Consumer complaint received 2018-11-20
Company: BANK OF THE WEST
State: CA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
An appraisal for a potential refinance ( Bank of the West is my current lender and approached me about a potential refinance which I have pursued in order to further renovate my home ) was completed within the past 30-days. The appraisal was clearly not up to appraisal standards and despite numerous emails, Bank of the West failed to ( i ) simply address the numerous flaws in the appraisal that I noted/questioned and/or ( ii ) provide an explanation for why the appraisal is acceptable under the governing appraisal standards. Below is the  most recent email I sent to the company to show what needs to addressed. 

Given the back and forth, I thought I would put in one concise email the specific items/issues that remain open without a response. Please see the items below that I am again requesting be addressed. I do not simply disagree with the appraised value, as is being asserted in the responses provided. I disagree with the comparable sales chosen and the adjustments made in the appraisal, and believe that the appraisal completed by Mr. XXXX does not meet the standards for an acceptable appraisal under the XXXX. Please find the matters below that need to be addressed immediately : 1. Appraiser lack of knowledge of area : a. Mr. XXXX was not an appropriate choice as an appraiser for a home located outside XXXX XXXX County. As shown on his website [ XXXX ], Mr. XXXX is an expert in XXXX XXXX County and resides/works approximately 30-40 miles east of XXXX. By this fact, the appraisal does not meet # 11 of the Appraisers Certification found on page 5 of the appraisal. Mr. XXXX comparable sales failed to meet the standards for a market area or neighborhood in XXXX XXXX XXXX 4 : Identifying Comparable Properties. 
b. Mr. XXXX comparable selections, as outlined in the letter dated XX/XX/18 that was previously provided to Bank of West and is again attached herein, shows how the comparable sales chosen are in neighborhoods of lesser value. This is consistent for the comps chosen outside of XXXX XXXX XXXX. This is further validated by a recent listing ( a home listed just this month that was referenced in the attached letter dated XX/XX/18 ) at a value comparable to the only comparable sale chosen by Mr. XXXX within XXXX XXXX XXXX ( Comparable Sale # 3 ). Further, the response to provide comparable sales that have already closed is incongruous with Mr. XXXX approach. Comparable Sale # 5 remains an active sale. 
c. Appropriate comps include the following : i. XXXX XXXX XXXX XXXX Ca XXXX ( Comparable Sale # 3 ) ii. XXXX XXXX XXXX XXXX, CA XXXX 1. Price : {>= $1,000,000} ; Sq Ft : 1,560 ( ~200 sqft less than subject property ) ; Sale date : XX/XX/18 iii. XXXX XXXX XXXX XXXX CA XXXX 1. Price : {>= $1,000,000} ; Sq Ft : 1,626 ( ~100 sqft less than subject property ) ; Sale date : XX/XX/18 iv. XXXX XXXX XXXX XXXX CA XXXX 1. Price : {>= $1,000,000} ; Sq Ft : 1,849 ( ~100 sqft more than subject property ) ; Sale date : XX/XX/18 v. XXXX XXXX XXXX XXXX XXXX CA XXXX 1. Price : {>=  $1,000,000} ; Sq Ft : 1,975 ( ~200 sqft more than subject property ) ; Sale date : XX/XX/18 vi. XXXX XXXX XXXX XXXX CA XXXX XXXX. Price : {>= $1,000,000} ; Sq Ft : 2,121 ( ~400 sqft more than subject property ) ; Sale date : XX/XX/18 2. Please explain why a property within the neighborhood that had not had any updates or renovations can not be used as a comp simply because of sqft when the previous appraisal accepted by Bank of West used comps of similar size. 
vii. XXXX XXXX XXXX XXXX XXXX XXXX 1. Price : {>= $1,000,000} ; Sq Ft : 2,160 ( ~400 sqft more than subject property ) ; Sale date : XX/XX/18 2. Please explain why a property within the neighborhood that had not had any updates or renovations can not be used as a comp simply because of sqft when the previous appraisal accepted by Bank of West used comps of similar size. 
2. Comp # 1 : Comparable Sale # 1 is an inappropriate comp, for several reasons. Please provide an explanation as to why this is an appropriate comp to be included. 
