As a former Account Executive, that’s a question many underwriter’s have asked me. So many times, an appraisal would come in with comps that are not comps, adjustments that were made to make the value work, not support the value, and just plain old errors. Sure, it’s easy to throw this stuff back on the appraiser, but you want to know a secret? The underwriter also blames the mortgage broker for these errors. It’s the mortgage broker’s responsibility to make sure the loan documentation is correct BEFORE the underwriter ever sees it.
What’s the result? Many times, I’ve seen an underwriter come to one of two conclusions. Hopefully they decide that you are incompetent. That the broker is either to lazy or ignorant to realize that their are obvious errors on the appraisal. The second conclusion is much worse. It’s that the broker knows about the problems and is trying to get over on the lender, hoping the underwriter misses the problem.
Either way, it lowers their level of trust with the broker. Some underwriter’s I’ve worked with even go so far as to nitpick every other document in that broker’s loan packages, knowing that if they are to lazy, ignorant, or sneaky to submit a problem appraisal to them, the rest of the file was probably treated with the same level of incompetence.
Broker’s have to know every facet of the industry. From the many I’ve worked with, they understand credit, income, marketing, rates, programs, tax returns… but many haven’t got a clue as to how an appraisal is formulated. It’s not good enough to look at the value, and then through the appraisal into the loan package. You need to scrutinize this document just like every other. My advice is to invite an appraiser to lunch. Ask them to show you how the process works, many are all to happy to show brokers how to spot a faulty appraisal. They have the same disdain for incompetent appraisers as underwriters have for incompetent brokers.
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I’m a former Underwriting Manager and while ultimatley the underwriter makes the final determination regarding the overall risk of the loan the Broker should absolutely know the ins and outs of each and every loan in their pipeline. Collateral is probably the most important aspect of a loan because it’s so prone to fraud and it’s ultimately the bread and butter for the investor. I can’t stress enough to brokers how important it is to understand the inner-components of an appraisal report. The results of understanding an appraisal is better customer service, quicker turnaround in underwrtiting and benefit of the doubt in future instances where you need an underwriter to make a boarder line decision that favors you and your customer.
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