Consumer complaint received 2023-08-03
Product: Mortgage — FHA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: CARDINAL FINANCIAL COMPANY, LIMITED PARTNERSHIP (TX)

I purchased a home in XXXX of 2021 using an FHA loan. In XXXX of 2021 I reported a {$100000.00} error and omission in my appraisal that would have rendered the home ineligible per FHAs minimum property requirements. HUD/FHA and the lender have not only refused to perform the required field review of my property for 22 months, they made a decision in attempts to cover for the lender using their Loan Review System that is based on property eligibility without determining property eligibility. Please reference the article written by the CFPB entitled Mortgage Borrowers Can Challenge Inaccurate Appraisals Through the Reconsideration of Value Process. 
Below are the facts and requirements per HUD. 

Per 4150.1 REV-1 CHAPTER 9. REVIEWS OF APPRAISAL REPORTS States Cardinal Financial had a duty to perform a field review of XXXX XXXX XXXX XXXX, TX prior to closing on XX/XX/2021. 

9-5. SELECTING CASES FOR FIELD REVIEWS The following types of cases should be selected for review : d. No repair requirements for an older home in average condition. 

A field review was also due when I reported the error and omission on XX/XX/2021 per HUD. 

9-6. XXXX XXXXXXXX XXXX XXXXXXXX COMPLAINTS. 
XXXX complaints involving existing properties should be routed to the Valuation Section for field review if the complaint involves major mechanical items or an extensive list of deficiencies. 

A. All field reviews must be completed on form HUD 1038v. 
Reviewers should provide useful comments on the review form. 
The Field Reviewer should either concur with the appraiser 's judgement or non-concur and explain why. Interior reviews are an important part of the field review since a serious oversight by the appraiser of a noticeable defect in the property could affect the health and safety of the occupants or the continued marketability of the property. 

A " 3 '' rating should be assigned if the appraiser has made errors and/or omissions, but such errors and/or omissions have a minimal effect on the final value. Errors and/or omissions which lead to value determinations which are an unacceptable underwriting risk to the Department should lead to " 2 or 1 '' ratings. 

Due to the loan review system and the Defect Taxonomy being based on property eligibility, the previous loan review is null and void because this was never determined. 

The pre-mature ranking of a severity level of 4 can not be true. 

Evidence of fraudulent or materially misrepresented information about which the lender did not know and could not have known. 

This can not be true due to FHA Defect Taxonomy below B ) FHA determines if the lender knew or should have known based on whether : an employee of the lender was involved and/or red flags in the loan file should have been questioned by the underwriting lender. 


The lenders underwriter was involved and the red flag was ; The following types of cases should be selected for review : d. No repair requirements for an older home in average condition. 

The severity level of XXXX also can not be true due to the property not being eligible for a FHA loan which they refuse to determine. 

( UNACCEPTABLE ) Evidence of fraudulent or materially misrepresented information about which the lender knew or should have known. 

XXXX. ( UNACCEPTABLE ) FHA is unable to determine acceptability, eligibility, or compliance with applicable policies for XXXX XXXX due to absence of required documentation./FHA is able XXXX conclude that the property did not meet XXXX XXXX requirements based on documentation in the loan file. 

Or ( DEFICIENT ) Compliance errors, inconsistencies, or missing information identified within the XXXX XXXX documentation, but FHA is able to conclude that the property is eligible. 
( DEFICIENT ) Evidence of fraudulent or materially misrepresented information about which the lender did not know and could not have known. 



Once the eligibility determination is made, all appraisal defects should be listed according to FHAs defect taxonomy and appropriate remedies exercised. Particularly the category of property appraisal and severity level XXXX below which requires the bank to mediate including but not limited to a reconsideration of value. 

FHA is unable to determine XXXX and/or underwriter compliance with applicable policies for the appraisal, collateral valuation, or property acceptability due to absence of valid documentation. 
FHA is able to conclude that the property was not appraised and/or underwritten in compliance with applicable policies and the appraised value is not supported or the property is not acceptable as a result. 
Documentation required for specific property types, programs/products, or by construction status was not obtained to support FHA XXXX XXXX loan amount. 

All information such as the finding from the appraisal review below should be taken into account. 

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. 


XXXX XXXX 's XXXX of XXXX. The mortgagee 's underwriter is to review the appraisal to determine whether or not the XXXX 's conclusions are acceptable. If found to be acceptable, the property is eligible for HUD mortgage insurance. The review consists essentially of the following : XXXX ) XXXX ( as possible from available data ) that the factual information submitted is correctly reported. 

