Blog of the Mortgage

Appraisal Tips for 2009 & New FNMA appraisal form required

February 11th, 2009 9:00 PM

Sometimes good posts bear repeating: Click Here:

I am going to be in Eureka today so if we haven't yet scheduled a meeting...let's try to meet up before I leave town @ 3pm.

First Some Ideas on Appraisal for 2009: YES, 2009 is going to Suck hind wind for Valuation. Some markets are back to 2005 (raise your hand S.F.) other markets are back to 2001/2000 (Stanislaus, Solano et. al.) the last thing you want is an appraiser "hitting" your value mark.
Lord knows you'll find a lender that has issues with it.

1. It's a refinance market (somewhere in California)
   that being said, GET COMMITMENT from the
    Borrower on appraisal UP FRONT. I had one shop
   close 1 loan out 6 locks because value had evaporated.
2. Comparables: Alright, your lender (like us) let's you
   go back 90 days for comps - how cool is that (some
   handcuff you to 60 days)? At the same time, if this is a
   floated refinance consider completing an appraisal and
   waiting for rates to fall - inside of your wait (30-60
   days) your value could drop another 5-10% (don't
   scoff: it's happened). Remember this is now 120-150
   days from oldest comp (a lot can change in 4-5
   months AND IT WILL)
   So, Don't get the oldest comps for Value, get the
    newest. See what you can get inside of 45 or 30
    days.
   This is a tact that will protect you AND the borrower
   at AVM/Desk Review time.
3. SEND YOUR APPRAISAL WITH YOUR LOAN.
   We are all Jammed up. There are some lenders that
   can't even fund all the loans they get in a single month
   because their warehouse lines are maxed out. I know of
   one that could double production if only they had the
   capacity but right now they're having to sit back and
   wait. The last thing you want to do is: wait 3-4 (up to
   20+) days with some lenders only to have to wait for
   appraisal review issues after your conditions are sent
   in. I mean, you want to lock for 60 days.. that's your
   choice but in my world, I get paid 2 weeks after the
   month ends so, let's Book 'em now!
4. Read and Review: Remember the 4 C's of lending?
   Credit, Capital, Capacity & Collateral? most us learned
   all about these and then promptly forgot about them
   when SIVA-NINJA loans were waived under our noses.
   Well, now we're back in 1990 (and I don't mean the
   parachute pants I saw some dude wearing in the City
   the other day).
   Collateral.. we're back to basics. Read those
   Appraisals BEFORE YOU get surprised by your
   lender.
   when I was a processor I would GRILL my appraiser if
   something was remiss with his valuation. I was nearly
   always prepared for when an underwriter would call me
   back to discuss my loan and they were ALWAYS
   surprised when I would explain our position.
   Explaining our position in 2009 is long gone but being
   prepared is most definitely not. So, DON'T LET your
   processors e-mail those forms off until you've
   reviewed them.
5. Adjustments : jump into your appraisal and start with
the basics.
a. where are the comps located? inside 1 mile for
        urban/sub-urban? inside 5 miles for rural? if not,
        why not?
    b. square footage? room count? bath count? garage?
        lot size? are they at least similar?
    c. adjustments on grid: what are they for? do they
        make ANY sense?
    d. what about your Gross and net adjustments at the
        the bottom? are they within a couple of percentage
        points? REMEMBER: Gross adjustments OVER
          15% = Field Review. I am not kidding.
        Appraisers STILL want to throw the sink at these
        deals. It's not good for you and your borrower gets
        pissed when you have another 1 week delay.

Some thoughts from the Lender side: we've turned down some very good appraisals on some very nice homes in areas that NEVER turn over. Guys, if you get that one deal in the nicest, oldest part of town, get it appraised and get an underwriter from your partner lender (Yours truly) to review it ASAP! Before you submit the loan.

Here's what's going on: The home is worth $500k in the eyes of the buyer because they'll never be able to buy in this neighborhood again until someone passes away.

The problem is that the last home sold in 2007.. for $600k. Our buyer is getting a deal right? Sure, maybe. But now your appraiser is going ALL over town (well outside of 1 mile) to gain comps and sure enough your lender can't even begin to support $350k...

So, check 'em out, call on 'em and get them dealt with early. The sooner you know, the better.

Posted by Raoul Badde on February 11th, 2009 9:00 PMPost a Comment (0)