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”

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
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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.
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Please give us your comments right here below.

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 

Fannie Mae, the single biggest player in the American mortgage market, plans to crank up the pace of short sales on properties in its bulging portfolio. Fannie intends to “streamline” procedures to enable pre-foreclosure sales to speed through what is currently an extended, and often complicated, process.

Fannie says it plans to “pre-approve” certain short sales–a major change from current practices–and wants to provide higher commission incentives to realty agents who can connect sellers with qualified buyers.

Fannie Mae thus joins its rival, Freddie Mac, who months ago began emphasizing faster, more efficient short sales – to great success.

Freddie Mac’s program, which allows some loan servicers to submit short sale packages with minimal documentation, doubled the number of completed short sales for the company in the last quarter, according to a report in the American Banker, a financial trade journal.

Investors like Freddie and Fannie want to speed up the pace of short sales because — to put it bluntly — it saves them a ton of money. They avoid the crushing costs of foreclosures. Plus, they generally get a much higher payoff percentage of what they’re owed.

Despite complications — ranging from uncooperative banks holding second liens on properties to title, financing and inspection problems — short sales are booming. Some industry estimates suggest that so far this year, one of every five home sales in the U.S. has been a pre-foreclosure transaction of one sort or another.

The opportunities for small investors and realty brokers here are huge. But investors need to have patience and the ability to handle what are sometimes contentious negotiations.

For example, Nancy Gusman, a Maryland real estate attorney, told Realty Times that “everybody in these deals is after every last dollar they can negotiate, and sometimes they hold out forever.”

The mortgage holder is looking for the highest possible current appraisal to justify the highest possible payoff price; the short-sale buyer is looking for the lowest possible appraisal to justify a bargain-basement price for the house; and of course, listing realty agents want a fair commission for their work in putting the transaction together.

The bottom line here for investors and agents: Fannie Mae’s forthcoming policy emphasizes getting short sales DONE — faster. That, in turn, should mean more opportunities for everybody — investors, first-time home buyers, and brokers alike.

Written by Kenneth R. Harney
April 11, 2008 

There are literally dozens of bills on Capitol Hill that are aimed at relieving the mortgage and housing crisis. Some of them — like FHA reform — have been bouncing around for months with no final action.

On the House side right now, what could be the mother of all housing-relief bills is taking shape. Reportedly it will roll together reform of Fannie Mae and Freddie Mac, plus all sorts of new add-ons, including a $300 billion authorization for FHA to buy up and refinance delinquent mortgages held by private lenders.

Meanwhile, in the Senate, there’s legislation to provide huge new tax benefits for home builders, new deductions for home owners who don’t itemize, and tax incentives for buyers of foreclosed houses.

But the White House warned last Wednesday that it didn’t like the way that bill was shaping up — hinting at a possible veto if it passes in its current form.

With the total number of legislative days left before the Fall elections down to less than a month, can this Congress actually deliver housing market relief? That’s a tough question, but it would speak volumes, if, during the worst foreclosure crisis since the Great Depression, the U.S. Congress could not gets its act together to produce much of anything.

Just about the only action spot in town at the moment appears to be at the Federal Housing Administration.

Last week, in a significant expansion of its efforts to reach out to troubled subprime and other borrowers, the FHA announced new criteria for its “FHASecure” program. Under the revised plan, even borrowers with seriously delinquent payment histories will get a shot at refinancing into an FHA fixed rate loan:

• Homeowners with adjustable-rate loans who have been late on two consecutive monthly payments during the prior 12 months, will now qualify for regular 3 percent equity FHA-insured mortgages.
• Owners who were late on three consecutive payments will qualify for FHA refinancing, but will need to have 10 percent minimum equity stakes.

These borrowers’ current lenders will be allowed to help their clients by writing down principal balances to the 90 or 97 percent loan-to-value level required by FHA. Lenders will get a little “haircut” — they’ll have to forgive some debt, but it should a lot less than if they went to foreclosure.

FHA estimates that with the expanded reach of FHASecure, a total of 500,000 troubled families will refinance into fixed-rate loans by the end of 2008.

Bottom line: At least somebody in Washington is producing solutions. But so far, it hasn’t been Congress.

Written by Kenneth R. Harney
April 14, 2008 

You will find out when you read and use these tips on how today’s market might be your biggest gift when it comes to home buying.Let’s dive in and see what’s in store for you

·         Prices are way down- Because of the access surplus of homes on the market sellers are forced to reduce prices to be more attractive. some areas are down as much as 30%-40%

·         The supply of homes is increasing rapidly- The number of homes for sale around the country has increased way faster than home sales, creating a continued surplus of homes and in some locations can last 4+ years.

In 2005 we had 2,846,000 Homes for sale
In 2006 we had 3,450,000 Homes for sale

      In 2007 we had 3,974,000 Homes for sale

            As of January 2008 there are 4,191,000 Homes for sale

            These are national numbers from the NATIONAL ASSOCIATION OF REALTORS^®

·         Rates are historically very good- 30-yr fixed rate mortgages are at a little over 6%. (as march 2008). From 1992 to date rates have ranged from 9.25% and 5.25%. . Take advantage of cheaper money.

·          Sellers are very motivated- Because of the increase in inventory sellers who are serious about selling are more willing to negotiate knowing that the buyers have lots of homes to choose from.. Sellers know that.

·         Take a little cut on selling your current home and get a big cut on your new home- If you currently own a home that you need to sell in order to buy a new and more expensive one, think about discounting your home let’s say by $30,000 or so to sell it fast. And get a much bigger cut $70,000 or more in savings when you buy your new home. Yes you will act as a buyer expecting you seller to negotiate and be more willing to cut prices

·         Buyers have many options to choose from- and sellers know that. A few years ago buyers had to settle for what was available even though the home was not really what they wanted, because of bidding wars and multiple offers.

·         Short sales are an option, don’t get hung on them- The number of short sales and foreclosures are climbing. It may be a great opportunity but be prepare to deal with a lot of red tape. The banks take their time to reply.

And now you see why and how 2008 is a great year to buy a home, for 1^st time buyers upgrading to a bigger home or down sizing.

Have a question? email us at info@loans-4-u.com

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