Consumer complaint received 2024-09-06
Product: Mortgage — FHA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — Negative impact of inaccurate appraisal
Company: CARDINAL FINANCIAL COMPANY, LIMITED PARTNERSHIP (TX)

Cardinal States, " It is up to FHA to consider the facts in this case, conduct its own investigation, and decide what actions should be taken, if any. '' However, FHA relies on Cardinal to self report the error, so in order for FHA to consider the facts, it is up to Cardinal to accurately and honestly choose the correct defect category of Property Appraisal since it was an appraisal error and omission.

Cardinal did not choose the category of Property appraisal because it clearly incriminates " appraiser and or underwriter '' when self reporting.

This led to FHA categorizing the defect as a category 4 however the defect taxonomy states Tier 4 is primarily used for Findings of fraudulent or materially misrepresented information about which the Mortgagee did not know and could not have known. Tier 4 is also used for underwriting Findings when minor data integrity issues exist that are inconsequential to the loans approval and eligibility.

The home does not meet FHA minimum property requirements therefore can not be a level 4.

It also states, The purpose of remedies is to mitigate risk to FHA and, if applicable, put Borrowers and/or other affected parties in the position they would have been in absent the violation. When FHA sustains a Tier 1 Finding, Life-of-Loan indemnification is the only remedy available in LRS. Alternatives to indemnification may be available in LRS for Tier 2 Findings. In some cases, multiple remedies may be necessary to address the full impact of an individual Finding. Remedies are described below for unacceptable Findings in LRS. In each defect area, possible remedies for common policy violations are listed in order based on the degree of impact. They are for reference only and may not be all-inclusive of remedies requested by FHA. A. Mitigation Findings may be mitigated in LRS with the Mortgagees submission of one of the following as requested by FHA : additional documentation and/or information that was not included in the original loan file reviewed by FHA, which demonstrates the Mortgagees compliance with HUD policy requirements ; or evidence of corrective actions completed by the Mortgagee which, in FHAs determination, adequately addresses the source and cause of the Finding so that the loan no longer presents an unacceptable risk to FHA. B. Financial Remediation Consistent with FHA rules and requirements, Mortgagees may financially remediate certain loan-level Findings by submitting documentation showing completion of the requested action in the amount specified by FHA. Financial remediation may include : refunds to reimburse unallowable or erroneous charges, fees, or costs to the Borrower; principal reductions applied to the unpaid principal balance of the loan. For delinquent/defaulted loans, funds may be applied to the Borrowers suspense account ; account adjustments to the Borrowers loan, escrow, or suspense account in the amount necessary for the Servicer to bring the account in compliance with HUD policy and/or demonstrate corrective action ; and remittance of improperly paid servicing claims and/or loss mitigation incentives to HUD.

Cardinal continues to use HUD 's response based on their fraudulent self reporting stating, As noted in our responses to you, HUD has no authority to repair the defect or compensate homebuyers for any problems. On an existing home, FHA does not warrant the condition of the property. '' However, there is a program which is publicly available to read, and is attached, that is specifically for existing defects in homes which states, Determination of Existing Defect. The defect must be determined by HUD-FHA to have existed on the date the conditional commitment cover the property was issued and must be one that a proper appraisal inspection of the property could reasonably have been expected to reveal.

HUD 's response goes on to state, " The purpose of an FHA appraisal is to estimate the value of the property for insurance purposes. '' However, HUD and Cardinal 's own website confirm the definition of an FHA appraisal stating, FHA appraisals are unique because they have two goals : First, to determine the propertys value, and second, to check for minimum health and safety standards.

https : //www.cardinalfinancial.com/blog/fha-home-inspection-checklist/ And finally the fraudulent response from HUD that Cardinal continues to use states, " Also, as previously stated, HUD reviewed the appraisal and determined that the lender could not have known that the property was not hooked up to public service. HUD determined that the underwriting lender was not responsible for the underlying appraisal error. '' When in reality HUD 's desk review that determined 18 appraisal deficiencies in my appraisal determined it was public information of which HUD requires lender 's underwriters to use to check the accuracy of appraisals.

Failure to provide an accurate description of the subject's/project 's site and consider site conditions or external factors that affect value. 
XXXX : The appraisal must report whether utilities are public or private and typical for the area. If the subject has private water or septic, report the availability of connection to public and/or community water or sewer systems and any jurisdictional conditions requiring connection. 
The appraiser must be familiar with the minimum distance requirements between private wells and sources of pollution, and if discernible, comment on them. The appraisal must note any MPR/MPS deficiencies that are readily observable and require test or inspection. 
In case number XXXX : Per published listing and online data sources, the Subject property was connected to an onsite well and sewage disposal system, but not identified, disclosed, or discussed, and the Appraiser failed to report the availability of connection to a public/community water and sewer systems, and/or whether there were any jurisdictional conditions requiring connection. 

Cardinal claims XXXX XXXX threatens to continue submitting duplicate complaints on the same subject until Cardinal submits a loan defect to HUD pursuant to XXXX XXXX instructions. 

Again, this is not a duplicate complaint, this is a refusal of a lender to report the loan defect in the correct category to escape liability, and will be reported until what is required is completed. 

Cardinal 's actions are that of a career criminal who knows the loopholes to commit fraud ( in this case close loans ) and HUD 's lack of oversight and utter incompetence excuses it. 

It has most likely also been feasible due to a borrower 's ignorance of what SHOULD have happened, but the information is publicly available to read and the most recent CFPB docket CFPB-XXXX has made clear the predatory scheme that lenders, appraisers and appraisal management companies have constructed, and proves it is being exposed. 

https : XXXX