Appraisal waiver granted amid COVID19 pandemic

“This was during the middle of the COVID19 crisis. With the volume increasing with most lenders, including ours, staffing became overloaded very quickly and turnaround times decreased due to the large drop of interest rates.”

Senior mortgage loan officer: Bob Gerson, California Bank & Trust.

Property type: Singlefamily home in Point Richmond. Appraised value: $850,000. Loan amount: $680,000. Loan: Highbalance agency 30year fixed.

Rate: 3.25% with no points. Backstory: My clients had put in and ratified an offer last year around August. A week after the loan was placed, one of the clients became ill and decided to cancel the purchase and loan. After eight months, and my client’s health was back to normal, they both decided to start looking again so they can move in to get a larger home which included their three children.

After a few offers that were rejected, they were able to ratify a new home. This was during the middle of the COVID19 crisis. With the volume increasing with most lenders, including ours, staffing became overloaded very quickly and turnaround times decreased due to the large drop of interest rates.

We have a fast track process whereby a separate processing and underwriting team can move very quickly for certain types of loans.

Fannie and Freddie Mac made the possibility of avoiding appraisal inspections and we were able to get this waiver.

I had provided sales comps to satisfy their value. There were a few stumbling blocks due to requiring an outside appraiser to assist in rental comps for a departing residence. It was very difficult to get an appraiser because of the volume hitting lenders. One borrower was impacted on his income due to his hours being reduced, but the timing was perfect when he went back to use his regular hours and income just before our final review for closing.

So I was able to calculate their combined income and avoid the use of counting a renter for offsetting debt.

One of the benefits of this crisis was that the IRS gave clients the ability to use an IRA without any tax penalty. My client used these funds for the down payment and closing costs.

In the end, the clients were able to move in on time and not only that, the client was able to rent to a new tenant on the departing residence. Government loans are tightening credit guidelines to insure loans don’t go down south.

Verification of employment is done five days before closing and income and assets are needed to be current. Funds must be liquid now too.

Bob Gerson, California Bank & Trust, 4159023002, bob.gerson@calbt.com.