a. Issue # 1 Sale Process : Comparable Sale # 1 did not have an actual marketing process. Public records indicate that this property was Sold Before Processing, indicating that this was not a market transaction, but was is referred to as a Pocket Sale. This does not meet the standard for an appropriate appraisal. Page 4 of Mr. XXXX appraisal includes the definition of Market Value, which matches the definition utilized by the XXXX [ http : XXXX ], which includes the statement the conditions of sale ( e.g., exposure in a competitive market for a reasonable time prior to sale ). Comparable Sales # 1 simply does not meet that standard. The Appraisal does not account for, as is required under XXXX XXXX XXXX 2 : Adjusting Comparable Sales for Sellers Concessions and XXXX XXXX XXXX 4 : Identifying Comparable Properties [ See bullet number 4 on page 5 of XXXX XXXX XXXX 4 ], the lack of exposure to a competitive market under a normal marketing or sales process. Under a Sold Before Processing or Pocket Sale, value is often depressed and this might be due to a myriad of reasons. Public sites, such as XXXX and XXXX clearly identify this transaction as Sold Before Processing and the listed and sold date occur on the same day. Further, Mr. XXXX writes that in his report on page 9 of 28 that Comparable Sales # 1 is inferior in photographs. I could only find 1 exterior photo on sites like XXXX and XXXX and would ask that Mr. XXXX please provide the photographs he references. My assumption is that Mr. XXXX failed to meet the standards referenced on page 5 in bullets 6 and 7 and that he simply failed to actually research and verify this comparable sale or other that might actually be better comps. 
b. Issue # 2 Comp Condition : Comparable Sales # 1 is inferior in quality, as quantified by the C4 rating. Given that  the transaction is clearly not market and/or not an arms length transaction, nor are there any pictures to view the condition of the home at the time of the sale, the condition can not truly be quantified and the proper adjustment made to make this an applicable sale. Mr. XXXX, for this reason, failed to meet bullet 9 on page 5 of the appraisal. 
c. Issue # 3 Adjusted Sale Price of Comparable : After reviewing even the little information that is available about Comparable Sales # 1, it makes little sense that the subject property was valued to be exactly the same as Comparable Sales # 1. Again, Comparable Sales # 1 is ( i ) located in a different neighborhood, ( ii ) was a Pocket Sale transaction, and ( iii ) is of inferior quality which could be significantly worse than the adjustments made by Mr. XXXX. This simple does not meet the XXXX standards. 
3. Comparable Sales # 4 : Comparable Sales # 4 is an  inappropriate comp and/or inadequate adjustments were made based on factors of this property. 
a. Issue # 1 List Price vs Sales Price : The list price of Comparable Sales # 4 was {$930000.00}, whereas the sale price was {$900000.00}, a drop of approximately 3.89 %. Mr. XXXX fails to note this or quantify an adjustment made to account for the reason behind this significant of a price drop. XXXX outlines that such a drop may be the result of any number of negative conditions ( which are likely given the C4 condition ). Mr. XXXX once again failed to meet bullet 9 on page 5 of the appraisal. 
b. Issue # 2 Comp Condition : Comparable Sales # 1 is inferior in quality, as quantified by the C4 rating. Given the drop in value quantified by the drop from the List Price of {$930000.00} to the sales price of {$900000.00}, a drop, as noted earlier of approx.. 3.89 %. Mr. XXXX does not mention a verification of this as outlined on page 36 of APB Valuation Advisory # 8 : Collection and Verification of Residential Data in the Sales Comparison Approach. With the drop in price over 3 %, it appears that a verification process ( interviewing  of listing agent, etc. ) should have occurred. Given that the property was noted as a C4, and the broad availability of C3 comparable sales to choose from, the inclusion of this transaction does not meeting the XXXX standards. At best, the appraisal does not outline an adequate verification process and clearly does not include adequate adjustments to make this a proper comparable sale. 
4. Comparable Sales # 2 : Comparable is not properly adjusted based on the neighborhood and site size. 
a. Mr. XXXX failed to meet the standards to properly reviewing the neighborhood market data for XXXX XXXX XXXX and recent sales activity. Comparable Sales # 2 is simply not an appropriate transaction unless ( i ) a greater value is placed on the site size adjustment ( as demonstrated by Ms. XXXX in her appraisal ), and ( ii ) an adjustment is made to account for the variance in value between the neighborhoods. 

Please note that due to the lack of compliance with XXXX standards and a failure to properly review the appraisal and/or respond to my numerous questions about the appraisal, I am filing a complaint with the CFPB. 

Regards, XXXX

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation