Appraisal Review By Underwriter In Mortgage Loan Process

This BLOG On Appraisal Review By Underwriter In Mortgage Loan Process Was UPDATED On August 12, 2017

The Process Of Appraisal Review By Underwriter:

When mortgage borrowers apply for a residential mortgage loan, a home appraisal is required and is part of the mortgage loan process.

  • There are no upfront fees to apply for a mortgage loan with the exception of the appraisal cost.
  • The appraisal needs to be paid by the home buyer applying for a home purchase mortgage loan or a homeowner applying for a refinance loan. 
  • The appraisal is ordered by the mortgage lender through an appraisal management company. 
  • The appraisal management company, also referred to as the AMC,  then contracts with a local appraisal company. 
  • A mortgage loan officer is not allowed to speak to the appraiser due to new mortgage rules and regulations. 
  • It is a felony to try to influence an appraiser to enhance the home’s value.
  • The appraiser is dispatched to the subject property and inspects and evaluates the subject property by comparing it to nearby comparable properties.
  • Comparable properties need to be similar lot size, square footage, bedroom count, bathroom count, and amenities such as pool, patio, pond, and the structure of the building. 
  • The appraiser compares subject property to similar and like properties within a one mile radius that has recently been sold within the past six months. 
  • The appraiser normally compares the subject property to three similar comparable properties. 
  • The appraiser then completes his appraisal report and turns it in to his local appraisal company which then turns it in.
  • The appraisal management company determines the validity of the appraisal and signs off. 
  • The appraisal management company has a senior member review the appraisal report and if everything is in line, signs off on it .
  • It then gets submitted to the mortgage lender where the home appraisal review by underwriter will be done for quality control purposes.

Appraisal Review By Underwriter

Once the appraisal is submitted to the mortgage lender, it goes to the appraisal review department of the mortgage lender.

  • The appraiser review by underwriter is started and the underwriter will then scrutinize the subject appraisal and make sure they agree with the appraisal report. 
  • In most cases, the appraisal review by underwriter signs off on the home appraisal. 
  • However, there are cases where the appraisal review by underwriter does not like the home appraisal even though the appraisal came in at the target value.

Reasons Why Second Appraisal Is Required After Appraisal Review By Underwriter

Although the mortgage loan borrower has paid for an appraisal and the appraisal did come in at the target value, the mortgage lender’s appraisal review department can turn down the appraisal and deny the loan.

  • Reasons why the appraisal review department voids an appraisal are numerous. 
  • One of the main reason why the appraisal review department denies the appraisal report is because they do not agree with the comparable the appraiser has used as comparable. 
  • Other reasons why the appraisal review department do not like to accept the appraisal is because the comparable are not too recent and might be older than a year old. 
  • Other reasons why the appraisal review department can also not accept the appraisal is because the subject property is a non conforming property and the adjustments to the subject property is greater than or less than 25% of the market value of the home. 
  • Another common reason why the appraisal review department reject the appraisal is because comparable are too far away from the subject property. 
  • Some appraisers use homes that are 3 or more miles away from the subject property and the mortgage lender do not like to accept comparable properties greater than a mile.

Solutions When Appraisal Review By Underwriter Voids Appraisal Report

Unfortunately, when the mortgage lender appraisal review department does not accept the subject appraisal, there are very limited solutions.

  • Worst case scenario, the borrower will still be approved for the property but not the property so the borrower needs to purchase a different property. 
  • Other times, the appraisal review department might give a discounted value of the subject property and the loan will be made off the discounted value and anything higher, the mortgage loan borrower needs to come up with the difference. 
  • Other solutions might be that the mortgage lender might require a field review appraisal which is a second opinion from a different appraiser. 
  • The bottom line to this blog is that make sure that your new home purchase has plenty of nearby sales comparable. 
  • The biggest home on the block or other so called unique properties might run into an appraisal review nightmare.

Viewers with any questions on home appraisals, please contact us for more information at 1-800-900-8569 or email us at

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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