This lender kept countering back at $40K more than the fair offer we have.  We kept asking if they had more land included in their value.  After wasting a few weeks, they finally did check.  I kept reminding them that the mortgage only encumbered one lot and the contract was including two lots.  The seller owned more land than just the two lots, too.  This is also one of those BOA Equator mystery decline files that we have to initiate, again, just before we were due to receive an approval letter.  Now, they informed us that their BPO was based on three lots.  Still waiting on their completion of their new BPO review.  But, it is alarming to hear that they just ordered this retro appraisal.  Any ideas?  Is this good or another bad turn for this file?

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Permalink Reply by Kimberley Kelly on July 22, 2011 at 3:41am
Do they suspect fraud with the original loan?
Permalink Reply by Kristy Hamilton on July 22, 2011 at 4:14am

We haven't heard about BOA suspecting fraud.  The only way we know about them ordering a retro appraisal was that the listing agent spoke with the appraiser when he needed access to the property.  The appraiser had a copy of the original appraisal to find the comparables, too. 

 

Permalink Reply by Estella Drake, CDPE on July 22, 2011 at 4:24am
I would make sure to ask them if this file has investor MI, they might be trying to see something from the past to settle the Investor MI, hum...sounds fishy to me!
Permalink Reply by Kathleen Couch on July 22, 2011 at 5:20am

If the value does not come back the way it should, make your own professional looking comparable valuation, with color pictures, and load it into Equator.  You can dispute the value.  Some BPO agents are not as good as others, that includes appraisers also.  Some BPO agents have even told me that they are hoping to make it into REO listings by doing BPO's. Do you think they might have a reason to want to make a short sale fail by giving a higher value, if they think they may get the listing as a REO?

I like to get comps ready on the property to be valued, and if possible give them to the agent or appraiser, in the guise of helping them out.  I am not an agent, but a third party short sale facilitator.  I'm not sure if agents have restrictions placed on them with this.

Permalink Reply by Estella Drake, CDPE on July 22, 2011 at 6:45am

I think the questions is: Why are they going back to 2006? Investor MI payoff might be sweeter!!!

Permalink Reply by Bryant Tutas on July 24, 2011 at 12:09am
They are more than likely auditing the original loan and value.
Permalink Reply by Gabe Sanders on July 24, 2011 at 1:48am
I've had this a few times in the past.  It could be as Bryant said above.  Occasionally they are also checking trend values in local markets as well.
Permalink Reply by Deborah McKnight on July 24, 2011 at 3:43am

I've been doing more "historical" bpos lately...they're checking values at the time of the effective date of a previous loan.



Gabe Sanders said:

I've had this a few times in the past.  It could be as Bryant said above.  Occasionally they are also checking trend values in local markets as well.
Permalink Reply by Sally A Solomon on July 24, 2011 at 7:23am

Hi Kristy,

I had an appraiser call me 2 weeks ago on a short sales I closed at the begining of the year and I asked him why he was doing an appraisal on a property that was already closed.  He told me that the MI company on this transaction had order a forensic appraisal on the property for the year 2007 which was when the loan was taken out.  I asked him the reason for this & he said that the MI company wanted to make sure that there was no fraud perpetrated on the original appraisal.  I was concerned for my client but the appraiser said it was just about the appraisal. 

Permalink Reply by Sandra Koutsopoulos on July 24, 2011 at 2:55pm
I am a Certified Appraiser & have done many retro forensic field reviews over the last few years.  Typically, the issue is over-valued appraisals, and the targets are the individual appraisers' licenses & the lender that initiated that appraisal to give loans on over-valued properties. Many times that homeowner is still there & trying to do a modification or short sale.  Many of these reviews are initiated by FNMA, and are aimed at lender put-backs, to decrease the loss to FNMA for a foreclosure or modification.  When I get a review on Big Bank Loan who used their in-house appraiser to justify value, I admit that I have to smile.  The Big Banks shut out independent appraisers for the most part so that they could make appraisal income another profit center.  No worries for the homeowner (unless HE committed a fraud).  But appraisers may be losing their licenses or see their E&O ins go way up!  BTW, by over-valued, I mean ignoring the fact that the comp sale had a basement or 3rd car garage, or extra 200sq ft addition, or additional bathroom, or pool or...  If appraisers don't pull the MLS, it is like knitting in the dark...you may get away with it sometimes, but when a light is shown on it, all the nasty errors become obviously visible!
Permalink Reply by Barb Van Stensel on July 24, 2011 at 3:23pm
I have heard of this happening as they more then likely are trying to find out if the property was over-appraised as I have had some Banks here in Chicago send me an appraisal to review with a lot of questions.. Granted, I no longer hold my appraisal license but I generally can figure out if the property was sold for more then what it was worth. Happens alot. If the file comes back that the value was too high back then, then it is a good turn for you. I have looked at new construction here in Chicago for banks that are holding title and my first statement generally is: I hope you fired this in-house appraiser. They recognize but want another opinion as it is hard to justify at times. Just my two cents.
Permalink Reply by Kristy Hamilton on September 9, 2011 at 3:27pm

I am unsure as to what came about from the "retro appraisal", but know that the new BPO that was ordered came back at the same amount as the first, even though the first BPO was performed with 11 additional acres of land included in error.  So, their BPO amount was the same with 11 acres included as without the 11 acres, which were not encumbered by the mortgage.  Only the house and one acre had a mortgage attached.  Result?  Buyer walked.  The seller had even included an additional acre of land with the contract toward the short sale.  BOA is the lender.

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