|Lenders have the final say about
Julie Garton-Good, GRI, DREI
were buying another home out of the city limits and the loan process was going
pretty well until we got close to closing. It seems that the appraiser the
lender used was not approved by them. The closing was held up for more than a
week while the appraiser filled out a bundle of paperwork. In addition, it cost
us another $300 to keep the rental we were in. Shouldn't the lender have checked
on this before that point, and do you think there's any chance we can get our
rent reimbursed because of it?
are correct that the lender should have checked out the approval status of the
appraiser much sooner than was done. If a lender (and/or an investor in the
secondary market where the loan is sold) hasn't used an appraiser before, the
mountain of paperwork you described is requested. It requires not only a
multi-page biography of the person, but samplings of his previous appraisal
For example, it's not unusual for an appraiser to be required to submit an
appraisal sample of a single-family home, a condo and a multi-family structure
(like a duplex.) This gives the lender an overview of the quality of work the
appraiser does, but also an idea of property values in the area where the new
appraisal is being made. If the appraisal samplings are not within a certain
range of time (the past six months), the appraiser may have to comment on why
more current comparable appraisals were not available. The idea is to know the
quality of work the appraiser has performed, as well as the type of overall
marketplace the subject property is in.
As for recouping the $300 in rent you lost by waiting to close, it's
doubtful that the lender would see it your way. Delays like the one you
experienced are unfortunately commonplace in the mortgage industry and usually
don't result in any reimbursements. While it wouldn't hurt to send a certified
letter of request to the president of the lending company, you would have had
much more leverage prior to closing the loan -- at the actual time you were
being inconvenienced and before you signed the closing documents.
were about to close on the refinance for our mortgage when the lender called to
say that we couldn't use the insurance company we used previously. She said they
didn't have the proper rating, and we would have to choose another company
before we could close. What does this mean? Isn't insurance coverage all the
not just the coverage the lender is concerned about, it's the rating of the
insurance company. The lender has the right to specify that you use an insurance
company with a specified rating, such as Class A- or above. They contend that
the company's rating has a bearing on how solvent the company is and how fully
the claim would be satisfied if a loss occurred.
In the future, ask the lender to specify (in writing) exactly what type of
rating they're looking for before you start shopping for insurance.