A Home of Your Own

I do have to be honest and say that she was not a pottymouth, but probably one of the sweetest ladies I've ever met- and also one of the happiest.

After all, she had just closed on her first home, and only needed to bring $500.91 to the closing table. All this by using a USDA loan.

To find out for yourself how this program works, please contact me for details.

A pending change in the way appraisals will be ordered, could have an adverse effect on buyers, appraisers, lenders, and even Realtors.

A good critique of the agreement was written by one of my good friends, who happens to be an experienced appraiser in Florida. I wanted to post this as I could not have said it better myself.

"In case anyone has missed it, there is a large regulatory move to promote real estate appraisers “independence” this year, and many Realtors are unaware how this drastically affects them.

They appear to be to removing all communication between lenders, mortgage brokers or originators and the appraiser. They plan to accomplish this by using “appraisal management companies” as a third party for regulating appraisal assignments. Since each lender (bank) basically has their own contracted management company, appraisers now must face the challenge of aligning themselves with several different management companies in order to receive the usual amount of assignments.

Instead of being on approved lists for several major lenders, appraisers now must try to obtain registration for several of these companies or, more often, increase the geographic areas they cover to make up for the lost business. Appraisers must either pay an upfront fee, a per-assignment fee or discount their current appraisal fees (with the remainder going to the management company as profit).

Don’t be surprised when you have a pending sale ready for the appraisal, and the appraiser comes from two counties away instead of within your zip code! Are these appraisers familiar with your market? Do they have the data available to them to complete a competent appraisal report? Probably not. Fair to the seller? No way. Servicing and maintaining the public trust? Nope!

Management companies also dictate the terms of an appraisal assignment. No comparables over one mile; must describe market as “declining” because the bank’s software says so; use foreclosure sales so that the banks can see their downside risk, etc., etc.

Lenders were faced with heavy regulations during the course of this “mortgage crisis,” which included verifying the quality of the valuations attached to the loans they had made. Instead of using the vast profits they made during the boom years, they decided to outsource this regulatory “additional overhead” to appraisal management companies. Its not the first time big banking has dodged regulation. Those of us who are old enough remember the S&L bailout.

The worst thing is what these management companies do with the appraisal reports. Upon submission, the data contained in the appraisal report is “stripped” or “lifted,” and the contents sent to a large database of real estate information, which is then sold back to the lenders in the form of an “Automated Valuation” software subscription service. The sole purpose of that is to look to the future when big banking will have their computer generated value of a property and through computer generated “Automated Underwriting” (which is currently in place and has been for many years) – add the two together to generate a loan score. Add that to the borrowers credit score, and you reach an overall score, which will determine the rate and terms of the loan to the advantage of the bank.

Listed prices, contract negotiation skills, marketing skills not needed or wanted here. Soon banking will control the whole process of a real estate transaction, and with no human involvement, little overhead and increased profits. Currently, banks and lenders own a large portion of properties, and they are getting used to disposing of them efficiently without paying much for marketing services. At what point will banking determine that it can be a “one stop shop”? Deposit your paycheck, place your home on the bank’s Web site of properties, check on the activity of a home you have been considering, obtain the value of that home, and find out what your approved loan would be if you decided to buy that house. Close in five business days and, in that time, perhaps talk to one human.

It’s probably time to go back to school or update your resume folks!"

Timothy K. Goessman
Florida Appraiser
Deltona