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Can the bank influence the appraisal on a jumbo loan refinance?

I have started the refinancing process with Citi on a jumbo loan. I am going through a divorce and have an agreement in principal that I will keep the apartment. My plan is to refinance and have my spouse sign a quitclaim deed. I estimate the current value at $650K-$700K based on the most recent comp in the building. This is MUCH less than what we put into the unit, but not too far from the current mortgage balance of $700K. The broker at Citi calculated that the value would have to be $875K to keep the mortgage at $700K (w/20% down), and the $875K is on my loan application. The thing is, I don't want the appraisal to come in much over $700K. My spouse has agreed to split any negative equity with me (up to a certain amount), but that implies that if the appraisal comes in higher than $700K, I will have to pay him half of the "profit". The fact that Citi put the $875K value on the application is driving me bananas. Is it possible that on a jumbo (nonconforming) loan, they can make the appraisal a mere formality to keep the loan value as high as possible? If I were approved for a $700K loan, I would have to pay my husband $87.5K for value that doesn't really exist. (Note: I am happy to have the value come in around $700K and come up with the new down payment myself.) Should I have let Citi know that I didn't want a loan for $700K? I just got the paperwork for my application, so nothing has been submitted yet. But I'm fearing the appraisal and don't know if I should highlight all the wonderful things about our unit or just keep quiet and hope for a lower value.
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June 04 - Chicago
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Answers (9)

Interesting situation.  In theory it should make no difference what is written on the application but I certainly think some lenders still have "some" influence.  With that said, you don't need 20% equity to get a great jumbo loan. 
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June 09
The appraiser is an unbiased party and should have no contact or influence from any lender in regards to value.
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June 05

Steve Greene's answer is spot on and accurate advice.

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June 05
To put a slightly different "spin" on it, the lender is not only probibited from influencing the appraiser, but I am virtually certain that they were not trying to do that. If they had input a value of under $875,000 they would have been starting a new loan application that on its face did not qualify.  That would be a total waste of time for everyone.,

But there is something else that might matter to you.  Appraising a property for mortgage collateral purposes is different than appraising a property to establish value in a divorce situation.  I know that sounds odd, but the appraisers will tell you this.  Of course you and your ex can agree to accept any valuation of the property, but you may find that in a legal dispute (should one arise), the lender appraisal might not be acceptable. 
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June 05
Reading Part I sections A & B should put you at ease. 

 https://www.fanniemae.com/content/fact_sheet/appraiser-independence-requirements.pdf
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June 05
Your application will not have any impact on the appraisers opinion of value, you could put $1,000,000 as a value there if you wanted to.  The appraiser is going to determine the value based mostly on comparable properties that have sold recently.
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June 05
The appraiser does not see your application and Citi cannot influence the valuation. The appraiser has to be independent by law. This means that nothing but comparing your property to other similar, recently sold properties can be used to determine the value.
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June 05
The application should have nothing to do with an appraisers decision on the value of your property. They will most likely put a lot of emphasis on the comps. What the lender put on your application is probably just a high estimate and shouldn't have much clout.
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June 04
An Appraiser usually has to follow USPAP guideline to help determine Fair Market Value, "

WHAT IS MARKET VALUE AS DEFINED BY USPAP?

Market value or fair market value is the most probable price that a property will sell for in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

You can also show your current tax assessment which may show what the County or City is currently valuing your property.

You can ask a real estate agent to do a comparable market analysis of your property and turn that into the bank to help justify your dollar amount.

How about choosing another bank or lender to do the refinance?

Few options hope this helps.

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June 04
 
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