The legislation was introduced by New York Attorney General, Andrew Cuomo. It was designed to decrease the likelihood of appraisal fraud by removing the individual most inclined to push for inflated value (the loan officer/realtor). This rogram severed communication with the appraiser. Whereas that may sound logical, the reality is that the extra layer of bureaucracy increases cost, slows down the loan process, decreases customer service and creates an increased potential for miscommunication

My main points of contention:

1. Appraisals are now more expensive for the consumer, because the third party company charges a fee to process the order. The consumer, whom the legislation was designed to protect, can expect to pay more.

2. HVCC is likely to create unnecessary customer service issues. I am more likely to follow up on a delinquent appraisal than a third party company. There are often mistakes on the appraisal. I am more likely to catch errors due to my direct interaction with the client. If I can’t address appraisal issues as they arise, the client becomes irritated and frustrated.

3. Going through a third party Appraisal Management Companies (AMCs) is inefficient. These unregulated entities (AMCs) don’t acknowledge orders consistently, they charge additional fees and the turn-around times are slow.

4. Whereas I used to be able to use local appraisers who knew every detail about their market, I am now forced to utilize large national companies who order the appraisal. Each AMC has a roster of appraisers at their disposal. There is no guarantee that the appraisers working for the AMC will be skilled or knowledgeable about the local market.

5. Payment methods vary between AMCs. There are some that require the loan officer to collect payment from the borrower. If I collect the payment from my client, but have no involvement with the appraiser and they make a mistake, it is perceived as my fault, which negatively impacts my relationship and communication with my client.

6. I have developed outstanding relationships over the last 7 years with appraisers all over the country. These relationships are based on an appraiser’s cost, speed and the quality of their work. Independent appraisers can no longer rely on the patronage of satisfied mortgage professionals and realtors. They will be forced to work with the AMCs or starve.  Appraisers are being asked to work for less, though the AMCs are charging borrowers more.

7. In the past you could opt to pay for the appraisal at the closing. Currently appraisals must be paid for up front.  If the loan officer needs to change lenders before the closing for any reason, the borrower may have to pay for a new appraisal, incurring additional cost.

8. How many loan officers have had to get two separate appraisals over the last month? On every appraisal, the appraiser must check one of three boxes regarding local market conditions.  The options are: “market is appreciating,” “market remains stable” or “market is declining.”  Given the nationwide decline in home values, appraisers are most likely to cite “market is declining.”  This may prompt the underwriter to request a second appraisal.  

9. FHA has not adopted the HVCC. It is not requiring lenders to use the AMCs.  However, many FHA lenders are using AMCs anyway, charging even more for the service than Fannie Mae and Freddie Mac.

10. As a loan officer, I feel ridiculous telling realtors and clients that: I don’t know who the appraiser will be, I can’t use anyone they recommend, I don’t know when it will be done and I hope it doesn’t’t detrimentally impact the closing.

I am not the only one frustrated with the new policy. A quick Goggle search on “HVCC nightmare” yielded numerous articles discussing issues caused by HVCC regulations, including the following story from Maryland.  

An investor purchased a property for $375k cash at a trustee sale. The property was listed for $450k on MLS. After reviewing multiple offers, they accepted a final contract price of $459k.

The client wanted to do a conventional loan. The loan officer was limited in terms of investor. They selected Flagstar, because Flagstar does not have a 90 day anti-flipping policy. They scrutinize the appraisal.

The loan officer submitted the order to Flagstar’s AMC. The appraiser was given all of the information on the transaction; including the listing, previous trustee, sale information, offers and counter offers, executed contract, 24-month chain of title, etc. The appraiser measured the property inaccurately, by 500 sq. ft. As a result, they used the wrong comps. Rather than calling the agents about the discrepancy between purchase price and appraised value, they submitted a report with a value of $400k.

The buyer freaked out. The seller freaked out. Both agents freaked out. The buyer’s agent emailed the appraiser to inform them of the error. The appraiser amended the report to reflect the correct square footage and provided new comps. The appraiser uploaded the revised report to Flagstar’s AMC; however, the AMC had not requested the revisions. They contacted the appraiser to ask why the report was amended. The appraiser told them that the buyer’s agent pointed out errors.

