Underhand Tactics by Mortgage Companies

billywhy

I recently applied to the Nationwide for a mortgage on a new build property. All was well until it came to the valuation. The surveyor commented (before inspecting the property) that he had been instructed by the Nationwide to undervalue the property. Now I know that valuations can vary, but he came back with a figure of £175,000, when two other mortgage companies had valued identical properties at £200,000.
This left me with a shortfall that I could not cover - to get their market leading rate at that time (a tracker 0.98% above the BOE base rate) ! i feel that this was deliberate to avoid giving me the mortgage. (they had already withdrawn the product to new customers after the BOE 1.5% drop).
To make matters worse the whole exercise has cost me £250 for their valuation fee. I am furious and feel I have been robbed. I am thinking of contacting the FSA to try and get my valuation fee refunded. (dont hold much hope though!).
Eventually I got a mortgage with the Abbey (a tracker, 2% above BOE Base rate) who valued the property at £200,000.
Any ideas how I can get my money back?

feisty1

i'm afraid to quote you "don't hold much hope" as you have rcvd the service you paid for..........I find it mighty strange a surveyor would make such a comment to a client, as they're compromsing their position!

opinions4u

billywhy wrote: »

I recently applied to the Nationwide for a mortgage on a new build property. All was well until it came to the valuation. The surveyor commented (before inspecting the property) that he had been instructed by the Nationwide to undervalue the property.
Tell us exactly what he did say. Give us the full context. If he'd said this, why didn't you cancel there and then to save your fee?

Now I know that valuations can vary, but he came back with a figure of £175,000, when two other mortgage companies had valued identical properties at £200,000.
Properties are rarely identical. They may have the same layout, but may have different access, views or internal fittings. A property valued at £200,000 6 months ago may well be worth £180,000 today.

This left me with a shortfall that I could not cover - to get their market leading rate at that time (a tracker 0.98% above the BOE base rate) ! i feel that this was deliberate to avoid giving me the mortgage. (they had already withdrawn the product to new customers after the BOE 1.5% drop).
They aren't trying to get out of giving you a mortgage. They are concerned that new build properties invariably fall in value faster than established properties.

To make matters worse the whole exercise has cost me £250 for their valuation fee.
Again, why didn't you cancel if the valuer had already told you he was going to sell himself short?

I am furious and feel I have been robbed. I am thinking of contacting the FSA to try and get my valuation fee refunded. (dont hold much hope though!).
You might be better of trying their internal complaints procedure and progressing to the Ombudsman first, as the FSA don't deal with complaints.

Eventually I got a mortgage with the Abbey (a tracker, 2% above BOE Base rate) who valued the property at £200,000.
Good.

Any ideas how I can get my money back?

You need to pursue your complaint via their internal complaints procedure (it will be on their web site). This will also tell you how and when to involve the ombudsman if you are still not satisfied.

Your problem is that a valuation is simply a matter of opinion. Abbey's valuer had a different opinion to Nationwide's.

dunstonh

Surveyors are not instructed to undervalue properties. Currently a common instruction is that they are told to value them for quick sale. That in effect means valuing them a little less than perhaps you would do if you were putting it on the market and happy to wait it out. That isnt the same as undervaluing them though. They may also be valuing them with the understanding the prices are dropping and likely to continue. So any margins of error that they might have been inclined to give in a rising market wont exist in a falling one.

For him to give you that impression is very unprofessional and to be honest, I dont see it as being very likely. Although they may possibly explain the valuation criteria and you have misinterpreted that.

I know that valuations can vary, but he came back with a figure of £175,000, when two other mortgage companies had valued identical properties at £200,000.

Values are a matter of opinion. Unless you can find a price tag on your house that says £200k guaranteed then then it just what the person buying or the valuer thinks.

To make matters worse the whole exercise has cost me £250 for their valuation fee. I am furious and feel I have been robbed.

You paid for a valuation and you got a valuation. You have not been robbed as you knew you had to pay £250 before you started the process.

I am thinking of contacting the FSA to try and get my valuation fee refunded. (dont hold much hope though!).

The FSA wont be interested. They do not deal with consumer complaints and will just forward your details onto Nationwide.

Any ideas how I can get my money back?

There is no justification based on what you have said as to why they should give your money back. You would be relying on the goodwill of the Nationwide and I cant see why they would want to refund it as they have had to pay the valuer.

spuds_2

This was mentioned in an article in the Times a few weeks ago. The under-valuation is to protect the bank when and if house values fall further and to restrict the availablity of their best rates.

