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from Local Attorney, Michael H. Wasserman

Monday, December 22, 2008

Mortgage Appraisals

Here's a head scratcher....

My client wishes to purchase a bank-owned property. His mortgage lender orders an appraisal to confirm the property value. So far, so good, right?

The appraiser visits the property, checks for comparables in the neighborhood and reports that the contract price is fully $20,000 below the appraised value. The comps are all higher, too.

Yes, you read that right folks. Buyer would be get the house for less than market value. An instant (paper) gain of at least $20,000. More equity for the borrower/owner. A lower "loan to value" ration. That is a good thing, isn't it?

Apparently not; the underwriter denied the loan. Blames the appraisal.

huh?