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We also refied recently and under similar conditions as you--bank had our mortgage, all accounts, high home value relative to amount owed, and in So. Cal. Appraisal was done as a "drive by" I think because no one ever came out. What I don't understand about your issue is why the bank balked. I assume you were refinancing only the outstanding balance. If the appraiser down rated your home, it's still much higher in value than the refi amount. I suspect the lender didn't want to lend for some reason.

Given your history with the bank, I don't see how an appraisers report would kill such a deal--unless it was to refi for the appraised amount. The defect he reported is not something that makes the house uninhabitable or significantly devalues it.