Mortgagee Letter 09-28 discusses appraiser independence and appraiser fees. This letter requires FHA approved lenders to ensure that all parties to the appraisal process; appraisers, AMC’s or other third parties, are compensated at rates that are customary and reasonable and are commensurate with the level of the respective service provided. What does customary and reasonable mean? This can be interpreted differently by anyone reading the letter. HUD responds with this:
"Customary and reasonable appraisal fees are reflective of those fees established and negotiated by an FHA approved self employed independent fee appraiser or an appraisal firm that may directly employ FHA approved roster appraisers or retain FHA approved roster appraisers as independent contractors, for appraisal services rendered, regardless of whether a lender, AMC or a 3rd party company or vendor is ordering/requesting appraisal services. The fee charged must be commensurate with the level of services provided and should reflect the amount of research, level of difficulty, and due diligence required on the appraiser’s part to produce a credible, reliable and accurate appraisal report that is in compliance with all FHA guidelines and USPAP."
The customary appraisal fees in the Hampton Roads market is between $350 and $400 for a single family appraisal. This is far from the $150 to $250 that AMC's want to pay for FHA appraisals. So when is FHA going to enforce this guideline that they set? They are quick to enforce the guidelines having to do with writing the reports and our analysis. I sure hope the FHA backs us appraisers on this and does it quickly. We can't keep working at these low fees. I hate to keep harping on this subject but it is tough times right now. Our educational requirements and licensing requirements have increased as well as what we are required to include in the report, which means we are investing more time in each assignment and our pay is decreasing. We need help and we need it soon! I have bills I need to pay and we are losing good appraisers.
The following is a position available with First American, an AMC (Appraisal Managament Company). I have copied it directly from their website. It can be viewed at http://jobs.firstam.com/jobs/205840-Appraisal-Coordinator.aspx.
Note the priorities listed in the ad.... The areas bolded are my emphasis. The comments in red are mine as well.
First America - Bloomington, MN Tuesday, February 02, 2010 The Information Solutions Group, a division of The First American Corporation (NYSE:FAF), is the largest collector and provider of real estate information used by businesses to value, locate, and analyze properties across the United States. With the world's most comprehensive database of real estate information and property characteristics, our companies transform complex data gathered from thousands of public records and private sources into meaningful business information used by mortgage lenders, title companies, government agencies, legal firms, and others. For more information, please visit our website www.firstam.com. If you are looking for a growth-oriented, financially stable company that's been in business since 1889, please consider our opportunity.POSITION SUMMARY:Processing Analysts are responsible for the timely and accurate placement of all Conventional and FHA orders within 24 hours of their receipt. Proper placement is ensured by the PA’s analysis of the appraisers available and selection of one that meets the company standard turnaround time, profitability requirements, and quality standards. (quality standards is last in this list, after turn time and profitability) Complete and concise documentation, as well as clear communication to all parties, is required on all files.ESSENTIAL FUNCTIONS:• Appraisal Management functions including answering incoming calls, placing of FHA and Conventional orders, telephone contact with the customer as needed, managing your assigned branch in box and other duties as assigned. These responsibilities may be changed from time to time as appropriate.• Placing orders. Focusing on rushes, orders on Hold, Finals and orders over 48 hours old first. Order Placement standards are as follows: Conventional – Placed with in 2 hours of activation, FHA – Placed with in 4 business hours, Declines – Reassigned same day, and Holds – Followed up on daily until resolved. The goal is to have 92% of all orders placed with in 24 hours. Each PA will be responsible for calling on any non accepted orders within their area along with placement of new orders.• Assuring vendor acceptance of the Quantrix Valuation standard turn around time of 5 business days.• If an appraiser requests a higher fee or longer tat, the PA is expected to get a minimum of 2 other quotes (for a total of 3) in order to determine the best appraiser (lowest fee) option for each order• After eliminating all reasonable options in VOM (by checking previous orders in the subject area and checking the vendor coverage detail report) a One Time Vendor can be used, check www.yahoo.com or the other web-sites given.• Shorten turn around times by establishing a good flow of communication with our appraisers, keeping in contact with both the appraiser and lender to accomplish this goal.• Holds – When the reason a hold was requested is out of the appraiser’s control, place the order on hold and contact the client to update them and-or request needed information.