Wife and I have FICO in 800s...asking for refi of home at 79% LTV (per their appraisal).

Received the following e-mail

"... I have some bad news about the loan unfortunately. I had to send the loan to underwriting because the appraisal came back with some red flags. The county states that there is no guarantee that they would allow property to be rebuilt in case of loss due to acreage allowable. Also the site value is over 40% and we are only able to accept 30% and that is based on property total value. So unfortunately the Underwriter had to make the decision to decline the loan. There has been a decline letter mailed to you saying that the property is unacceptable as collateral...."

WTF?  This is a custom handcrafted log home on 2.4 acres horse property.  Of course the land is worth a lot...I've developed it so it would be VALUABLE.  Why am I now penalized for this (30% site value). 

Who do I contact in county records about the red flag, i.e., "no guarantee that they would allow property to be rebuilt in case of loss due to acreage allowable". This is the first I've heard of that.  Where would this little tidbit of info be stored at the county?  Could it be a mistake? If yes, can I appeal to the underwriter to re-open the application?

Do the underwriting standards vary much and how do I find a bank that won't can this refi (again) after waiting another 4 weeks?  Looking at US Bank (the current mortgage is with them) now for refi. They wouldn't can a refi that they are already holding, would they?

Thanks

That does not sound right...the UW delcine reason.  Property (home ) permitted through your County, I assume-- correct?

Find a Broker in your area that has done Log Home financing.  You can look at Loghomeliving.com and find a Lender that does log homes as well.

There are a couple of things you can try. One having a new lender and appraisal done to start. The site value is an opinion of value from the appraiser and doesn't sound right, not for 2.4 acres (240 maybe but not 2.4).

I would call the county to see what they're talking about but it's also most likely coming from the appraisal. I would get a copy and look for some reference.

I would also ask US Bank if you loan is a Fannie Mae or Freddie Mac loan. If you're just refinancing for a better interest rate there are some streamline options that allow for computer model values vs. an actual appraisal which of course wouldn't cause these issues.

Hang in there, you'll find a competent lender/broker to get your loan done. Check the directory on this site and see if there's someone in your state.

I believe the problem that you are having with BofA is that the county is unable to issue a satisfactory Rebuild Letter.  Essentially, when your home was built it was within the zoning regulations.  The zoning regulations changed and today you could not rebuild the same home that you have on your lot.  The term for this is a legal non-conforming property.  (It was built to the legal standards at the time, but currently does not conform to those standards.)  To find the information at the county, contact the zoning department. 

You have a somewhat challenging property in that it is a log home, is legal non-conforming, and that the structure (house) is a relatively low percentage of value in comparison to the land.  You may want to find a professional who is familiar in dealing with these issues.  A broker would have access to multiple lenders and may make the process easier for you.