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on Fri May 1 2015, 1:48 PM
You know what is scary? The last time the 10 year yield crossed above the 200 day moving average... May 3, 2013. That sparked a 6 week massive sell off. Could we be heading towards that now since we are only 6 ticks away from the 200 day moving average?
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Tue Apr 28 2015, 11:10 PM
Bill--your honesty and the question you pose are all valid,. I fear there is a level of apathy in the entire industry that doesn't allow a new debate about these issues to rise to the surface amid the ocean of regulatory change that continues to affect the frontline service providers like you and me. There is a perpetual ground war for market share and realtor referrals that doesn't translate to anything resembling a unified front that can 'protect' the housing consumer. I wrote an article a few years ago--Cowards Do That, and That Ain't You". I would pretty much say, Cowards Do That, and that is the housing industry. How many times do we blame a realtor, a title company, a credit reporting agency, a loan officer, an underwriter, a funder, the US government monetary policy makers, Dodd, Frank, Regulatory agencies, big banks, small banks, brokers, greedy investors, dishonest consumers, the BS stock market rally, the shadow inventory, the appraiser, unrealistic affordable housing demands, the lack of financial literacy of the average American consumer...for the multitude of things that challenge every mortgage transaction? There is honestly so much blame to go around, why bother trying to find any common ground? The truth is the pie is being divided up to compensate the frontline providers as little as possible, while the back end, secondary operations are where the bulk of the profit is made. The problem is, the primary providers are the ones with the most direct contact with consumers--and they don't have to look far on any mortgage related news site to see the adversarial tone that permeates the comments, stories and blog posts. The key is to unify as educators--but that will only happen when we respect each others' functions and importance in an unbelievably and unreasonably complex process.
on Mon Apr 27 2015, 6:19 PM
As a certified appraiser I could devote the next week of my time going through this article line by line and give you my opinion, however the appraisers opinion does not seem to be welcome by anyone. Ask yourself why you do the job you do and I'm sure if your created a top 20 list, the following topics / reasons would be on there. (1 - Pay). 10 years ago my average fee for a typical 1004/1073 report was North of $400, today it is just over $315. If I rolled back your salary to what your profession made 15 - 20 years ago, would you stay? (2 - Hours worked) With an average time to complete a single assignment now in the 10 hour range compared to 6 hours 10 years ago, would you stay? Again, if I rolled back your salary to what was typical 15-20 years ago and asked you to work 60 to 70% longer to make the same pay, would you stay? (3 - opportunity for advancement) As a business owner who performed appraisals, the advancement opportunities in the past were to hire more appraisers under your company name to add gross sales. With the regulations in place now, other than working more hours individually, ones income is capped by not having the same business expansion opportunities as in the past. (4- Liability) If I told you that you are NOT going to be judged by a group of your peers (other appraisals) but rather by a group of outsiders that do not hold a similar license, would you stay? Agents, loan officers, lower level AMC staff, borrowers, underwriters, and computer programs all will try and judge your work while not holding an appraisal license. (5- Increased entry qualifications) With reasons 1 - 4, who is going to spend tens of thousands of dollars to get a bachelors degree (4 to 5 years), spend 2.5 years obtaining the apprenticeship hours, complete all of the education classes, pass the state trainee, residential and at least the certified test to only have the opportunity to sign up with AMC's for potential work? The solution is easy Rob, keep raising the salary to attract people in high school and college so that they want to choose this career. If to become a lawyer you ask for the same time / education commitment as an appraiser, but pay 3 times more, you're going to turn out lawyers. Frank Ceizyk, please confirm by way of a comment / response that my entries are not being blocked?. Thanks.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Mon Apr 27 2015, 12:47 AM
If as an industry we don't embrace the role of financial educator, then we continue to do the same thing and expect different results. It's not surprise that Fannie Mae's survey found that tighter credit standards and waning demand were the primary culprits for declining mortgage volume in 2014. As an industry we all but start every conversation with 'well, sorry Mr/Mrs. Consumer but we have to make this ten times harder than it used to be because of all those pesky regulations. And by the way, we have to pass the cost of adhering to those regulations by charging you more than ever. But hey--even you consumer know that over the long haul housing is a great long term investment, because you just told Gallup that according to the results of a survey last week. Yeah--that doesn't seem like it's likely to build a bridge of trust to David Steven's desired 'confidence' in the mortgage industry.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Mon Apr 27 2015, 12:39 AM
This is a sobering article--the appraised value represents the most important component of whether a house is 'investment worthy', yet the professionals being asked to complete this important task are being paid less, being asked to take on more training and hours, and take on liability for lower down payment programs? This is another example of the lack of voice and leadership that exists at every level within the mortgage industry and all of the related partners. How can we bridge the gap from distrust to confidence if as an industry this is how we are treating the folks who establish the 'opinion of value' on every transaction we originate?
