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#2297029 - 05/10/24 12:33 PM
Clarification - reportable LTV
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Gold Star
Joined: Jan 2015
Posts: 395
Maine
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i need clarification, please, on what property value - which leads into the reported LTV - to report on the LAR.
1003.4(a)(28) states - in general - we "report the property value relied on in making the credit decision." Our presentations have a collateral table that many times state the required appraised value that is needed, as an appraisal is not ordered until the loan is approved by the lender. The loan is conditioned on receiving an appraisal for at least the stated required value. The associated LTV on the approval is calculated on this required value. These are the values relied on in making the decision.
Is it these presentation values and LTVs that I report? Or, because a condition of the loan is the satisfactory appraisal, do I report the actual final appraised value and the LTV calculated from that final appraisal.
_________________________
Expect the worst, hope for the best and you'll never be disappointed.
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#2297245 - 05/15/24 07:56 PM
Re: Clarification - reportable LTV
Melissa S
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10K Club
Joined: Jul 2001
Posts: 84,144
Galveston, TX
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You condition the approval on a minimum appraisal amount, but the decision is made based on the actual appraised value it sounds like to me. Just like the denial would be.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2297983 - 06/06/24 02:12 PM
Re: Clarification - reportable LTV
Melissa S
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Gold Star
Joined: Jan 2015
Posts: 395
Maine
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Thank you rl. The decision is really made on what we require the value to come in at. When the appraisal is received, we verify that the amount at least equals the required amount. If it does, there is no further action taken and the loan proceeds to closing. The only time the loan would be resubmitted for review based on the final appraised amount is if it came in less than was required, which would then require changing the loan amount.
It sounds as if your first response is indicating that we should be reporting the final appraised amount and associated LTV on the LAR. Does the additional information change that?
_________________________
Expect the worst, hope for the best and you'll never be disappointed.
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#2298031 - 06/07/24 03:40 AM
Re: Clarification - reportable LTV
Melissa S
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10K Club
Joined: Jul 2001
Posts: 84,144
Galveston, TX
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It might be best to run this past your EIC, as they are the only ones that count. There is no real clear guidance.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2298055 - 06/07/24 04:30 PM
Re: Clarification - reportable LTV
Melissa S
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Platinum Poster
Joined: Jan 2017
Posts: 600
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If your LAR matches your appraisal, then I can't see an examiner challenging that. If it's based off your max allowable LTV, you'll probably have to explain things to your examiner, and they may or may not accept it. An amount based on the max LTV allowable is not the property value imho. we verify that the amount at least equals the required amount. Sounds to me like you relied on the appraised value in making your credit decision.
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#2298075 - 06/07/24 08:24 PM
Re: Clarification - reportable LTV
Melissa S
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Platinum Poster
Joined: Nov 2010
Posts: 953
USA
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Thank you rl. The decision is really made on what we require the value to come in at. When the appraisal is received, we verify that the amount at least equals the required amount. If it does, there is no further action taken and the loan proceeds to closing. The only time the loan would be resubmitted for review based on the final appraised amount is if it came in less than was required, which would then require changing the loan amount. Am I interpreting correctly that you rely on the lower of the appraised and the required value?
_________________________
Opinions are strictly my own, and have nothing to do with my employer.
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#2298092 - 06/10/24 01:08 PM
Re: Clarification - reportable LTV
InFairness, CRCM
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Gold Star
Joined: Jan 2015
Posts: 395
Maine
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If the final appraised value is at least the required amount, we proceed to close. If the final appraised amount is less than required, then we don't meet the required LTV for which the loan was approved and have to go back to the borrower.
I was thinking about this as I was walking my dog this morning. The loans, when approved by the lender, are usually "Subject to an appraised value of XXXX to provide for a maximum LTV of XX." So in reality, we really do have only an initial provisional approval, subject to the appraised value of a certain minimum amount, at which time the provisional decision becomes final.
It would appear the only time I can use the collateral value as shown in the presentation for the loan request - which the lender uses to decision the loan - would be if no new valuation were required, which sometimes happens when a borrower comes back for an additional loan against a property recently appraised and no new valuation is required.
_________________________
Expect the worst, hope for the best and you'll never be disappointed.
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#2298191 - 06/11/24 11:40 PM
Re: Clarification - reportable LTV
Melissa S
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Power Poster
Joined: Jun 2003
Posts: 7,720
Florida
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I may be getting confused, but IMHO, the Loan to Value is the
Amount of the loan _________________________ Determined value of the collateral
If the applicant wants a $100K loan, and the appraisal comes back at $100K it's 100% LTV. If the appraisal comes back at $400K it's 25% LTV
What the bank requires, IMHO is not the LTV - it based on the determined property value - not expectations.
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Integrity. With it, nothing else matters. Without it, nothing else matters.
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#2298193 - 06/12/24 12:18 PM
Re: Clarification - reportable LTV
Rocky P
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Gold Star
Joined: Jan 2015
Posts: 395
Maine
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Thank you Rocky. I have come to the same conclusion.
Thank you, everyone, for your input.
_________________________
Expect the worst, hope for the best and you'll never be disappointed.
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#2298209 - 06/12/24 02:47 PM
Re: Clarification - reportable LTV
Melissa S
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10K Club
Joined: Aug 2002
Posts: 47,642
Bloomington, IN
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I may be getting confused, but IMHO, the Loan to Value is the
Amount of the loan + any existing lien on the property _________________________ Determined value of the collateral
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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