HVCC VIOLATION! The agents are not allowed to contact the appraiser either, despite the fact that the agent is the person who grants the appraiser access to the property. ALL communication has to go through the AMC. 

As a result, the appraisal was voided. Flagstar would only accept the original $400k appraisal. The deal is dead, because Flagstar was the only lender that would allow flipping in less than 90 days. Dead loan. The seller will have to accept the next offer in line.

The new appraisal system is wreaking havoc on home values and transparency.  It is unfair to the consumer.  This nightmare could slow economic recovery in the real estate market. The system that we had before was flawed, but this system is no better. The National Association of Mortgage Brokers issued a “Call to Action” this week. Please take a moment to email hvcc@namb.org and tell them your horror stories. 

Courtesy of Leslie Davis an Examiner Author from Atlanta. http://www.examiner.com 

My reply to Leslie

Leslie

I too have been using 2 appraisers for 14 years.

If I can’t have a professional discussion for the benefit of my client how do I help them?

They will never give me a # but they can tell me if we are in or out of line. Not waste my client’s money or time and the bank too.

With the new system appraisers submit a bid on a fee they will charge. The Appraisal Management Company (AMC) looks at this bids list and guess who gets the job? Yap the cheapo one.

PRONLEM 1-
The professional appraisers will be out of business as they cannot do a “GOOD JOB” for $150, $175. Who will be left? You can answer it.

PROBLEM 2-
Buyer pays $350-$400 to the AMC Company, appraiser who does the job gets $150-$200. Who pockets the fat? You can answer that too.

At the end WHO LOOSES? the very person this system “Meant to Protect” the CONSUMER, and the whole system suffers as we are now.

Let’s get rid of the problem NOT choke the market.

Warm regards

Racheli Smilovits

Watch the HVCC video https://www.thinkbigworksmall.com/public/showArchiveVideo/1/4909

Here is how you can help Sign the HVCC Petition http://www.hvccpetition.com/

Together we can all make a difference

With mortgage rates returning to levels seen before the Fed pledged to buy up billions in mortgage securities, it might be time to turn to a costly Plan B, subsidizing mortgage rates.

Rising interest rates have already extinguished a short-lived refinance boom, with applications dropping precipitously over the past three weeks.

Mortgage rates, which slipped to a record low 4.78 percent on the popular 30-year fixed as recently as early April, have since risen above 5.50 percent, following the surging 10-year bond yield.

So now it appears as if the Obama Administration will need to come up with something more, which could be in the form of explicitly guaranteed rates.

Remember that whole plea for 4.5 percent mortgage rates to stabilize housing?

Then the National Association of Home Builders went a step further, calling for interest rates as low as 2.9 percent to spark sales and shed inventory; that wild proposal clearly fell on deaf ears.

Now the newly formed Housing Working Group of Business Roundtable, composed of the nation’s top CEOs, has called for lower mortgage rates to stimulate the housing market and lead an overall economic recovery, but it appears the only way that will happen now is with subsidized rates.

Unsurprisingly, the National Association of Realtors applauded the efforts of the roundtable group, asking for more concessions to spark flagging home sales and buoy corresponding home prices.

“NAR has called on Congress and the Obama administration to expand the first-time home buyer tax credit to all home buyers, regardless of income,” the Realtor group said in a statement.

“In addition, it is imperative to maintain mortgage interest rates below 5 percent, make the loan limit increases permanent, and strengthen foreclosure mitigation and loan modification efforts. These are all actions that BRT is fully supporting and we welcome their involvement.”

Seeing that lowering mortgage rates seems to be the Fed’s main solution to this housing mess, it appears likely something will be done to get rates back down near record lows.

Unfortunately, the repercussions of such a move could extend the housing crisis, keeping home prices elevated and subsequently pushing future home buyers out of the market.

Then there’s the cost of funding such a program, and the fact that subsidized rates tend to benefit the wealthiest of homeowners.

Ugh.

If you’re looking to stay abreast of the latest mortgage industry news, sign up and get the FREE  Mortgage Video News

got a question Email us info@loans-4-u.com

 courtesy of “The Truth about Mortgage”

The days of solely blaming subprime lending for the housing collapse are far behind us (I hope), but the risky, high-cost lending certainly played a hand in the mortgage crisis.