• Fees – Products have a standard flat fee regardless of what state the property is located in on all properties up to 1 million dollar or 1.5 million dollars dependent on business line. For this reason it is important for PAs to attempt to place the order to an appraiser with the lowest fee to maintain our profitability. On orders over 1 million dollars the PA is to obtain 3 fee quotes from 3 different offices before assigning the order. In situations where we must use a one time vendor or fee appraiser the PA will need to check as many options as possible to obtain the lowest fee.• The use of fee appraisers should be limited unless determined to be the best option• Documentation Habits – ways to improveo Use the correct abbreviations and acronyms.o Be clear and concise.o Do not over abbreviate.o Do not abbreviate when downloading notes to the client.o Record the name of the person with whom you spoke.o Record the person’s position.o Do not use one or two word follow-ups.o Record the reason for a fee increase request.Job Qualifications EDUCATION, EXPERIENCE AND SKILLS:To perform this position successfully, an individual must be able to perform each function satisfactorily. The requirements listed below represent minimum levels of knowledge, skills and/or necessary abilities. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.REQUIRED:• High School diploma or equivalent• Strong analytical and problem resolution skills.• Ability to be creative regarding current processes and future improvements.• Demonstrated ability to work independently and meet multiple goals and deadlines.• Effective time management and organizational skills.• Proven ability in building, nurturing, and protecting customer relationships.• Excellent oral, written, analytical and interpersonal communication skills.• Professional demeanor.PREFERRED:• Proficient computer skills in Window-based software products such as Word, Access, Excel, Email and Power Point.• 2-4 year college degree or equivalent relevant experience in the customer service field.
First American offers an empowered work environment that encourages creativity, initiative and professional growth. Our competitive salary and benefits package includes:• Health, dental and vision care• 401(k) retirement savings plan including a company match tied to profitability• Long-term disability insurance• Short-term disability insurance• Discount stock purchase program• Tuition assistance program• Title and escrow fee reimbursement program• Company credit unionFirst American Corporation is an Equal Employment Opportunity/Affirmative Action Employer and maintains a Drug-Free Workplace.% of Travel Required NoneNOTICE: Individual is responsible to adhere to First American Corporation’s and department’s compliance and information security policies, practices, and procedures, including the handling of systems and data, in the performance of the role.
My friend Kurt Petrich has contributed to my newsletter this month. He has written an article about a new product I am offering.
Pre Pricing Appraisals (PPA): Can Make the Home Selling And Buying Process Easier.Not getting offers on your listing can be frustrating. Or if you are a buyers agent, maybe your buyers are on the fence. Learn more here about pre-pricing appraisals (PPA), and you might get your buyer or seller clients to move quicker.If you are trying to sell a home or support your buyers purchase of a home, a pre-pricing appraisal (PPA) might be worth looking closer at. Instead of waiting for the house to close, the seller gets the appraisal before any buyers purchase the property. Its important in 3 different ways. It's an unbiased opinion of what the property is truly worth. And it's beneficial to Agents, Sellers and Buyers. After reading this article, you will have a better appreciation for how pre-pricing appraisals can help everyone in the home selling process.For the agent, a pre-pricing appraisal is essential for peace of mind for everyone involved in the transaction. With so much uncertainty in the market today, it can remove a lot of questions. For example, it takes the guess work out of the home value. It is an accurate assessment of what the home is worth. But that is just the first reason. Sellers also can benefit from this tool. This week I was talking with REALTOR Willie McDowell of Creed Realty, and he told me 2 ways that a pre-pricing appraisal can help them. He said that once they know the value of their home, they can stand stronger on the price they want. If they've done remodeling, then a pre-pricing appraisal will certainly make that value known to the marketplace. also, with a pre-pricing appraisal in writing, the seller can see what they can offer for closing costs to any buyer. It's an essential tool to sellers.Finally, buyers can benefit from a pre-pricing appraisal. They do not have to guess what offers to make. The likelihood of making an offer too low or high is eliminated. Once they know what they are paying for, they will create an offer that is closer to the listing price. Also, they have a better sense of what they can afford.Now you know a little more about this powerful tool just remember who it can help. Agents, sellers and buyers can each benefit from a pre-pricing appraisal. If you are looking for someone to provide a pre-pricing appraisal, give Betsy Hughes a call this week. She can put together a pre-pricing appraisal for your home.