on Fri Apr 24 2015, 4:48 PM
When 81% of the institutions are planning a 97% LTV program, who in the circle (lenders, GSE, etc.) has asked how this increased liability will impact the appraiser. We as a profession have no central voice and don't have a seat at the table when these programs are rolled out. When in 2009 there were 110,000 appraisers nationwide and now there are only 80,000, who will complete the work? With a 97% LTV ratio are the lenders aware of the increased liability to the appraiser? Are they aware but will not consider increasing the appraisal fee? With lower down payments and increased foreclosure and buyback risk will they accept a complexity (higher fee) request from the appraiser? Will they ask for the appraisers qualifications or still assign by way of fast and cheap? With recent history as a guide, the appraiser will most likely be asked to do more work, take on increased liability, complete the work faster while making the same net fee from 10 years ago. I understand my opinion may vary from others and look forward to responses.
on Fri Apr 24 2015, 3:21 PM
With thousands of appraisals completed over the years I have a vast understanding of the liability facing my profession. With out a doubt, the liability increases with the lowering of the down payment. In addition, the amount of unbillable back end work (value reconsiderations, additional comps to look at, etc.) increases significantly based on the increase risk to the client. The lending industry thinks that complex assignments are solely associated with the property characteristics of the subject, however most assignments are declined due to the high risk associated with the assignment (increased time and liability). A good seasoned appraiser will decline the order, or ask for a fee that they find is appropriate for the increased liability. Most of the time these high liability assignments are pulled from the original appraiser (declined for a $50 increase) and shopped and accepted by appraisers that are unaware of the complexities / liability. No one is asking the tough questions, but often times you end up with less experienced appraisers performing the higher liability assignments. The borrower is never made aware of the increased complexities/liability to the appraiser and will never have a say in authorizing the increase in pay request, but rather the AMC will find someone to do it at a discount.
on Mon Apr 20 2015, 12:33 PM
When Quicken loans does appraisal business in my area they typically go through an AMC (Streetlinks),and to get any business the appraisal fee needs to be in the range of $250. When the borrower can pay up to $500 for the appraisal, one must question how the remaining $250 gets split between the AMC and the lender. Is it possible that the lender has extra money to use to go after the DOJ?
Ted Rood
Senior Loan Officer , MB Financial Bank
on Mon Apr 20 2015, 12:12 AM
On Friday, Fannie did release the new LLPA structure, which will be in effect for loans purchased after 8/31/2015. As expected, the 25 bps AMDC has been eliminated, but loan officers and borrowers might want to scrutinize the changes, as some are far greater than others. For example, cash out refis will have higher net LLPAs, as will investment loans. The changes do, indeed appear fairly "revenue neutral" overall, but few borrowers will gain more than 12.5 bps, while those whose pricing worsens may well lose more that 12.5.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Wed Apr 15 2015, 11:28 PM
Irony aside, every CFPB sanction only strengthens the case that they are truly needed to regulate the industry and protect consumers against unfair practices.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Wed Apr 15 2015, 1:43 AM
One can only assume that Majestic's mailer response rate may be a bit less, once they no longer flaunt TILA and Reg N guidelines. I suppose that's why they need AE's and sales managers!