I agree that it seems unfair but I think we will see a lot more of this in coming months, I'm afraid. It is worth pursuing a refund, check on sites like Mouseprice to see what the houses have been going for (though info is around 3 months in arrears). Good luck.

boyse7en

There is no justification based on what you have said as to why they should give your money back. You would be relying on the goodwill of the Nationwide and I cant see why they would want to refund it as they have had to pay the valuer

Well, if the NW were deliberately under-valuing the property just so they wouldn't have to take on the mortgage, then it would certainly be morally dubious, if not fraudulent. Proving it is, of course, another matter entirely.

luckyfool

Did you get your mortgage yourself directly with Nationwide, or through a broker? If it was through a broker then they should probably have been aware of Nationwides valuations policy on new builds. If you got it direct then this highlights some of the value in using a good broker who knows the lenders criteria and could have directed you to an appropriate lender at the outset and secured a much more competitive deal from the right lender at the outset, avoiding the unnecessary fees and inferior rate caused by the delay.

Nationwide policy is to instruct valuers when valuing a new build property to assume that it must be sold "second hand", and if the valuer comes back with a valuation that is within 10% of the purchase price then they insist that he/she justify that "unexpectedly" high valuation. Normally a valuation on a new build property includes some element of a new build premium, i.e. people are willing to pay a little bit more to be the first owners of a property, potentially choosing their own fittings etc and normal valuations always have a disclaimer explaining this and that the property might not be worth the purchase price second hand once you have moved in. In a falling market, where new build properties are especially vulnerable due to builders needing to sell their stock so lenders need to protect their position.

Nationwide do this by making the above instructions to their valuers while still technically offering mortgages right up to their maximum ltv limits, whereas other lenders like First Direct or HSBC will just not lend on new builds above 75%. As a mortgage broker I would never have sent you to Nationwide unless you were putting down a very large deposit which gave you a significant cushion to allow for an expected downvaluation to get the product you wanted.

billywhy

Tell us exactly what he did say. Give us the full context. If he'd said this, why didn't you cancel there and then to save your fee?

I was not present when the surveyor arrived at the property to carry out the valuation. So there was no chance of cancelling. Its all very well saying that with hindsight but how was I to know that he was going to value so ridiculously low. He stated to the sales team that he was going to value the property in line with other 4 bed properties in the area. This is ridiculous, the property I have now purchased is 1600 sq ft compared to a local approx. average of about 1000 - 1100 sq ft and It is architect designed (award winning ) and been graded as a top spec eco property.

Properties are rarely identical. They may have the same layout, but may have different access, views or internal fittings. A property valued at £200,000 6 months ago may well be worth £180,000 today.

Trust me, these properties are identical in every way except for my property having £5000 worth of upgrades. One property was valued the week before at £200,000 and one two weeks after.

Surveyors are not instructed to undervalue properties.

Who says so? If an independant surveyor receives regular work from one of the largest building societies, I'm sure he will do whatever is asked of him (from behind closed doors of course!). Why bite the hand that feeds you.

You paid for a valuation and you got a valuation. You have not been robbed as you knew you had to pay £250 before you started the process.

I paid for a valuation and expected to receive a fair valuation that gave a reasonable estimation of the properties current value.
What I received was a ball park figure which included possible future drops in property value to protect the Nationwides backside. (and I paid £250 for the pleasure). Dont they use Loan to Value Ratios to protect themselves?

dunstonh

He stated to the sales team that he was going to value the property in line with other 4 bed properties in the area. This is ridiculous, the property I have now purchased is 1600 sq ft compared to a local approx. average of about 1000 - 1100 sq ft and It is architect designed (award winning ) and been graded as a top spec eco property.

That would explain why a valuer would need to enter the house. It is non standard and certainly more likely to be volatile in price value during a market crash.

Trust me, these properties are identical in every way except for my property having £5000 worth of upgrades. One property was valued the week before at £200,000 and one two weeks after.

You suggested that its different to others. Upgrades do not always reflect their value in the property price. One persons upgrade is another persons cost to have to change it.

Who says so? If an independant surveyor receives regular work from one of the largest building societies, I'm sure he will do whatever is asked of him (from behind closed doors of course!). Why bite the hand that feeds you.

If you had evidence of that you would have an indication of what could be possible illegal activity.

I paid for a valuation and expected to receive a fair valuation that gave a reasonable estimation of the properties current value.
What I received was a ball park figure which included possible future drops in property value to protect the Nationwides backside. (and I paid £250 for the pleasure). Dont they use Loan to Value Ratios to protect themselves?

It was in the media just today (BBC article) that estate agents have said that people have to be realistic on valuations and accept that they are likely to get around 30% of the peak value at this time.

The valuer isnt to know what deal you have applied for or how close you are to hitting the tier point where it changes. If you have watched any property !!!!!! show which gets values for properties you will see that there is a wide variation on what the agents think is the price. If you think you are hard done by, ask an estate agent to value your property. Then ask them for a realistic quick sale price.

luckyfool

Nationwide are perfectly entitled to instruct the surveyor to make certain assumptions when valueing the property. They are far from the only lender to do so, and the fact that they instruct them to give a 2nd hand valuation could account for the differential if the comparables you advise are all new builds also.

CocoLoco_3

dunstonh wrote: »

property !!!!!! show

Eh?