The Center for Public Integrity released an interesting report documenting the actions of so-called “mega-banks,” which supported such lending that set off a global economic meltdown.

Unsurprisingly, 21 of the top 25 subprime lenders were financed or owned by banks that received TARP money.

Investment banks Lehman Brothers and Merrill Lynch both owned and financed subprime lenders, while others like Credit Suisse and Goldman Sachs were major financial backers of subprime lenders.

Nine of the top 10 subprime lenders were based out of California, along with the top five, which include Countrywide Financial, Ameriquest Mortgage, New Century Financial, First Franklin, Long Beach Mortgage.

Of course, twenty of the top 25 subprime lenders have either closed shop, stopped lending, or have been sold to avoid bankruptcy.

Eleven lenders on the list have had to make payments to settle claims of widespread lending abuse, including four who received bailout money regardless.

Check out the list below detailing the insane loan volumes of “high interest” mortgages between 2005 and 2007; you’ll notice many of the names are no more.

Courtesy of www.TheTruthAboutMortgage.com

Bottom line, financially its more sensible.  The Supper Jumbo loans are available to selected few, to find out if you qualify please contact Racheli Smilovits 866-927-5900 X 203 or direct 954-567-7300 racheli@loans-4-u.com she will gladly share those Jumbo secrets with you.

 Here is CNBC take on the Jumbo Loans Market

‘Jumbo’ Mortgages Still Costly—And Harder to Get
By: Mark Koba, Senior Editor | 24 Mar 2009 | 09:20 AM ET
Text Size

While most mortgage rates are heading lower, people looking to buy or refinance a more expensive house may be out of luck.

Source: beazer.com Beazer Home

That’s because the market for so-called jumbo loans—mortgages of more than $417,000 in some areas but over $729,750 in others—is still feeling the worst of the credit crisis. In some cases, the spread between conventional mortgages and jumbo rates is a full point or more.

“I don’t see the situation for jumbo rates improving for more than a year or two,” says Bob Walters, chief economist for QuickenLoans. “What you need is for the housing market to stabilize. Until that happens, jumbo rates will be high.”

Recent government efforts to free up the mortgage market are aimed primarily at conventional loans, not jumbo mortgages. As a result, banks have little incentive to either offer or refinance jumbos.

• Slideshow: 10 Highest Homeowner Vacancy Areas In U.S.

And while conventional mortgages can still be sold off by banks and bundled into mortgage-backed securities, there is no such market for jumbo loans, which is also keeping rates higher, says Mark Goldman, a real estate lecturer and mortgage broker with Windsor Capital Investments.

“The secondary market is dead,” says Goldman. “Fannie Mae, Freddie Mac and Ginnie Mae are getting propped up by the government for conventional loans. But portfolio lenders for bigger loans are not getting any kind of funds. There’s no political benefit to support funding what some people think are ‘rich people’s’ homes.”

That lack of a secondary market means lenders are forced to carry the loans on their books. That makes lending and qualifying for a loan much tougher in the current real estate market, says Peter Grabel, a private mortgage banker with Luxury Mortgage in Stamford, Connecticut.

“The jumbo market has gotten much tougher in the last few months,” says Grabel. “The guidelines and qualifications to lend are harder and so are the guidelines for borrowers.”

Getting a loan

Despite the higher rates, loans are still being made. Grabel says he recently did a jumbo loan for $3 million with a 7 year ARM at a rate of 5.25 percent and no points. However, the homeowner had to put down 40 percent to get the deal.

• Slideshow: Million Dollar Homes Across America

“People at one time could get up to 80 percent of a loan,” says Grabel. “Not anymore. The higher the loan amount now, the higher the down payment.”

And for those looking to re-finance, losing value in their homes hurts when they might plan to use the equity for a downpayment. Worse, a home now worth less than the current loan, could leave a homeowner facing the difficult task of finding any lender willing to give them a new loan, experts say.

Grabel also cites today’s sagging job market as a hindrance to potential borrowers. “A lender didn’t approve a jumbo loan because the couple worked in the same industry,” Grabel says. “That was too much risk of default if both got laid off.”