Ted Rood
Senior Loan Officer , MB Financial Bank
on Wed Apr 15 2015, 1:33 AM
Hmmm, I closed a HomePath purchase in February, and my client got 4% in seller paid closing costs from Fannie, with no homebuyer education, and he wasn't a first time buyer either. In fact, Fannie guidelines allow seller closing costs contributions of up to 6% on HomePath purchases, even with as little as 5% down. Those guidelines are more liberal than typical Fannie restrictions (require 10% down to exceed 3% seller contributions). Not sure what Fannie's trying to accomplish here, other than to perhaps generate some publicity for a program that's essentially winding down at this point.
on Tue Apr 14 2015, 4:56 PM
That is classic... "The CFPB also alleged that the lender's advertisements failed to satisfy TILA requirements for advertising variable rate loans and misrepresented interest rates and estimated monthly payments, such as by misleading consumers to believe advertisements were for fixed-rate rather than variable-rate loans..." BUT "...If you're interested in learning more about working for a true customer oriented company..." hahaha
on Tue Apr 14 2015, 2:40 PM
Based on the extremely low standards, why cheat. Try becoming a state of CA Certified Residential Appraiser. Requires a 4 year degree, background checks, 100+ hours of specific appraisal education to qualify to take the state Trainee test, 2,500 hours of documented time under a Certified Appraiser, no less than 2.5 years studying under the appraiser, pass your state Residential Appraiser test, pass the state Certified Appraiser test and complete 56 hours of continuing education every 2 years. When the bar is set so low, the employees have NO skin in the game.
Bill Eggleston
Underwriter, North American Savings Bank
on Tue Apr 14 2015, 1:51 PM
I like the irony of reporting the consent order for Majestic Home Loans in the upper section, and the job openings in the bottom - well played :)
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Tue Apr 14 2015, 12:00 AM
Anybody in MND land going to this?: MBA's National Advocacy Conference 2015 April 14-15 | Capital Hilton | Washington, DC Speak Up! Make a Difference. We have a right to speak freely, and a duty to speak up. As a representative of an industry that employs hundreds of thousands of Americans, you cannot sit idly by while decisions are made that affect us all. You have a choice -- watch it happen and accept what may come, or be an active participant. Attend MBA's National Advocacy Conference 2015 to: Find out what the issues are Learn how they affect your business Get tips and talking points for discussions with lawmakers Then join your colleagues on Capitol Hill for a day of democracy in action. Together, we CAN make a difference. You have the right to be heard. Make your plans today.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Mon Apr 13 2015, 8:20 AM
This does so much damage to our industry, yet this ethically challenged lender will likely remain in business, or resurface as a new company in a few months. What our industry needs is a trust building campaign to offset these continuing sagas of impropriety and consumer abuse. I don't know anyone still in this business that conducts themselves in this manner, and these stories unfortunately perpetuate the impression that all mortgage professionals have the proclivity for dishonesty, which is why the CFPB came into existence to begin with. Much like the NARs image building showing Realtors as trusted gate keepers to professionals that help them find their dream home, the MBA needs to embark on a public relations campaign as the trust gate keepers to ethical mortgage professionals.
on Thu Apr 9 2015, 2:26 PM
As a Certified Residential Appraiser I have provided dozens of comments from an appraiser point of view, but each has been deleted by Ted. Is appraising a part of the mortgage process, if so and you want my opinion, please comment as such ASAP before Ted removes this comment. Thanks and please ask Ted via this community board why I have been silenced. Thanks and have a blessed day.
