Underwriting – The Dumb Rules Club

August 20th, 2010


Underwriting – The Dumb Rules Club. I usually have to wait a month or so to blog about another hard to believe underwriter request. But I find myself writing about such an underwriter request only a week after I last wrote about this very topic.

A refinance story

I had a longtime client who wanted to refinance. I helped them get their mortgage when they bought their home back in 1995, and have helped them with three refinances since then. And these transactions are all on the same property.

They have a lot of equity in their home, high credit scores, and have been on the same jobs for over 15 years. They are stable and financially sound.

The alleged problem

The appraiser, for some unknown reason, cited on the appraisal that the rear deck to the home had no handrails. They said this was bad and that the deck needed handrails. Keep in mind there have been four previous loans on this home. And the deck has not physically changed at all from inception. No appraiser has asked for this before.

Does it really matter?

Now, I hear the skeptics out there already, saying, “well, shouldn’t a deck have a handrail?” Sure, why not? But does it really materially affect the borrower’s ability to repay the new mortgage. Or does it really affect the property value a nickel? Does it affect the marketability of the property at all? No, is the answer on all counts.

The end result

But the appraiser had this notation on the appraisal. The underwriter, who had the power to ignore this silliness, upheld the appraiser’s suggestion that a handrail be installed. The world is now a safer place.

And the appraiser had to come back out and reinspect the home to make sure the work was done. The re-inspection fee was $115 on top of the $400 appraisal fee. Hmmm, imagine that. Would I be falsely suspicious to wonder aloud if the appraiser was trying to pad his fee? I see more and more appraisers calling for repairs, which require a final inspection, which requires an additional fee. Wait a minute…what the…!?!!

Would I be negative to wonder why the underwriter could not use some common sense on a low loan-to-value, high credit score loan, and waive this condition? I find it astonishing in this economy that a loan that would save someone over $600 a month can get rejected over a few pieces of wood!

I report, you decide.

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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