possible appraisal fraud?

My husband and I refinanced our home last year in order to pay off other debts incurred during my illness and subsequent disability. Due to loss of income we have had some credit problems but nothing over 60 days late. When we attempted to refinance again this year with the same mortgage brokerage company (this because they recommended we do this last year), we were told they could not get the neccessary appraisal on our house. After a month went by they contacted us again offering a 15 year balloon mortgage. They had orginally offered us a conventional 30 year loan which is what we wanted. We are beginning to suspect that our house was over valued last year during the appraisal and we need to know if we should seek legal counsel. Thank you for your response.

mlneill

[HomeGuru]

You did not mention your state but regardless, you do not have a case. Even if there was an over valuation, you were the beneficiary of a high appraisal.

We live in North Carolina. Sorry! I don't feel like I will "benefit" from this at all, because I now own a home that I cannot sell or refinance since it has been over valued. I also am afraid that at the end of the 15 year balloon I wouldn't be able to get a refinance.

mlneill

[HomeGuru]

When you refinanced based on the high appraisal you got more cash to pay off bills. If the appraisal came in low, you would have gotten less cash due to the loan to appraised value ratio.
So you have already been a beneficiary of the alleged high appraisal since you spent the money.
If you still feel that you got the raw end, do some internet research into predatory lending and real estate appraisal fraud.
Talk to the real estate appraiser and your lender about your past refi and explain to them your situation with respect to the high appraisal.

I am not so enclined to say that they benefited from a high evaluation. The logic behind an equity loan is that an asset of equal or greater value is supporting the loan. In this case, the inflated value of the property generated more unsecured debt that cannot be satisfied by selling the assets. Damages are that the bank gave them an unsecured loan under the perception that the loan was secured by the equity in the home. (proving it is a problem)

I would suggest that the appraisal be compared to any other appraisals of the same property, or examined by another appraiser. If the appraiser you are concerned about falsified any information about the house it would help in the argument.

Key things to look at are the square footage and what type of homes were used as comparables. If the appraisal added living space, or used comparables that are not in line with your home or the neighborhood you live in, it may help to show intent, but an attorney would be better at advising you.