Archive for the 'Appraisals' Category
The New FHA: What You May Not Know About Appraisals
During the sellers’ market of the early 2000’s, FHA loans were the forgotten stepchild of the mortgage business. No seller would even talk to a buyer approved through FHA or VA. One big reason for that avoidance was the FHA appraisal and related property issues.
All that has changed.
While an FHA approved appraiser must still be used, the rest of FHA’s appraisal requirements have been brought into parity with those of conventional loans. Here are some key improvements:
- Pest reports: No longer required. Pest reports used to be an FHA fact of life, and every structure on the property—the broken down shed in the back forty included—had to be inspected. The seller was required to fix or tear down that shed and repair all Section I & Section II inspection items. Today, even if a pest report is written into the Contract as a condition of purchase, the lender will likely only ask for a letter signed by the buyer confirming that all conditions of the Contract have been met. The only time a pest report will be required is when the appraisal calls for it.
read comments (4)I posted my Friday article about appraisals and “declining markets” over on Active Rain. It was popular enough to achieve “featured post” status and a good discussion ensued. To read those comments click the Active Rain link.
“Check Your Appraisal”
….was the heading on yesterday’s email from Wells Fargo Wholesale. This is a heads-up to Realtors and home buyers…
Fast Rewind
In mid July, FannieMae issued Announcement 07–11, entitled Collateral Valuation Practices and Declining Markets. Here are several key points from the memo:
- FannieMae’s Desktop Underwriter (DU) Version 5.7 released July 22, will now generate a message when it thinks that a property is located in a declining market.
- The appraiser must also indicate when the property is in a declining market.
- The lender is responsible for ensuring the accuracy of the appraiser’s work.
- Any pressure by the lender on an appraiser will cause the mortgage loan to be subject to immediate repurchase by the lender.
What’s The Big Deal?
The appearance of that term—declining market— in an appraisal has thrown a monkey wrench into many a loan approval. Appraisers avoid saying it, and lenders discourage the use of the term. However, FannieMae is tightening its jaws on past practice with this announcement. The teeth in those jaws are threat of immediate loan repurchase by the lender.
Appraisers Pressured to Falsify Findings
It’s an ugly fact of life in a declining real estate market. Real estate appraisers are under pressure from all sides. Here’s a recent article I saved.
Daily Real Estate News | February 2, 2007
Appraisers Get Pressured to Falsify Findings
The pressure is on property appraisers to come up with the right number, say 90 percent of appraisers surveyed by October Research Corp., which publishes Valuation Review, an industry newsletter.
That percentage is much higher than it was in 2003, the last time the survey was conducted, when only 55 percent of appraisers reported attempts by others to influence their findings.
The current survey found that 68 percent of appraisers lost the client when they…