This is a great video on the new changes to the HERA effective July 2009.
Video from think big work small on HERA (housing and economic recovery act)http://www.thinkbigworksmall.com/mypage/player/tbws/12733/1079889
As the market has been changing I have been getting a lot of REO work. Although it is sad to see it is to be expected. There is just one thing that bothers me with these foreclosures. I hope someone can help me understand the process. I keep hearing on the news and different advertisements how financial institutions are willing to work with those who are having trouble paying their mortgage. Now I am not sure if this is specific companies or all companies, but I know of a few instances where this has not been the case. In one instance they were trying to sell their home. This home was purchased two years prior. No one was willing to look at the property even when it was listed at their purchase price. It took numerous phone calls from the home owner and the agent to the mortgage company before anyone was willing to negotiate a short sale. This company did not seem willing to work with the homeowner at all. With a lot of persistence and patience, they were able to sell the home. Another instance is one where the homeowner was getting behind on their payments. They tried numerous times to speak with a representative at their mortgage company but were continuously told they needed to be 3-6 months late. I just don’t understand this concept. Why not help the borrower out while they can still see light at the end of the tunnel?
The most disturbing situation to me is this last case. I have a good friend who is a Realtor. He has had two listings that were short sales. Each listing had a buyer and a ratified contract. All the paperwork was turned into the mortgage company for approval. The mortgage company did not stop the ‘foreclosure clock’ on the house. The mortgage company took so long on the paperwork that the house went into foreclosure. I just don’t understand that. Why would a financial institution want a house that they will now get less for? They had a buyer and a signed contract. Why can’t these documents go to the front of the line for review? Now not only has the seller lost their home but so has the buyer as well as the buyer may have missed other buying opportunities while waiting for the mortgage company.
This whole situation is so frustrating. The government is throwing money at these companies to help the economy. What is happening to the funds? I have not seen a change in business at all. Wait a minute, I think I have to correct myself. I have seen a change in one company I deal with directly. That would be Citifinancial. I have a 2nd mortgage with this company. They sent me a letter a couple months ago thanking me for being a good customer and have cut my interest rate in half for the next six months. Do you believe that? They also requested that I speak with my 1st mortgage company to request the same from them. I have not done that, nor do I think that they would be willing to do that. I am a big fan of Citifinancial right now. Think about it. If I default on my mortgage Citifinancial looses everything. They have nothing to gain by lowering my rate except good will and me bragging about it. This is one company that is doing something with the TARP funds that is helping the economy.
If anyone can assist me with the foreclosure process it would be greatly appreciated. Also if anyone has any interesting stories you can post them to my blog.
The eye of the storm has just passed over
From 1999 onwards the hurricane started to build, moving ever closer to the world's financial system, obvious even to the man in the street. Yet the near-term gains were so beneficial to individuals and government budgets that every Finance Minister threw prudence down the well. Chancellors even became popular. Bizarrely, the only people who did not recognize the inevitable were the regulators, senior bankers and fund managers. In 2007, the storm ripped into the banks. There was a brief calm as the eye came overhead, within which complete regulatory and political paralysis developed, even as institution after institution imploded. Now the eye is passing; we're back into the other side of the storm. Initially the winds will be extreme, but each crisis will be a little less than the one before. It is the best possible outcome, for the alternative was an immediate vertical drop into a deep economic Depression. This would have made the 1930s look a picnic. The 'positive' alternative may not seem that glamorous as many small countries are already in recession and the major ones will follow before the end of this year. Yet this recession will be a 45 degree slope, not a 90 degree fall. This is because the correct response is now in train. It means that as early as 2010, a stuttering recovery could commence.