on Thu Apr 9 2015, 12:33 PM
Ted, can you unblock my comments so the general public on this board can view them? With the borrowers being mislead on the HUD1 statement concerning appraisal fees, with the inability of the appraiser to discuss with the borrower appraiser fees, with states like CA not requiring the report to reflect the separate fees the AMCs collect, and with lenders requiring that NO invoice can be included within the appraisal, I/we have enough people trying to keep us quiet.
on Thu Apr 9 2015, 12:03 PM
Why is no one asking the question, "What will PR do to the people that receive a PR refinance-ability?" Currently if you received a PR it is treated like a short sale for refinancing (4 year wait). No one is thinking about this issue.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Thu Apr 9 2015, 2:26 AM
The solution is simple. Just use some historical index or price index like Case Shiller and overlay it against these occasional bubbles. When an MSA exceeds the norms, just cut back the LTVs by 5 or 10%. Presto whammo, no more overleveraged homeowners. It's obvious from the last 10 years of boom and bust housing values that targeting a 90 to 120 window worth of inventory sold most likely between the largest real estate companies in any given market just doesn't create sustainable, above water homeownership. Time to innovate.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Thu Apr 9 2015, 2:20 AM
The simple truth is it's time for the veteran professionals in this industry to take the industry back. We have a simple choice: educate or regulate . We've seen what regulation has done, and while it may have had some role in eliminating the most egregious mortgage products, the byproduct has been more complexity and cost for consumers in the name of accountability at every stage of the mortgage lifecycle. What has been lost is any focus on the overall financial benefit of any given mortgage loan. If that can be defined on every mortgage transaction, then complex disclosures and regulatory quality assurance becomes unnecessary. Payment comfort thresholds on purchases and using historical apprecition chart to even out bubbly home price appreciation would virtually eliminate overleveraged homeownership. The bigger issue is whether the overall debt load Americans are not carrying between student loans (at over 1 Trillion as of last year) and overall credit debt (which reached another high according to CNBC today) is the bigger reason why more Americans are unable to buy houses. Innovation and financial education is what the mortgage industry can provide as an anecdote to hyper regulation.
on Tue Apr 7 2015, 2:54 PM
With the insane QM and so called "ATR" rules with ridiculous ratio requirements, even more than qualified borrowers with pristine credit are getting turned away.
on Mon Apr 6 2015, 5:44 PM
Here's another example of how tighter appraisal regulations increase the time necessary to complete an assignment, but contribute nothing to supporting market value. The appraiser is required to indicate if any services were provided on the subject property within 3 years of the acceptance of the assignment. The key to the question is "any services" as it does not specifically just relate to appraisal work, but ANY work. I'm no longer a part owner, however I used to have ownership of a lawn care company that did heavy volume in Southern CA. I must research every current appraisal assignment against my old lawn care clients and disclose the specifics of the work completed in the past 3 years. The most recent disclosure was for a property that we took care of on a bi-weekly schedule based on a time frame of some 2 years back. The additional work to disclose 26+/- lawn services took several hours to make sense of. The regulators could care less that my former lawn care client sold the property and is no longer the owner, and that my current assignment is for a new lender with a borrower that I've never met. This is a perfect example of increased regulations and expanded scope creep to the appraiser, that provides nothing to the loan process. The system is broken.
on Mon Apr 6 2015, 1:15 PM
Here's a scenario to reduce the costs to originate a loan. Starting tomorrow, all loan originators must go through a third party LOC (loan originator company) to obtain their work. The HUD1 statement may show a small reduction to the compensation of the LOs, thus the overall fees have been reduced. However, what will not be disclosed to the consumer is that the LOs must support this LOC by way of paying up to 50% of there already reduced fees. As per state guidelines (CA) the LOs are forbidden from disclosing within the documents as to what portion of the loan origination fee they are truly getting to keep. And lastly, when submitting the documents, the loan officers can't include an invoice for their services. Sounds strange but that is exactly what has happened to the appraisal process. The HUD1 is wrong as the stated appraisal fee is a lie; the appraiser may not discuss the appraisal fee with the borrower; the appraiser is forbidden to disclose the portion paid to the AMC within the appraisal report (CA); and the appraiser is instructed to never include an invoice attached to the appraisal. The system is broken.
