Martinez CA real estate listings and homes for sale, home buying, home selling information – Apple Appraisal, Inc.

Apple Appraisal Blog

Home Price Statistics have been updated

September 15th, 2009 4:47 PM

After increases in nearly all areas over the summer in average sales prices, home values seem to be stabilizing if not sputtering a bit.

It's good to see thing's stabilizing, but it brings up some interesting questions.

HUD releases Mortgagee Letter 09-09, requiring appraisers to include additional comparables and additional data for properties lovated in declining markets. I think it's clear that most markets in California have stabilized and many are increasing.

I haven't seen HUD release any info stating ML 09-09 doesn't need to be followed anymore.

Maybe if someone sends HUD this blog, HUD will think about it...;)

You can see California's Home Price Stats at:

http://www.appleappraisalinc.com/prices

Posted by Apple Appraisal, Inc on September 15th, 2009 4:47 PMPost a Comment (0)

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New Appraisal Rules From HUD Mirror The HVCC And Go Even Further..

September 21st, 2009 12:59 PM

HUD recently released 3 new MOrtgagee Letters

09-28 Appraiser Independence

09-29 Appraisal Portability

09-30 Appraisal Validity Periods

09-28, Appraiser Independence could be considered the most groundbreaking. It adopts much of the current HVCC standards and goes even further to protect the interests of consumers.

Prohibition of mortgage brokers and commission based lender staff from the appraisal process

This is very similar to the current HVCC rules. To ensure appraiser independence, FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.

Appraiser Selection in FHA Connection

FHA has found that, on numerous occasions, the name of an appraiser in the appraiser log-in screen is not the appraiser who actually completed the appraisal. Lenders who fail to assure that the FHA Connection reflects the correct name of the appraiser will be subject to administrative sanctions.

Appraisal and Appraisal Management Company (AMC)/Third Party Organization Fees

FHA does not require the use of AMCs or other third party organizations for appraisal ordering. To address several questions that have already been raised regarding compensation, this mortgagee letter corrects and expands existing fee requirements set forth in Mortgagee Letter 1997-46.

FHA-approved lenders must ensure that:

FHA Appraisers are not prohibited by the lender, AMC or other third party, from recording the fee the appraiser was paid for the performance of the appraisal in the appraisal report.

This is a very interesting issue. Appraisers have long held that if consumers knew how much AMCs were making for the service they provide and how much the appraiser is making, that there would be pressure on AMCs to increase fees to appraisers and decrease the fees they charge for managing the ordering process. I'm not entirely convinced that is true. Consumers care about their own bottom line, not someone else's. The current HVCC has not cause an upwelling of sympathy for appraisers, from consumers.

FHA Roster appraisers are compensated at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.

Who is going to determine what is "Customary and Reasonable"? The AMC's will argue that they have 'Customary and Reasonable" fees because appraiser's accept them. Appraisers will argue that a "Customary and Reasonable" fee is what the retail price of an appraisal is.

The fee for the actual completion of an FHA appraisal may not include a fee for management of the appraisal process or any activity other than the performance of the appraisal.

Currently, many AMCs send an invoice to a lender for $375+ and pay appraisers as low as $86. The fee on the invoice to the lender does not reflect the fees for the appraisal itself.

Any management fees charged by an AMC or other third party must be for actual services related to ordering, processing or reviewing of appraisals performed for FHA financing.

Now maybe lenders will start to question the value that they are getting from AMCs. Is it really reasonable for an AMC to take 40% of the appraisal fee just for looking up an appraiser in a directory and telling them to do an appraisal for lender X? Currently, there are several services like Ellie Mae and AppraisalPort that charge less than $25 to do that, leaving the rest of the fee for the appraiser.

AMC and other third party fees must not exceed what is customary and reasonable for such services provided in the market area of the property being appraised

Again, the argument will come down to who defines what is "Customary and Reasonable". An Appraisal and an AMC will have far different definitions.