What will change the market

As for what might actually lower jumbo rates, analysts say it comes down to a change in business practice and psychology. “Confidence and transparency need to come back to the market,” says Goldman.

“No one will jump into jumbo loans unless everyone is getting a good idea of the risk in the housing market. Underwriting guidelines need to be clear and concise.”

Luxury’s Grabel agrees. “When people have confidence in the housing market, there are many more players in the system.”

And as housing values go, so too go the number of loans, says Quicken’s Walters. “Prices need to settle for at least one to two months straight,” says Walters. “Then lenders might not be so afraid to have jumbo loans on their balance sheets.”

Missed Opportunity?

Whether rates come down or stay the same, Grabel says jumbo loans are still a pretty good bargain. “Yes, rates are higher, too high, but I still think rates are fairly good for borrowers in today’s market,” says Grabel.

And at least one analyst says jumbo loans currently present a missed business opportunity.

“The jumbo loan market is tremendously undeserved,” Goldman says. “It’s a great opportunity for lenders. Too many high quality borrowers have been squeezed out of the system and that’s too bad.”

© 2009 CNBC.com

Sunday’s federal takeover of Fannie Mae and Freddie Mac will likely translate into lower mortgage rates and greater availability of credit, experts said. Rates could drop by 1 percentage point from the stubbornly-high 6.39% for a 30-year fixed rate mortgage.

“This could be good for would-be homeowners,” said Tom LaMalfa, managing director, Wholesale Access, a research and consulting firm. “It would reduce the cost of financing at the new and improved Fannie and Freddie.”

The government bailout is aimed at making mortgages easier to obtain and afford. By shoring up the mortgage financing giants, they can continue buying mortgages from lenders and injecting much-needed cash into the system.

“Fannie Mae and Freddie Mac are crucial to turning the corner on housing,” said Treasury Henry Paulson. “Therefore, the primary mission of these enterprises now will be to proactively work to increase the availability of mortgage finance. Our economy and our markets will not recover until the bulk of this housing correction is behind us.”

But the news isn’t all good. With Friday’s report that foreclosures and delinquencies are at all-time highs, Fannie and Freddie are expected to maintain – if not ratchet up – tighter lending standards. And the fees they have introduced for borrowers with weaker credit histories won’t go away anytime soon.

High borrowing costs

Mortgage rates borrowers pay are dependent on the yields that investors demand when buying mortgage-backed securities from Fannie and Freddie.

Investors’ doubts about the companies’ viability have sent interest rates on those securities soaring. Despite regulators’ July promise that they would step in to save the mortgage companies, investors are still demanding rates of 2.25% to 2.45% above Treasuries, LaMalfa said. Historically, the spread has been 1.25%.

With the government now taking over the companies and minimizing the risk associated with their debt, investors may be willing to ease off their need for higher rates.

High borrowing costs have led, in part, to a decline in mortgage borrowing. Applications are down 27% from a year ago, according to the Mortgage Bankers Association.

Also Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) will likely reverse their recent pullback from the mortgage markets. In early August, when they reported just over $3 billion in combined second-quarter losses, both said they would scale back their purchases of mortgage securities to preserve their capital.

Tight standards and fees will remain

Borrowers, however, shouldn’t expect the ever-tightening lending standards to ease. With defaults and delinquencies multiplying and home prices falling, Fannie and Freddie will likely keep a close eye on underwriting practices. Lenders are demanding credit scores above 700 these days, up from 620 in the past, and downpayments of 20%, up from zero in some cases, experts said.

The mortgage titans have also increased their fees in hopes of shoring up their finances. Just last month, Fannie Mae announced higher surcharges for loans to weaker borrowers. For instance, applicants with credit scores between 640 and 659 who are putting down 15% to 20% will pay an additional 2.25% charge.

The same borrower would pay 1.7 percentage points more because of higher fees and rates for the same loan today as he or she would have paid 18 months ago, LaMalfa said.

If the market continues to worsen, standards could further tighten and fees could rise more, he said.

“We may have more stringent standards over the next few weeks because of the continued deterioration,” he said. “We don’t know where the bottom is yet. It’s a falling knife.”