on Mon Apr 6 2015, 12:04 PM
The Net Cost to Originate the Average Loan should be higher as the lenders have pushed much of their newer appraisal compliance concerns back onto the appraiser. The lenders no longer handle the appraisal process in-house as much of the oversight has been given to the appraisal management companies or the software companies they hire. Why should the appraiser be paying directly for the lenders regulation challenges by way of splitting the appraisal fee? If the lender directly benefits from the outsourcing, then they should pay up. If the consumer needs protection, then why should the appraiser be paying out of pocket on behalf of the consumer who is not even my client! Based on split appraisal fees and the increased business expenses that we can't bill for, appraisers are losing a few hundred bucks per assignment. Ted, if you want to know what the increased regulation does to the appraiser business just look at the insurance premiums. Since 2008/2009 the million dollar E&O insurance policy that I'm required to carry has increased from $795 to $1,400. Forget the fact that I've never needed the coverage and that the dollar amount / volume of work had decreased 75%. The lender should be eating the fees necessary to comply with the regulations or pass the fees onto the consumer. Its no wonder that with the HUD1 updates last year, that it was voted down to have a separate line item as it relates to fees that maybe appraisal related, but not paid to the appraiser. The system is broken.
on Fri Apr 3 2015, 2:05 PM
And more to come!
on Mon Mar 30 2015, 2:37 PM
Tim, although the scope of work has exploded over the past 6 years, no appraiser is receiving guidance that suggest a more conservative approach to value. In fact, depending on the scope of work and the available comps, often times there can be pressure to artificially inflate value. In other words, if I'm required by the lender to use 3 comps from within 90 days and the available less similar data results in an artificially high value, am I done with my assignment? With reduced appraisal fees, increased business expenses, and significant scope creep, there is absolutely pressure to say my work is complete. A GOOD appraiser will research beyond what is required by the client (3 in 90 days), and actually provide the BEST comps regardless of what value they support. Doing the correct thing and providing the most probable price something would sale for (market value) in essence takes twice as long when the lenders take away the appraisers independence. Last thought, in my market where 70% of my appraisal work is refinance related, how can an appraiser choose to be conservative when he or she has no upfront number (sales price, etc.).
Tim Kalhorn
Originator / LO,
on Mon Mar 30 2015, 12:04 PM
I know a long time appraiser who I recently had a conversation about this - The appraisers are receiving literature and guidance that suggests a more conservative approach is wanted by the GSE's and others. There is no doubt the appraisals are more conservative this year none what - so - ever - I cannot believe the Appraisal institute still believes Loan Officers do not look at comparables nor have a realistic approach to anticipated values. Of course something has changed and the values are more conservative - it is also hard to dispute these reports due to the limited number of comps available - but appraisers as a group are taking a conservative approach this year
on Wed Mar 25 2015, 10:06 AM
Here we go again... so many counterpoints to make, but don't have the space. 1) Low appraisals based off of Zillow estimates - Really? 2) Hodges thinks we need a "number that guides us to a value?" - Cant believe he went there - Really? 3) Does CU have an impact? Does "market manipulation" ring a bell? - you bet it has an impact. 4) Appraisers "refusing" to consider "sales (FYI -they are not comps)" - Really? I bet the mass majority of appraisers "consider" all "sales", but for a variety of reasons discredit and don't consider them "comps." We have lots of educating to do....
