Lender is pulling a fast one (I think)

[bayyoc]

What is the name of your state? AR

My wife and I have been waiting a month for our closing date. Now, three days before closing, the bank calls and says there's a problem with the appraisal. The house appraises at the purchase price (91,000), but it needs some repairs (it's a 101 year old Victorian.) It appraised for 100,000 three years ago. The current seller has made major improvements in those three years.

The problem according to the lender is that even though the house appraises for the purchase price, it's condition is Average, and so doesn't meet secondary market standards.

As far as I have been able to determine, Fannie Mae requires a minimum of "average". But on top of that, this is a No Income/No Asset loan and I don't even know if Fannie Mae would approve that sort of loan anyway (would they?).

The reason I think they are pulling something shady is that they say we may be able to go ahead with the deal if we can get a construction loan (with them, of course) to fix some of these problems.

The loan officer knew this house was a fixer-upper when I applied for the loan a month ago. They waited until three days before closing to pull this on me.

I'm so upset I can't even think straight. Is there any recourse? Can I force the bank to honor the loan they promised me a month ago? It's not like the house didn't appraise for the purchase price. It did. (It was "as is" at $91,000)

ARRRRGGGGHHHH!!!

help me.

 

[HomeGuru]

What is the name of your state? AR

My wife and I have been waiting a month for our closing date. Now, three days before closing, the bank calls and says there's a problem with the appraisal. The house appraises at the purchase price (91,000), but it needs some repairs (it's a 101 year old Victorian.) It appraised for 100,000 three years ago. The current seller has made major improvements in those three years.

The problem according to the lender is that even though the house appraises for the purchase price, it's condition is Average, and so doesn't meet secondary market standards.

As far as I have been able to determine, Fannie Mae requires a minimum of "average". But on top of that, this is a No Income/No Asset loan and I don't even know if Fannie Mae would approve that sort of loan anyway (would they?).

The reason I think they are pulling something shady is that they say we may be able to go ahead with the deal if we can get a construction loan (with them, of course) to fix some of these problems.

The loan officer knew this house was a fixer-upper when I applied for the loan a month ago. They waited until three days before closing to pull this on me.

I'm so upset I can't even think straight. Is there any recourse? Can I force the bank to honor the loan they promised me a month ago? It's not like the house didn't appraise for the purchase price. It did. (It was "as is" at $91,000)

ARRRRGGGGHHHH!!!

help me.

**A: the bank got you by the old Victorians.

 

[amortgageman]

There's really not much you can do with that lender in regards to forcing them to accept your property and the appraisal. It is there money and they want to make sure that the property they are loaning monney on is acceptable.

There are too many instances where appraisal conditions are met on paper, but the lender does not like the comparative properties or in this case a "fixer upper" being called average. You admit yourself that this property needs some work. What type of negative notations are included on the appraisal. Maybe there is something there that has made the lender reject the appraisal. What does the outside picture look like on the appraisal. Is there evidence showing in the picture that there is obviously some needed care, i.e. paint.

One other thing here, a NINA loan gives the lender very few options to verify that they are making a good loan. In the areas where they are able to make decisions, they do scrutinize the material much more closely.

Also, there could be a slight problem with declining price values in the neighborhood, due to your mention of an appraisal three years ago being $9,000 more than the current appraisal after all the improvements.

If there is still some major work that needs to be done, it may be in your best interest to have the this money escrowed and the repairs made and proceed that way. If it is with the same lender and they can switch programs and still close the loan.

P.S. Wishing I could find one of those properties myself.