Also, while investors have initially cheered regulators’ moves in the past, their confidence has been short-lived. It remains to be seen whether and for how long Sunday’s action will placate them, said Kurt Eggert, law professor at the Chapman University School of Law. And if investors’ spook again, rates will rise.

“If I were an investor, I’m not sure this would be enough to make me want to jump in with a lot of money,” Eggert said. 

Rates have gone down by 1/2 presentage point.
Give us a call to see what you qualify for. 866-927-5900 Ext 203

With this new law and some other indicators like “The national home ownership rate — defying all gloom and doom predictions — jumped to 68.1 percent in the latest quarter, up from 67.8 percent”, I think this is it I truly believe it.

More home buyers mean more home sellers. Where do those sellers go? Yes to buy more hoses. The wheels of the Real Estate Market are starting to move, we are going some where.

Are you still an “on the fence” home buyer not sure if this is the right time to jump in the game?

Did you feel that just a few years back home ownership was slipping away from you due to the steep rise in home prices?

Well, if you answered yes to those questions you don’t need to wait any longer. Your dream of home ownership can come true if you act now TIME IS OF THE ESSENCE!

• The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
  Do you know a friend who bought a home after April 9 this year? Share it with them.

• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

• Married Couples can qualify to a maximum of $7500
• Single people can qualify to a maximum of $3,750
• You have to be a First-Time Home Buyers or a Renter who hasn’t owned a home in the last 3 years.

Here are some more resources

• Video News at a Glance
  Watch the Mortgage and Real Estate Video New Channel you can sign up on the top right of this page.
  Frequently Asked Questions
  The Law’s Other Provisions
  Home Buyer Resources
  www.federalhousingtaxcredit.com

Please remember, We are here to serve you.

100% home loans
Down payment Grants
Seller concessions
And now the $7,500 Tax credit

Act now or you may have to waive this opportunity “Good By”

Have a question email us at info@loans-4-u.com or call Racheli at

Thanks, and I am looking forward  for the opportunity to serve you.

 Serving you in 49 states
866-927-5200 Ext 203
954-567-7300

The seller’s Realtor suggested he call a mortgage advisor she knows who can work miracles…
Working with a professional mortgage advisor like Racheli Smilovits can work miracles for you too.
How knowing someone like Racheli can assist you?
Please give us your comments right here below.

1. How many homes in the subdivision, Neighborhood, or condos are for sale?
   If over 30% are for sale give the seller 10 points
   If over 20% are for sale give the seller 6 points
   If over 10% are for sale give the seller 4 points
2. When did your buyer buy the property they are currently selling?
   Before the year 2000 give the seller 1 point, each year after add 2 points.
   Year 2001 give the seller 2
   Year 2002 give the seller 4
   Year 2003 give the seller 6
   Year 2004 give the seller 8
   Year 2005 give the seller 10
3. How is the house maintained inside and out?
   Very poor and neglected give the seller 10 points
   Okay but needs improvements give the seller 6 points
   Well but could use a face lift give the seller 4 points
   Very well maintained give the seller 2 points
4. What’s owed on the property Compared to the asking price?
   10% of the difference give the seller a 10 may be short sale.
   20% of the difference give the seller an 8
   30% of the difference give the seller a 6
   <40% of the difference give the seller a 10
5. How many months of inventory are currently available?
   6-8 months 2 points
   8-12 months 4 points

How did your seller score?

40-50 points very motivated
30-40 points some what motivated
30 or less points has time to ride the storm

Use this quick scoring tool to guide you when you are in the process of presenting an offer to buy a home. By all means this is NOT the only tool to take into consideration. Consult with your realtor. Get pre-approved (Not just pre-qualified) submit a pre-approval with your offer to a very motivated sellers and your chances to get the home of your choice are increased a lot.

And now you can see how easier it is to pick your best home. Need a referral to a professional realtor in your area? Please Email me at info@loans-4-u.com I’ll gladly refer you one.

A realtor posted this question on our forum: We are working with a client who “want to see everything”. This is the second Saturday in a row that we are out all day showing them 10+ properties. We have tried to narrow her focus to specific areas but to no avail. There are still a LOT of homes left to see! Any ideas on how to explain to this client that it does not serve her best interest to view 10+ properties at a time.