Affirming Existing Requirements

Prevention of Improper Influences on Appraisers

I have always thought this needs to be changes to "Prevention of Improper Mortgage Pressure" or P.I.M.P., but that is a whole 'nother issue.

Mortgagee Letter 1996-26 requires that FHA Roster appraisers avoid conflicts of interest and the appearance of conflicts of interest. In order to help appraisers avoid conflicts or the appearance of conflicts, no members of a lender’s loan production staff or any person (i) who is compensated on a commission basis upon the successful completion of a loan or (ii) who reports, ultimately, to any officer of the lender not independent of the loan production staff and process, shall have substantive communications with an appraiser relating to or having an impact on valuation, including ordering or managing an appraisal assignment.

This is similar to the current HVCC rules, but with the distinction that Loan Officers or anyone compensated by commission on closing a loan cannot order the appraisal.

I have always thought the interpretation by FNMA, of the current HVCC, to allow mortgage brokers and loan officer to actually place the order with an appraisal company is ludicrous. If they are supposed to be out of the appraisal ordering and controlling loop, then keep them out. It only has cause more confusion of and already confusing issue.

Appraiser Independence Safeguards

When FHA transitioned from rotational assignment of appraisers to “Lender Select,” Mortgagee Letter 1994-54 was issued to advise of the necessity for appraisal independence. Mortgagee Letter 1994-54 prohibited loan officers and loan production staff from supervising or directing appraisers and prescribed penalties for mortgagees that unduly influenced or pressured appraisers. Subsequent Mortgagee Letters enhanced the importance of appraiser independence, and clarified and supplemented Mortgagee Letter 1994-54. In Mortgagee Letter 1996-26, FHA directed that the mortgagee and the appraiser avoid even the appearance of a conflict of interest, which would include providing the appraiser with anything of value in consideration of returning the appraisal at a given value. With the release of Mortgagee Letter 1997-45, FHA instructed mortgagees that they may not condition continued selection of an appraiser on inflating values or disregarding repair requirements.

FHA is reaffirming these requirements by adopting language from the current HVCC.

Mortgagees and third parties working on behalf of mortgagees are prohibited from:

· Withholding or threatening to withhold timely payment or partial payment for an appraisal report.

· Withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser.

· Expressly or impliedly promising future business, promotions or increased compensation for an appraiser.

· Conditioning the ordering of an appraisal report or the payment of an appraisal fee or salary or bonus on the opinion, conclusion or valuation to be reached, or on a preliminary value estimate requested from an appraiser.

· Requesting that an appraiser provide an estimated, predetermined or desired valuation in an appraisal report prior to the completion of the appraisal report, or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report.

· Providing to the appraiser an anticipated, estimated, encouraged or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase must be provided.

· Providing to the appraiser, appraisal company, appraisal management company or any entity or person related to the appraiser, appraisal company or management company, stock or other financial or non-financial benefits.

· Allowing the removal of an appraiser from a list of qualified appraisers or the addition of an appraiser to an exclusionary list of qualified appraisers, used by any entity, without prompt written notice to such appraiser, which notice shall include written evidence of the appraiser’s illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice (USPAP) or state licensing standards, improper or unprofessional behavior or other substantive reason for removal.

· Ordering, obtaining, using, or paying for a second or subsequent appraisal or automated valuation model(AVM) in connection with a mortgage financing transaction unless: (i) there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such appraisal is clearly and appropriately noted in the loan file, or (ii) unless such appraisal or automated valuation model is done pursuant to written, pre-established bona fide pre- or post-funding appraisal review or quality control process or underwriting guidelines, and so long as the lender adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value; or

· Any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity or impartiality or violates law or regulation, including, but not limited to: the Truth in Lending Act (TILA) and Regulation Z and USPAP.

Services like AppraisalPort will become increasingly attractive to FHA lenders as they move to adopt the new ML 09-28. The role of AMCs could diminish and at the very least, HUDs adoption of the HVCC concepts considerably damage the attempts by CAMB and NAMB and other organizations that represent Loan Officers and Lenders, to put a moratorium on the current HVCC rules.