on Tue Mar 24 2015, 1:09 PM
Your comment stating "After all is said and done, the costs are passed on to borrowers, of course." is only true to some extent when it comes to appraisal fees. Ten years ago I received the full appraisal fee that averaged $400, however with most work now being filtered via appraisal management companies, my fee is now $300! Since implementation of HVCC / and Dodd - Frank it is the appraiser paying out of pocket to support the regulation on behalf of protecting the consumer. Although the borrower may be paying $500 for a typical appraisal today, that should be the appraisal fee to the appraiser based on simple inflation and increased scope of work over the past 10 years. On top of only getting $300 per assignment, I often pay delivery fees of $10 to $30 per report just to send it to the client. I also have a client that charges me 3% of the total appraisal fee for the connivance of the borrower to use his or her credit card to pay the lender for the appraisal. The borrower should be paying separate fees to the clients contracted appraisal management company (say $200) and any and all transaction fees and delivery fees (say 25 to $50) while the appraisal fee should be $500. Unfortunately, the borrower only sees the appraisal fee of $500 and assumes the full fee goes to the appraiser. In addition, my state of CA does not mandate the separation within the appraisal report of the AMC fee / appraiser portion. Without the ability to separate the fees within the report and the lenders demanding that no invoice be included within the appraisal report, the borrower is blind to the lenders tactics.
on Mon Mar 23 2015, 1:55 PM
HVCC and Dodd/Frank over regulation chickens coming home to roost.
on Sun Mar 22 2015, 9:25 PM
Ted, your comments hold some truth. When I appraise for my lawyer clients my scope of work is to only meet my professional USPAP guidelines. When we say scope of work we are essentially saying what set of standards must be met. I have no restrictions as to what comps I can use, I’m not forced to stay within some predetermined distance, date of time, etc. When we work for lenders, we must not only meet our professional USPAP guidelines, but we must also agree to the expanded specific client requirements. The expanded client guidelines will at times be 15+ pages long (AMC – Streetlinks) and will in effect provide a line by line requirement as to how an appraiser fills out the form. Just as an agent works for his or her client to achieve their buying goals, we as appraisers have agreed to our client’s terms. We are 100% judged be meeting these guidelines and never judged by the final outcome (market value). The issues we have is when we are told to provided 4 closed sales within 90 days, 2 active / pending sales, must stay within 1 mile, etc. is that our hands are often tied. When we meet our USPAP guidelines and meet as many client requirements as we can regardless of the value outcome that is considered a good appraisal. Although the appraiser is providing an opinion of value the frustrating part is that none of the other parties involved have to meet the same hurdles we do when they provide their opinion of value.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sun Mar 22 2015, 1:49 PM
After I wrote the last sentence, I begin to wonder: is housing finance even really about home ownership anymore? Perhaps the simple truth is the primary mortgage market serves to feed the secondary market debt machine, which trades in multi-trillion dollar securities all over the global economies. In the most cynical view, upside down homeownership is necessary--and even desirable--to control prepayment speeds. Loss mitigation is more desirable than refinance booms, since the default timelines can be controlled more than a flood of refinancing. Even then, refinance prepays be can controlledwith capacity constraint measures--such as requiring 60 days locks, or adding layers and layers of QA--or even as referenced above, forcing a more conservative approach to appraised valuations for refinances verses appraisals that force higher LTVs, with their corresponding point driven LTV LLPAS to offset the lower interest income. Either way, it seems that the MBS must be protected far more than the individual homeowner. Perhaps the needs of the few underwater homeowners outweigh the needs of the global mortgage debt securities operations.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sun Mar 22 2015, 12:49 PM
Barry-thank you thank you thank you for being another voice to point out the simple speculative inefficiency of the asset valuation system we have in place for residential real estate. It is amazing to me that we rely on such a subjective system of valuation-the 'opinion of value', considering how miserably it failed systemically when combined with extremely leverage homebuying, pressure from real estate sales forces to support the higher price 'trends' and ridiculously lax underwriting standards. With so much brain power and brilliance going into to the design of an entirely new MBS platform for mortgage financing, it is rather remarkable we are not using some algorithmic metric to use for housing valuations related to lending, rather than 3 or 4 sales in a 90 to 120 period, within a few miles negotiated by agents, who as as you indicated, are trying to 'push up the listings to unreasonable high prices and hoping (here retiring) cash buyers will support them. If we are going to have any chance or gaining the trust of housing consumers again, this issue is going to need to resolved to avoid creating another wave of underwater homeownership.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Sat Mar 21 2015, 11:48 PM
One of the factors I see locally (St Louis region) is that with fewer comparable sales to choose from, appraisers can essentially be forced to use a comp they might have preferred to avoid, given other options. It's also difficult to know just what is, and isn't, a distressed sale. Divorce situations, estate sales, and job transfer motivated sales are all potential causes for a "less than market" sales price, but there's no way to take those factors into account during the appraisal process. REO or short sales are easily identified, but are not the only reason for homes to sell cheaply.
