Blog of the Mortgage

February 19th, 2008 11:14 PM
I've been fielding alot of questions about appraisals. For some reason we're all having problems with value?

I'm not really sure why, but as soon as I know I'll get back to you.

All kidding aside: Appraisals are a major, MAJOR issue in this market. I've been wanting to post on this for awhile but somehow imparting Monty Python carried more precedent.

Rule number 1: Stay off the Zillow Crack. All it will do is depress you. No one will agree with their methodoligies (at least here in CA).

Rule Number 2: If you're going to ask for that extra 2-5% in value you had better bring your elite Harvard Law review team in for enforcements. Internal tools that lenders use today will likely be at issue -scrap that: will definitely have issue with any value pushes. Some sources on Internal Tools: Core-Logic, History Pro, HomeGate, InterThinx et. al.

Rule Number 3: Read the appraisal. specifically pages 1 through 20. It's your loan after all. I can't tell you how many DOH! calls I've had in the last 4 years. (don't kill me if you do already - I'm being very general here).
Rule Number 4: page 2 (the grid) be careful of gross adjustments over 10% (unless your property is wacky or abnormal) be suspicious of gross adjustments over 15-20%
Rule Number 5: Agency/Non-Agency/Jumbo: The automated engines & internal tools rule your value world. FHA: the appraiser is your only source for definition of market value.
Rule Number 6: if your appraiser tells you that it takes 6+ months to sell a property your value is declining, this also applies if your appraiser can't find comps that have sold in the last 90 days.
Rule Number 7: Discuss Declining values with your borrower. You don't want to lead your borrower down the path of uncertainty. Plus having uncomfortale conversations with your borrowers will make it easier later.
Rule Number 8: Don't believe Lawrence Yun @ NAR. See rule number 1 for frame of reference
Rule Number 9: Don't lock your loans until you have a firm grip on value. No one wants to double work (you especially).
We're all losing loans to Wells, BofA, CITI, Countrywide retail and we don't want to lose our competitive edge with wasted locks.
Rule Number 10: Appraised value needs to be based on Like kind properties. Homes with Full Granny units need to be comp'd against the same, not have a line item adjustment in value because the other local homes don't have them. Same goes for property size.
Rule Number 10b: Send your loans to us! we're only 2-3 days in underwriting and closing fast will help us avoid issues in #9 many times.
Posted by Raoul Badde on February 19th, 2008 11:14 PMPost a Comment (0)
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