Valuer overvalued the house in 2006. Do I have any comeback now?

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josephine

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I have a query re a valuation for a mortgage which someone else may have similar experience of, or thoughts on.

My sister about 8 years ago took out a buy to let mortgage, but the property valuer put on the property valuation that the property had 6 bedrooms instead of 2. There always was, and still are, only 2 bedrooms in the little cottage. The valuer also wrote that the property had central heating, when it had (and still has) none, and double glazing, when it had (and still has) only single glazing. The borrower only saw the valuation recently, when she obtained the file from the bank, and was shocked at the information on the valuation.

Also, the "valuer" the bank used had only an engineering qualification, and was a self-employed draughtsman / engineer from his house. He is not known locally as a valuer. However the "valuer" was on the banks panel of valuers. It is obvious the valuer inflated the property so the borrower could get a mortgage. If the property was valued correctly, the borrower would not have got the mortgage.

I wonder what legal recourse this borrower may have when the valuer / bank's loan officer have breached the bank's criteria for issuing mortgages so that the borrower obtained a mortgage that they simply did not qualify for or could not afford, as mortgage repayments were very unsustainable?
 
Neither the lender nor the valuer determined the price your sister paid for the house. Your sister did that in a free and fair market with the seller of the property.

There is no issue here. The lender may have a case against the valuer if your sister defaults. But your sister has no case.

Brendan
 
josephine said:
I wonder what legal recourse this borrower may have when the valuer / bank's loan officer have breached the bank's criteria for issuing mortgages so that the borrower obtained a mortgage that they simply did not qualify for or could not afford, as mortgage repayments were very unsustainable?
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Is there a problem also with the calculation of the multiples of the salary/income that your sister was earning at the time when she was applying for the mortgage.
Was your sisters income at the time "doctored" up or was it submitted correctly.
What was the € valuation of the house at the time.
What was the amount of the Mortgage at the time.
What was your sisters income at the time.
What type of mortgage has she SVR / Tracker or other.
Has your sisters income changed since.
 
I fully concur with the response by Brendan b above. These type of arguments have been put forward as a defense many times in the Courts and have achieved nothing for the defendant. I.e. your sister would be wasting her time. The valuer has no contract with your sister and could not be sued directly by her!
 
Really? I never heard of valuers lying before on valuations....what was or is the point of valuations so?
The borrower may not have had a contract with the valuer but she did make a sizeable cheque out to the valuer,for the valuation, as requested at the time. That was an exchange of money for a service. The service was expected to be provided honestly, by a competent person. Any case law of a bank taking an action against a valuer so I wonder.
 
Did she retain the valuer to negotiate the price of the house with the seller for her, or had she agreed the price beforehand?

The valuer reports to the bank, but the borrower pays for it.

Brendan
 
Su're she agreed to purchase the property at the contract price whether its a 2 bed or 6 bed house.

The contract price & the valuation should be the same. Was she was using her PDH as security to make up a shortfall at the time or was she using savings - it doesnt make sense for a valuer to put an extra 4 rooms & central heating on a property if it was for sale for the correct price.

if you told me that he inflated the value of her existing property to make it more valuable for security purposes it would make more sense ie the bank was taking another charge on her PDH as security & she needed it valued for more.

I dont think she has a case as the value & contract price were the same & 2 bed properties in that area were obviously making that money at the time & she was obviously happy to pay that price.
 
The valuer was just employed by the bank, but paid by the borrower, to ensure the property was good security for the bank, was it was supposed to be etc. Instead the valuer wrote it had 6 bedrooms instead of 2, had central heating etc. If the valuation had been honest or done by a proper valuation firm the bank would not have made the loan.
 
Did your sister see the valuation report before she went ahead and took out the loan?
Sorry - just saw now that you are saying she only saw the report recently.

How much did she borrow?
 
Thanks everyone for your replies. Danny Boy, you say "it doesnt make sense for a valuer to put an extra 4 rooms & central heating on a property"...that is correct....but the property was quite unique with no comparisons nearby, and the borrower overpaid for it. It was a buy to let mortgage so perhaps by adding the extra bedrooms and inflating the value and condition of the property, the valuer was able to get it across the line for his mate the mortgage broker? Head office would not have lent that amount of money if it saw on paper it was for a 2 bedroom property in a rural location anyway. I wonder if valuers (or an engineer / draughtsman who values) just get paid if the valuation matches the contract price and the mortgage is drawn down?

Danny Boy, you wrote that "2 bed properties in that area were obviously making that money". Actually no, they were not, but some 6 bedroom properties with central heating, double glazing etc were.
 
Josephine, if 2 bed properties werent making that price then why did she pay that amount for it? After all she could have pulled out of the bidding at any stage if she thought it was over priced - she obviously didnt as she bought it.