on Sat Mar 21 2015, 1:41 PM
In our area, as a Certified Residential Appraiser and Broker I see almost across the board, agents putting their listings well over Current Market by appraisal standards of Market Value research. Then - the accepted price drops them down to still about (+-) 5-10% over Market and they hope the Appraiser can find comps that will support it. 8 out of 10 times they can't - so who is the villain ! Yup, the Appraiser. And this is coming from the Broker part of me! Agents are remembering the inflationary rise 2003 through 2006, when sales were so active and fast, an inflated sales price of 10 - 15% over the market would find comps to support it, all seeking approval as they flooded the market and eager buyers sought to buy before it went up another 20%. Local Brokers used to curse me when I mentioned inflationary unreasonable rise in Market Values. Yes, curse me, as a turncoat Broker who didn't realize the values were going up and would "never come back down again!" They had forgotten everything in life is cyclical. ESPECIALLY REAL ESTATE. The appraisers, in this strange era, could, yes, now find four or five comparable sales to match the inflated price - so the Market must be supporting the value...? And it spun up. Now, this is not happening, but many of the mostly newer agents seem to think it should, and they try to push up the listings to unreasonably high prices and hoping (here, retiring) cash buyers will support them. There aren't enough of those, and the number of listings are rising - thus pulling down the prices to compete with all the others seeking the more elusive purchase.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sat Mar 21 2015, 1:02 AM
Mar 13 2015, 12:38PM With increased competition for precious few homes, prices have no where to go but higher, faster Mar 17 2015, 12:13PM …the number of underwater homes increased seasonally in the fourth quarter of 2014, Mar 20 2015, 7:45AM A few weeks ago there were a flurry of comments on MBS Live from members expressing concern about a sudden increase in appraisals reflecting market values well below what had been expected. Does this reflect a one week transition from fantasy to reality? Hmmm.. Something ain't right here.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sat Mar 21 2015, 12:54 AM
This is a very well written, if not sobering article. One has to wonder with these kinds of negative equity numbers increasing, alongside what could arguably be a strengthening job market in may parts of the country, if there will be a wave of rational defaults if these homeowners seek out employment opportunities outside of the depressed markets they currently live in. I attended a workshop a few years ago hosted by a local county government office about 'mortgage free' homeownership, and the statistical analysis by the Phd who hosted the event suggested another drop in valuations within 5 years. This would be 3 years on his doomsday clock. Maybe it's time to begin plans for HARP 3, or get serious about principal write down options.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sat Mar 21 2015, 12:07 AM
This simply speaks to the inefficiencies that still exist with 'opinions of value'. The appraisers are an easy target, but the simple fact is they derive their opinions of values from closed sales. Maybe the sales price that was negotiated before was simply speculative. A frenzy of buyers drove up things for awhile, and then things cooled off, or perhaps a few more foreclosures or fire sales hit the market a few months later. Refis in my world here in Tucson seemed to hit pretty much up or down 3% from the valuation models I use. The purchase prices seems to mysteriously hit every time, with maybe a 1 or 2% miss to the low side worst case. This may spoil the 'housing is a good investment psychology' and certainly doesn't set well with customers who you helped with purchase financing a year before when the housing recovery seemed to be moving along. Hopefully no one is pitching housing as an investment anymore anyway. It's a foundation for wealth down the road when the house is paid off--a long term financial tool to acquire shelter that you own rather than rent or pay debt on for your entire life. You can then pass that free & clear shelter down to future generations. Glad to see someone courageous enough to take this topic on though it may not exactly instll consumer confidence with the housing bubble burst so fresh in the homeowning public's psyche.
