Citibank contacted us in December offering to remortgage our house. There was a reasonably steep application fee but I was promised a refund in the event that the remortgage failed. Specifically this email:
Unfortunately we cannot waive the application/appraisal fee, however I can refund it back to you in your loan is not approved.
What do you think?
Senior Lending Consultant"
So we paid the fee, filled in the paperwork and waited for the appraisal.
The appraiser came and did a lousy job. His report mixed up photos, missed salient features of the house and worst of all used ridiculous comps with what must have been distressed sales of crack dens next to the freeway instead of similar nice houses on the west slope of Bernal Hill. Apparently this isn't unusual. Chris Arnold from a recent NPR News story:
"Right. It used to be too easy. The appraisers were part of the problem, so Congress changed the law. And that's had some unintended consequences. And to make a long story short, what sometimes happens now is the lender says, OK, we need an appraiser for Robert's house. And an email goes out, blasted out to a hundred different appraisers across the entire state. And the email says something like: Hey, who wants to do this for a hundred bucks. You know, so the guy you get might be driving in from 50 miles away and really have no idea what the homes in your neighborhood are worth."
So long story short the appraisal valued our house at about $5 and the remortgage application was declined. There was an appeal process for the appraisal but it wasn't possible to complete unless a few of our neighbors happened to have sold their houses in the same week.
Given that we've never missed a mortgage payment it seems bizarre to suppose that making it lower would represent an increased risk. But it's Citibank's decision and I wouldn't be whinging about it in public if they'd refunded the application fee in January. Despite repeated emails the didn't refund it in February or March either. In fact, after declining the transaction we never heard from our friendly Senior Lending Consultant again.
I've just got off the phone with the credit card company as in the end I had to resort to challenging the transaction and getting it charged back to Citibank. I'm not sure if it's incompetence on the part of a few employees or a new scheme to defraud customers but be careful if Citibank make the same offer to you. And make sure you get the refund promise in writing.