As I read this excellent portrayal of what has happened with the banking industry, I can't help but hear those critics who are blaming President Bush for our current economic crisis. That is not to say that there may have been some bad decisions or misguidance in the past eight years, but I think this crisis was staged before George Bush ever made it into the Oval Office. Put yourself in his position. As soon as you take office and are starting to get settled in, you are forced to deal with the largest, most devastating attack to hit American soil. I don't care how much denial we are hearing in this current political debate about the war. I don't know of too many Americans who didn't want this war in 2001. I think the American people need to remember that hind site is 20/20, especially in this election year. It is easy to say what we should have done and what would have been best for this country but as far as I know, you can't change the past. We can only use our experiences to make better decisions in the future.
Although this turn in the market and economy can be very painful (that includes for me as well), this downturn is a correction in the economy that is well needed. If consumer spending continued to grow as rapid as it had been, think of what you would be paying for a gallon of gas or a gallon of milk. We were all complaining about paying $4.00 for a gallon of gas. If the economy didn’t slow down, the retail prices wouldn't’t either. Look around the area now. Gas is in the mid $2.00 range. In fact it just dropped 20 cents in one day this past weekend. Go to the grocery store. The biggest drop I have seen is in cereal. It is actually down to $2 something a box. Think about it. If we are in the mindset to spend, spend, spend, we will be paying for it.
In early May, CNN reported on fraudulent home appraisals and the agreement between Fannie Mae, Freddie Mac, and Attorney General Cuomo. To see the video click on the following link http://www.cnbc.com/id/15840232?video=734374266
Alan Hummel, Sr Vice Pres and Chief Appraiser at Forsythe Appraisals, St Paul, MN was a guest in the report. Alan is a former President of the Appraisal Institute and is a national speaker on appraisal topics.
Alan spoke about using technology to be efficient in this industry. At BK Appraisal Services we are efficient with the use of online ordering, electronic delivery, and online data sources. Our website is packed with useful information for just about anyone.
Alan also spoke about competent/incompetent (under educated, under trained) appraisers. The appraisal industry saw a 30% increase in appraisers in the past 7 years. Although I have been in the appraisal business just over 3 years and am considered a part of the aforementioned 30%, my resume shows the numerous courses I have taken to keep current in the market as well as staying current with numerous trade journals and economists reports.
Ronald Peltier, CEO of HomeServices of America, mentioned AVM’s (automated valuation model). As Alan Hummel stated, AVM’s may be ok for ‘cookie cutter’ neighborhoods, meaning all the homes are similar in size, style, condition, and construction quality but they do not take into account location, or special characteristics each property may have. AVM’s are used by lenders to keep costs down and to get a value quicker. Yes, an AVM is cheaper than an appraisal however this is a case of you get what you pay for.
The following is an article from our local paper that just put me in a tizzy. My opinion is stated at the bottom. Please feel free to post a comment. I am interested in other opinions.
The threat of losing Oceana Naval Air Station nearly three years ago forced the city to rethink how it did business with the military. The city compromised. The Navy gave a little. But now a pair of council members are chafing over the power they seem to have relinquished to protect the Beach's largest employer. This week, the council members said they feel they no longer have full control over the future of residential development around the base. "What's left for us?" Councilwoman Barbara Henley asked. "I wonder where the City Council is in this, or have we abdicated our authority?" City Councilwoman Reba McClanan said she appreciates the more amicable relationship that has developed between Virginia Beach and Oceana officials in recent years but wonders what the cost has been. "How much citizens have given up in the process to keep Oceana and the planes here, I don't think is clear," McClanan said. The federal Base Realignment and Closure Commission in 2005 recommended moving the jet base because too many homes were being built too close to Oceana. Since then, the City Council has approved a slew of new policies to keep the base. Virginia Beach and the state are spending more than $30 million to buy properties from willing sellers around Oceana. The City Council tightened its zoning rules, allowing fewer new homes near the base. And Beach and Oceana staffers now meet regularly to discuss and review residential development applications. However, the latest change has caused at least two council members to raise an eyebrow. Earlier this month, the City Council unanimously voted to slice the 65-to-70-decibel noise zone around the base into three sections with different degrees of restrictions. The western part of the band is the most restrictive, and residential rezonings for additional homes