Is it hard for you to pick the home that is best for you?
Here are 5 Tips that will help you make a decision. 

1. Know what you DON’T want and what you  DO want in a Home-
   When you have a few major Items you want in a home ask your self”  “What’s important to me  in  #1”   and #2, 3 and so on have at least 5 points you are looking in a home. However many points you have, prioritize them.  Notice what comes up.  It will get you focused and quid you on finding the right home for you.  Take with you the list of the things you want and don’t want in a home.Sit with your realtor and discuss those issues thoroughly. DON’T rush to get in the car to see homes before you narrow down what you REALLY WANT, It’s hard to find anything if you don’t know what you are looking for first, right?
   
2. Ask yourself, what I Don’t like and what I DO like about this home?   
   When you’re done going through the home, discuss with your realtor again “What I don’t like about this house and why?”  And “What I do liked most about this home and why?” How do your answers compare to the items on your list? Listen to your realtor who will point out to you what you said you want. See even if what you like about this home is 1 of the 5 you said you want. Don’t be surprised if it’s not.
   
3. Which Home out of those 2 would you pick? –
   Go to the 2^nd home you chose to pre-view. Ask again the same 2 questions, what you don’t like and what you do like about this home. Now add another question, “If you had to make a choice between those 2 homes which one would you pick and why?”  Can one be a home for you or is it another house?  A “Home” can belong to you; a “House” belongs to someone else. Listen to your answers.  It may surprise you that what you liked in one of the homes more is NOT one of the Top 5 on your list. Keep taking notes.
   
4. Eliminate 1 House of those 3 Homes-
   After pre-viewing the 3rd home, ask the same questions and take very good notes. Before going to house # 4 you must eliminate one of the first 3 homes, or you are setting yourself up for confusion. Remind yourself what you want and notice how it makes you feel. You may notice how much easier it is to choose because you know what you really want. I would like to suggest that you pick the best 2 homes out of those 3, and eliminate 1 house.” 
   
5.  Repeat Step 4 once you go to the next house. More than 3 homes on your plate is “indigestion”.  Professional realtors guide their clients through the process. Your realtor wants to help you buy your dream home, lean on them.  Want to read more  2008 is the year of the buyer.

© 2008 Racheli Smilovits All Rights Reserved.

What’s the hottest subject right now in residential real estate investing?

No question about it: Picking up houses at great prices through short sales-transactions where lenders agree to take less than they’re owed and allow financially-stressed home sellers to avoid foreclosure.

One top specialist we talked to — Raffi Tal of iShortSale.com in Los Angeles — has nearly 900 transactions currently in process, concentrated mainly in places you’d guess-California, Nevada, Arizona and Florida.

The volume of short sale requests “exploded” in the final three months of 2007, says Tal, as lenders “finally began figuring out that they’d lose a lot more money through foreclosures than they would through (negotiated) short sales” to local investors.

But nobody involved in short sales — whether Realtors, investors, lenders or the home sellers themselves-should assume that these transactions are as quick or straightforward as the name sounds.

The time required to do them is almost never short, and the haggling needed to pull deals together can be intense.

As Mr. Tal put it in our discussion: “Everything has to be negotiated, everybody wants to come out of the deal on top,” and there are lots of potential complications along the way.

Take one of the most commonplace sticky situations-houses that have not just one mortgage liens against them, but two or even three: A first mortgage or trust deed, a “piggyback” second trust and a home equity line.

The home owner may be four months behind on the first trust and the property may be worth $100,000 less than its original price, but all of the lenders with liens on the property need to agree on terms before a short sale can proceed.

And there’s the rub: In a foreclosure, the junior lien holders typically would get wiped out. But in a negotiated short sale deal, they’re likely to hold out for at least a little piece of the proceeds — maybe 10 cents or 20 cents on the dollar, rather than settle for nothing.

All that has to be hammered out. It takes time — and good negotiating skills.

Plus, there are lots of other complications that can pop up-starting with — what’s inside that title report? What appraised value will everybody accept? And who’s financing the new buyer?

In upcoming reports, we’ll tell you more about the issues everybody needs to know before plunging into this year’s red hot short sales market.

Written by Kenneth R. Harney
January 11, 2008