Consumer complaint received 2022-03-18
Product: Mortgage — Reverse mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: AMERICAN ADVISORS GROUP (CT)

Even though it appears that, on this platform, should AAG do nothing more than respond to my complaint within 60 days then no matter how hollow their response, they win and I lose as my complaint will be summarily " closed ''. Nonetheless, I figure that I will begin my effort to get some sort of justice by beginning here before I become more aggressive in other fora in pursuing my rights. 

The facts are straightforward. 

An AAG rep contacted me late last year to tell me about the benefits of refinancing the existing reverse mortgage on my home originally extended to me by AAG in XXXX. In addition to lesser benefits, the Mortgage Insurance Premium ( MIP ) which I was paying on my existing reverse mortgage loan was going down from 1.5 % to .5 % and the maximum amount of mortgageable home valuation was increasing from approx. {$650000.00} to approx. {$950000.00} which, if my home appraised as it should have, I would have been able to borrow an additional {$150000.00} or so. Given those significant benefits, I decided to pursue the refinance. 

Bizarrely, the appraisal in XXXX for the refinance came in at {$800000.00}, which was {$50000.00} LESS than the appraised value of my home for the original reverse mortgage loan in XXXX when home values in my neighborhood were significantly less ( as they were across significant parts of the country ) and when I hadn't yet expended ( verifiably ) nearly {$150000.00} on home improvements. Upon review of the appraisal, I realized that, beyond the foregoing, there were several significant errors including the following : one of the comps had an address for a property which hadn't been sold or even listed in years ; another comp was nowhere near the lake on which my home has lakefront and the adjustment by the appraiser for that fact was so low as to be beyond comprehension ; the third comp, though listed for sale, had not sold and the appraisal failed to note this fact ; the 4th comp, however, was perfect in almost every way as it was my nearest neighbor and that property had sold within months of the appraisal. 

Though I am very familiar with the last two comps, it is my neighbor 's house, specifically, which undeniably demonstrates the flaws in the appraisal. Put simply, that house sold for {$800000.00} or {$800.00} p.s.f. ( based on 1000 sq. ft of living space ) though it hadn't been improved or updated in decades ( in fact, the new owner has gutted and rehabbed the home and is prepared to attest to that ). As the usable land and lakefront for both mine and my neighbor 's house are comparable, the significant issues here are, first, the usable area of that home is awkwardly laid out as nearly a third of it is under a sloping A-frame roof which makes that portion either untraversable or demands one 'duck and cover ' to cross it, second, more significantly, my home has 450 square feet of additional, very usable, living space, and, third, and most significantly, my home was completely renovated in XXXX ( at another verifiable cost of nearly {$250000.00} ) and further updated in XXXX ( that {$150000.00} expenditure ). Nonetheless, the appraiser valued my home at only {$530.00} p.s.f. 

After I pointed out these and other notable shortcomings in his appraisal, the CT appraiser promptly agreed to correct it but said AAG would have to make the request, which I conveyed to the AAG rep. She then advised me that AAG 's internal appraiser required that there be three NEW comps offered in order to get a corrected appraisal. Knowing not only of the scarcity of additional comps but, more critically, that a simple correction of the shortcomings in the existing comps, especially with regards to the comp involving my neighbor 's property, would satisfy my concerns, I asked why the need for those additional comps and requested, numerous times, to see whatever internal or governmental rules demanded that new info. I never got an answer to my request. So, up against that kind of resistance, I ended up surrendering and went back to the outside appraiser who, being agreeable to help me given his deeply flawed original appraisal, came up with the additional comps. 

Now, here 's the first rub. After demanding the new comps, AAG 's internal appraiser then claimed none of them were appropriate. Beyond the rather " Catch-22 '' nature of this determination is the arrogance that someone sitting in an office in California knows the local real estate market in CT better than an appraiser who is actually on-the-ground in CT. Pointedly, though, if the AAG internal appraiser were that certain about the inappropriateness of the new comps offered by the CT appraiser, then why wasn't she or he also suspicious about the appropriateness of the existing appraisal which, as a result of his/her decision, was the appraisal which would determine the amount of my loan. And, remember, the problems with the existing appraisal -- i.e., the inclusion as a comp of a property which had neither been sold nor even been listed ; the ridiculously low adjustment of a non-lakefront property for a lakefront one ; and the fact that one of the comp properties included had only been listed, and not sold with the appraisal failing to disclose that distinction. Those, alone, should have raised even concern about the need for a corrected appraisal. To me, though, the best evidence that the decision by AAG 's internal appraiser to refuse to request a corrected appraisal was, itself, deeply flawed is her/his decision that, since a picture of the outside of my neighbor 's house ( THE most relevant comp ) had been included in the appraisal, there was no need to make any further inquiry about the house notwithstanding the easily verifiable factual evidence of the seismic differences between its condition and awkward layout and that of my own home which, critically, were acknowledged by the CT appraiser as a significant factor in his failure to properly assess the valuation of my home. 

Here 's the second rub. Because of the low appraised value of my home which AAG 's internal appraiser insisted upon using to determine loan to value ( and which no higher authority was prepared to overrule notwithstanding my repeated attempts to get them to do so ), AAG advised me my loan did not satisfy the " benefit ratio test '' required by HUD to assure borrowers are not taken advantage of by mortgage lenders and, so, no loan could be made. That determination seemed preposterous to me because, at a minimum, I was both saving a full percentage point on the MIP and I was increasing my borrowing availability from {$330000.00} under the original reverse mortgage to {$410000.00} under the new mortgage loan, even at the low {$800000.00} appraised value. Given my already deep suspicion about the competence, in not the motives, of the AAG reps, I asked that they provide me the details of how the " benefit ratio test '' was calculated. They refused. I was stunned. I thought how can it possibly be that a governmentally regulated bank is able to avoid any transparency on a financial issue having such negative consequences for its customer. But they did. 

I can think of at least two reasons why the AAG reps may have been less than professional in their refusal to request a correction of my home 's appraised value and in their refusal to provide me with the calculations for the " benefits ratio test. '' At this point, however, all I want to do is to get sufficient information from AAG to either confirm my suspicions or to allay them.

Specifically, I want a copy of AAG 's internal guidelines ( or other sufficiently trustworthy guidance ) for deciding whether and when to request a corrected appraisal including, without limitation, the protocol for when an appraisal is self-evidently in error ( as was mine ) and for when an appraiser has acknowledged that new information has been made available to him or her which they agree would significantly affect the valuations made in their appraisal. Also, I would want the reasons behind demanding that additional comps be offered in a revised appraisal rather than simply demanding that the existing comps be corrected by whatever additional information is available. Finally, I want the details of the computations made in the determination that my loan did not pass the " benefits ratio test. '' If AAG refuses to provide me with the info I'm requesting above, which I think most reasonable people would agree is reasonable ( as would, I hope, the Federal agencies responsible for overseeing AAGs activities in the reverse mortgage market ), then my suspicions that I was treated dishonestly by AAG will be heightened and I will almost certainly pursue my rights elsewhere. 

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