are allowed there only if nothing else can be built. Along the southern portion, by General Booth Boulevard, the number of homes allowed in new subdivisions is limited to a density no greater than what already has been permitted on nearby properties. The Oceanfront is the least restrictive section, and development plans there face little objection from the Navy. Two separate cases this week, from South Hampton Roads Habitat for Humanity and The Breeden Co., tested the new policy. The City Council approved both plans after long debates. Habitat's plan called for six townhomes off Interstate 264 in the most restricted area. The Breeden Co. wanted to build 99 apartments and a strip shopping center off General Booth Boulevard. The joint staff committee reviewed both plans and found them acceptable. That's a call the City Council should be making, not the committee, said Henley, who said she thought 99 apartments were too many in an area of primarily single-family homes. The joint committee's report is just a recommendation, said Bill Macali, a deputy city attorney. It's similar to the planning staff's recommendation on land-use issues, he said. "We're not divesting the council of any powers," Macali said. "Council has full, 100 percent authority." A call to an Oceana official this week was not returned. Still, having the Navy on board with a project will make it more difficult for council members to vote against it, Henley said. Councilman Jim Wood said he welcomes the Navy's input. "This is a process that has been ongoing since Virginia Beach was first placed on the BRAC list," Wood said. "To say at the 11th hour that we've turned everything over to the Navy is shortsighted." Torrey Breeden, with The Breeden Co., said the joint review and the new rules in the 65-to-70-decibel noise zone help developers figure out what they can build. "You know where you stand," Breeden said. "It gives the council a little cover because they can say, 'Look, they're following the rules.' "
Deirdre Fernandes, (757) 222-5121, deirdre.fernandes@pilotonline.com
Comment:
I can not believe that as elected officials some city council members are concerned about making a decision contradictory to the joint staff committee. The city council’s job is to decide what is best for our community. This is much different than the joint staff committee who is making sure the proposal is within the regulations. If our council members are concerned about making decisions then we, as voters, need to remember this at election time. The residents and elected officials of Virginia Beach need to realize that if the Navy leaves Virginia Beach, more than just the jet noise will diminish. Everyone is complaining about the drop in home values as of late. Imagine what will happen when the city’s largest employer has left town. Your home value will plummet, since we would no longer have the thousands of military personnel, families, and support businesses needing housing. So for those of you who feel you may be ‘giving up ‘ things to keep the base here and others who feel they are losing their ‘power’, take a look at your property value and then decide what is best. As elected officials, you make the decisions about our community.
These terms are heard throughout any news media now days. No wonder everyone is afraid to purchase anything. The media has put a scare into consumers, not only in the housing industry but also in the retail industry. Luckily for us here in the Hampton Roads area the housing market does not apply to all the hub-bub reported in the news. We live in an area that is very transient. Thanks to the military, the businesses associated with the military, and the shipping ports. This area has a constant flow of personnel in and out of the area. This not only helps with home purchases, but also with rental properties. The problem is that many people want to live in the past 3 years when the housing market was outrageously overpriced and home buyers were competing for purchase contracts. The market has turned into a ‘normal’ market. Buyers and sellers are negotiating a price, sales concessions are considered in the purchase agreement, and homes are staying on the market longer. Now is a great time to BUY!
If a home buyer is purchasing a home to be a bank, they are in the wrong frame of mind and will be disappointed in the short-term. However if a home is purchased as a long-term investment and is treated that way, then it will most likely be rewarding for the home owner. In all my economy classes through out high school and college I never heard of using real estate for a short term investment. The previous market conditions allowed this anomaly to happen. Unfortunately too many people took advantage of the market and got in over their head.
With the change in lending practices, many homeowners are going to lose their homes. You know who you are. Bite the bullet and try to sell your house now, plan on it being on the market for at least six months. If you choose to sell now, hopefully it will sell before you get behind on your payments. Keep your credit clean so you are able to purchase a more affordable home. As for homebuyers, now is the time to buy. Interest rates are great and sale prices are reasonable.
Contact Us | Order an Appraisal | Fax an Order | My Blog
Copyright © 2010 BK Appraisal ServicesPortions Copyright © 2010 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site Map