on Fri Mar 20 2015, 8:05 PM
As a Certified Real Estate Appraiser, let me begin at the top of the article and inform all those who care to listen. Within the title of the piece the author states “Conservative Appraisals”, however an appraisal is not by itself high, low, conservative, etc., and it only becomes that when someone compares it to some other number (traditionally the purchase price). Stop referring to appraisals as being low or conservative, but instead refer to the purchase price as being above market value (appraised value). In the first sentence, the fact that MBS members expect market values to be X, should stop, because every assignment that an appraiser completes we have NO predetermined expected market value. I’m glad the author spoke to loan officers, sales managers, etc. to get their thoughts on low appraisal (sorry above market value offers), however my clients are the lenders and not the borrower, agents, processers, loan officers, etc.! Its’ an appraisers job to meet his or her professional guidelines (USPAP), and to meet the specific scope of work requirements that the lender has asked for. We give absolutely no thought into what other disinterested third parties may think about the client / appraiser relationship. With several paragraphs devoted to examples of low appraisals, I would say that every client I work for has a formal process to reconsider value. Appraisals are now often checked by our own software, by the AMCs software, an AMC employee going off a checklist, several lender run AVNs, an underwriter, other appraisers doing desk or field reviews and the now new CU platform. With such oversight, at what point does the value show support? In regards to the new CU platform, I would advise that all interested parties read Fannie Mae Lender Letter LL-2015-02 prior to commenting on the effect on appraisals. I could go gone, but I hope the trend of over inflated purchase prices will be short lived. Fannie Ma
John DeLeva
DeLeva Group
on Fri Mar 20 2015, 6:44 PM
Unfortunately the debate will be driven by the dollar and good policy will come second, this is the way of Washington. As for 'protecting the American tax payer' I find it odd even laughable that the very legislative body responsible for 18 TRILLION in debt has such clarity of purpose in the need to reform the GSE's...
on Fri Mar 20 2015, 5:27 PM
Get rid of FNMA and Freddie and replace with what? no one has a solid workable solution to this question. Don't kill the government golden goose, they are making money and helping the deficit. Who will stand in their place if wound down?
on Thu Mar 19 2015, 2:24 PM
Excellent article Ms. Swanson! It is very thoughtful and well detailed. Moreover, every real estate and mortgage professional should be reading this in order to develop their skills!
on Fri Mar 13 2015, 6:39 PM
This is happening because politicians thought it would be ok if they did nothing to prevent hedge funds and private equity syndicates to buy up all the foreclosed properties before they hit the market.
on Tue Mar 10 2015, 4:39 PM
As someone who worked on an assembly line for modular homes in there youth and am now a certified real estate appraiser, there is no comparison between the two. The last time I looked, stick built homes did not have to register with the DMV and get issued a license plate. I now refuse to take 1004C type assignments as most agents, brokers, and loan officers have no idea what the significance is between manufactured homes, modular homes, permanent foundations, etc. Not to mention the market value decline can be significant and difficult to teach to people.
Sheryl Laskie
Loan Consultant, Universal Lending Corporation
on Tue Mar 10 2015, 1:16 PM
I am curious about the requirement to remove the paid medical collection debt after it has been paid by insurance. How is that going to be proven by a consumer. Those medical debts should just be removed no matter who pays them. They are from someone being sick, not someone being irresponsible on a regularly paid debt. Make these changes really help people.

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