A DE lender that selects its own XXXX must accept responsibility, equally with the XXXX, for the integrity, accuracy and thoroughness of the appraisal and will be held accountable by HUD for the quality of the appraisal. 
Lenders are reminded that if the XXXX they selected provides a poor or even fraudulent appraisal which leads the Department to insure a mortgage at an inflated amount, the lender is held equally responsible with the XXXX for the violation. 
Lenders accept responsibility, equally with the appraisers, for the integrity, accuracy and thoroughness of the appraisals, and will be held accountable by HUD ( a ) Second Appraisal by Original Mortgagee A second appraisal XXXX only be ordered if the Direct Endorsement ( DE ) underwriter ( underwriter ) determines that the first appraisal is materially deficient, and the XXXX is unable or uncooperative in resolving the deficiency. The XXXX must fully document the deficiency and status of the appraisal in the mortgage file. The XXXX must pay for the second appraisal. 
Material deficiencies on appraisals are those deficiencies that have a direct impact on value and marketability. Material deficiencies include, but are not limited to : failure to report readily observable defects that impact the health and safety of the occupants and/or structural soundness of the house ; XXXX upon outdated or dissimilar comparable sales when more recent and/or comparable sales were available as of the effective date of the appraisal ; fraudulent statements or conclusions when the XXXX had reason to know or should have known that such statements or conclusions compromise the integrity, accuracy and/or thoroughness of the appraisal submitted to the client ; and indications of unlawful bias in the XXXX or other violations of applicable local, state, or federal fair housing and nondiscrimination laws. 

XXXX. XXXX XXXX XXXX XXXX XXXX XXXX and XXXX of XXXX The underwriter must review the appraisal and ensure that it is complete, accurate, and provides a credible analysis of the marketability and value of the Property. 
The underwriter must ensure the appraisal complies with the requirements in Valuation and Reporting Protocols ( XXXX ), any additional appraisal requirements that are specific to the subject Property, and all applicable federal, state, and local laws, including the Fair Housing Act and other federal, state, or local antidiscrimination laws. 
The underwriter must determine if : the original appraisal is acceptable without further action, the appraisal is materially deficient ( see Second Appraisal by Original Mortgagee ( XXXX ( B ) ( XXXX ) ( a ) ), or a Reconsideration of Value ( XXXX ) is appropriate. 

XXXX. Reconsideration of Value A Reconsideration of Value ( ROV ) refers to the underwriters request for the XXXX to review the accuracy and completeness of the Property information, analysis, or market data that was relevant on the effective date of the appraisal. The underwriter XXXX request an ROV and must provide the XXXX with all relevant data that is necessary for a reconsideration of value. 
If an ROV is requested, the Appraisers response must be included in a revised version of the appraisal, which must be uploaded into XXXX XXXX XXXX Delivery ( EAD ) portal and logged in FHA Connection ( FHAC ). The XXXX XXXX charge an additional fee if the relevant data was not available on the effective date of the appraisal. If the unavailability of data is not the fault of the XXXX, the XXXX must not be held responsible for the additional costs. The effective date of the appraisal is the date the XXXX inspected the XXXX. 
XXXX Borrower Requests for XXXX XXXX XXXX XXXX XXXX XXXX XXXX Definition Borrower Requests for Review of Appraisal Results refers to a Borrower-initiated request for the Mortgagee to review the accuracy and completeness of the Property information, analysis, or market data relevant on the effective date of an appraisal. 


I have attempted to get anyone to listen to my concerns for almost 2 years and had it not been for my own personal research I would not have discovered the lenders duties and responsibilities owed to me because for almost 2 years FHA has concealed them and most recently told me quote FHA and HUD have no further response to you. Meaning these duties owed to me wouldve never been disclosed voluntarily and I would have been left to pursue the lender/appraiser to comply to FHAs rules and regulations causing more mental, physical, and financial harm. 

This negligence has had an outstanding ripple effect upon my life starting from the time of reporting the error I was insultingly told by FHA you should have gotten a property inspection. Which I did. My XXXX children and I were forced to live in a health hazardous home due to not having money for alternate living expenses on top of an attorney to file suit against the bank and XXXX. I was forced to take a XXXX personal loan at a 25 % interest rate to obtain an attorney. I was forced to sit through XXXX hours of depositions being interrogated by the banks and appraisers attorneys asking if I have ever been an underwriter. I did not know if the water my XXXX children and I were using to brush their teeth and bathe in was safe. I was placed on XXXX XXXX medication at the age of XXXX. This situation played part in a XXXX year relationship ending. I have been forced to spend over {$30000.00} on attorneys fees. My credit has been destroyed. My XXXX children and I are currently homeless. And all of this was unnecessary for us to be subjected to had HUD enforced their own rules and regulations rather than construct a cover up for the lender. 

My situation is a prime example of the harm this institution inflicts on the very person it claims to protect the health and safety of. The XXXX lacks XXXX quality control and knowledge of their own rules to protect and resolve wrongs done by their lenders and selfishly places the burden on the borrower to enforce their rules and regulations in place to protect them. 

XXXX educational information and instructional materials for borrowers is necessary to ensure consumers know the processes in place to protect them against inaccurate appraisals, whether caused by XXXX bias in evaluations or appraisal errors, what steps they XXXX take and information they need to execute those processes, and what kinds of results they can expect. It is important that borrowers receive guidance early in the process as to what information is relevant. Borrowers should be provided all the information necessary to successfully initiate a strong ROV request, while also setting proper expectations. We believe that a comprehensive approach would include, at a minimum, educational resources for consumers, clear responsibilities outlined for lenders, and infrastructure for accountability of appraisers. Lenders should receive clear guidance on their responsibility to review XXXX requests, standards for evaluating requests for merit, and how to communicate the appraisers findings to the borrower. XXXX XXXX XXXX XXXX