Apologies if I'm not coming across on her side ( I'm not bank friendly) but I dont see her argument in that she paid the price that she was willing to pay for a 2 bed property.The valuer may have did what he did but the purchase pice was the contract price which was the value on the valuation report.

I dont think she has any case but if it was highlighted to the lender, the valuer may be struck off the valuers list for that bank but I can just hear his response...........we were so busy at that time that the valuation was typed by a temp or it got mixed up with another valuation in the same area etc etc..............
 
Was the BTL mortgage secured solely on the BTL cottage or jointly secured with her home?

Does her home have 6 bedrooms?
 
Monbretia said:
Does her home have 6 bedrooms?
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No it has 2 bedrooms too.

Yes the borrower got carried away at the time and decided to buy the cottage, and made a huge mistake. However she was not and is not a property professional. The valuer (or rather engineering draughts-man) who valued the property was a property professional and should have got basic details correct, even if he was not trained or had experience in valuations? Should not the bank have had a duty of care to the borrower to ensure the property was proper security.The mortgage on a 2 bedroom cottage was not sustainable or affordable; perhaps the bank head office thought a centrally heated 6 bedroom buy to let may have been as she vaguely remembers the broker saying that he may get the valuer to put down "an extra few bedrooms" to help get the mortgage. The borrower thought the broker was joking and was extremely surprised to see the valuation report only recently. She did not see it at the time of taking out the mortgage, and was not asked to supply projections or figures for futures rents etc. If she had been, she would have realized it was un-affordable and would not have taken out the mortgage.

I gather the bank has changed its lending policies and no longer deals with the broker but is there anything my sister can do?
 
I gather your sister's little cottage is now in huge negative equity as property in many parts of rural Ireland is still in the doldrums and will be for the foreseeable future. I think your sister has to take personality responsibility here, she took on a huge mortgage on a cottage that needed huge renovation i.e no central heating, double glazing and with only 'two bedrooms'. Now that the market is gone belly up its very easy to blame the bank, the valuer or the estate agent when at the end of the day your sister was the one that signed the mortgage deal. If it was the other way round and rural property had since spiraled she wouldn't be complaining. I am not saying it's tough, it is and there are many in her situation.
 
You're going nowhere with this one, unfortunate but true. The value of a property is whatever someone is willing to pay, your sister made a boo boo paying way over the odds for the cottage. The crooked valuer was another issue but either way did she not see herself that her income plus any rent she could get for a 2 bedroomed cottage, after all she knew there was only 2 rooms, was not sufficient to pay the mortgage.

Again as said if property had gone sky high and she was sitting on a nice profit she would be congratulating herself on her good buy, as it is unfortunately it's buyer's remorse, a common problem these days.
 
Brendan Burgess said:
+1

Why didn't she buy a 6 bed house with central heating and double glazing for the same price?
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Because she does not have a business head, had other complications in her life at the time and just thought the cottage in the country was quaint, and she believed what she was told that it would make a good investment. She trusted the broker (who also was an estate agent) who said it was a good buy....who said he and the valuer and the bank worked out figures and that it was a good buy and she could afford it. They were the experts, and she was assured she could trust them. It seems the trust was misplaced when they may have calculated her repayment ability on a 6 bedroom buy to let instead of a 2 bedroom....but even then she would not have been able to make the repayments once the interest only period expired.

To think of an analogy, its a bit like buying a car, say an old ford fiesta, but the motor loan finance the garage arranged was for a fine bmw. Seems in this case the motor finance people got away with filling forms out incorrectly - for whatever reason - and will pursue the owner of the fiesta not just for the fiesta but the difference in price between the bmw they thought they lent on and the fiesta. That would not be allowed to happen in the motor industry.

Has anyone else in the country found that a "valuer" got important details wrong on a valuation like 6 bedrooms instead of 2, amount of valuation, central heating etc? If the banking system gets away with this sort of carry on then it will happen again, and thats in nobodys interest.

Thank you for your replies anyway.
 
josephine,
It's not like your sister found out lately that she bought a 2 bed house & not a 6 bed, she knew what she was buying, how much she was paying for it & she proceeded with the purchase. If it turns out to be a mistake she shouldn't be blaming other people for her poor decisions - she's not alone in making bad decisions during the Celtic tiger years.

The broker didn't access her application or give her the money,he presented the application to the bank & they lent her the money based on her financial situation.She wouldn't have got the mortgage unless her income allowed her to borrow it.

No matter what the valuer put on the valuation, she chose to buy a 2 bed cottage without central heating & was happy to buy it at the price.

Unfortunately she has no case.
 
josephine said:
I wonder if valuers (or an engineer / draughtsman who values) just get paid if the valuation matches the contract price and the mortgage is drawn down?
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No they get paid for doing a valuation. It has nothing to do with the contract price and mortgage draw down. If it were linked to this it would skew valuations.

Valuers get paid by the borrower from the banks approved valuers list. In this case they got paid for the valuation by the borrower, your sister.
 
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