Blog of the Mortgage

HVCC - Petitions and Managing through

June 24th, 2009 8:05 PM

I know we all are not fond of HVCC and the AMC's that have been contracted to deliver our appraisal work.

As Lenders we're having to add extra internal tasks for our team to handle, as brokers you're having to put nearly your entire loan decision at the whim of the appraiser whom you've never likely worked with.

For all of us the quality of work has noticeably deteriorated and it's very clear that these appraisers and not the ones that should be left with the lion's share of the work.

Of course our most favored appraisers are typically the most experienced and they have all flipped the you know what to the AMC's as the compensation for work is ridiculously low (can you say 60% pay-cut?)

Well, despite all of the issues and all of our nightly praying at bedside for the removal of HVCC we have to deal with what we've been given.

First Some Petitions to Remove the HVCC:

HVCC Petition - Written by TBWS.com

HVCC Petition - from 2008 - Written by broker

HVCC Petition Sponsored by CAMB

I've pulled some highlights out for you all to better manage your AMC ordered appraisals. These are from my company's experiences but I can't imagine they are any different (or at least not much) elsewhere.

So, some tips:

Appraisal Ordering Process - Completion

Do not wait to order your appraisal after you've submitted or until the day you submit.

Completion time for AMC appraisal? Anywhere from 5-10 business days.

Have a Purchase? Order the appraisal as soon as you have a ratified contract.

Refinance: as soon as you submit your loan order the appraisal, or if you advance lock, order on the same day as lock. You don't want to get caught with lock extensions because of delays outside of your and your lending partner's control.

Please note: The order will not be processed until payment has been made. Ie. There are no more COD's under the Code - it is a violation

Be sure to use: your Lending partner's loan number (in this case it would be us :) ).

You may not request a specific appraiser for your work (ie your favorite signed up with the selected AMC): This also violates HVCC Code.

Condition Clearing on AMC appraisal -

To be sure the work that is coming in is less than stellar. In many cases it is just plain shoddy. That of course means that your Lending partners will likely have Appraisal Conditions required.

How do they get handled?

You can take a deep breath because our underwriters, at the time they place the appraisal conditions on the approval will also be placing the request for condition completion with the specific AMC that delivered the work.

You will be able to see all of these requests online through RealEC by opening your work number.

The process for identifying the appraisal fee is as follows:

1. Broker performs a search in RealEC and locates the loan.

2. Click the transaction # in the upper left corner highlighted in blue taking you to the Order Summary page -

3. Look in Event History for Event 342 - if there, click "View Event Details" located in small blue print above the Event History/Notification tabs -

4. On this the Event Detail Page scroll down to locate Event 342 which will include the Amount collected

On the screen below you can see there is Event: Payment Information Processed Event 342 and the Amount in this case was $380.00

I need to yell at someone to get this work done faster? - well, don't yell, although I am sure you want to:

RealEC Tech Support: 877-273-2532

LSI Customer Service: 800-722-0300

Service Link: 800-777-8759

After the Order has been Placed?

Q. Will I be notified of any action I may need to take due to an error, for example an incorrect credit card or property contact information?

A. Yes. An e-mail will be sent to you identifying an action required on your part IF you have completed the "Add Notify" information found on the Order Summary for each individual order you place. (Instructions for the "Add Notify Function" can be found in the Appraisal Management Quick Reference Guide.) Additionally, following the status of orders through RealEC's system will provide you with continued updates on each order.

Here's a link on how to add e-mails to your order request:

Adding e-mails for status updates in RealEC

I need to make some changes to my initial Order?

If you want to add info like a correct credit card # then you log in and search for your loan. Click on Transaction ID # and then select ADD EVENT and there you can add info.

What about the Appraisal Disclosure?

Q. If we receive the initial Appraisal Disclosure form and the borrower later changes his/her mind about their election, how do we handle that?
A. Once the borrower has made their election, no changes to that election will be accepted. We do not want borrowers being pressured into waiving their three (3) day right at a later time so the loan can close early, etc. The borrower's initial selection will be the governing selection. Common sense would also tell you that if the borrower DID waive their right to the three (3) day requirement, and then decided they want the three days to review the appraisal, they should be allowed that three day review period.

How about alternate Property Decisions in DU?

Q. Is a 2075 required to go through this process? (Updated 6/9/2009.)

A. Since a 2075 is a property inspection report and no value is being assigned, it is not required to be ordered through our appraisal management process.

Portability (taking the appraisal elsewhere):

Q. Will your company transfer an appraisal to another lender?

A. my company will provide written assurance and allow an appraisal to be transferred upon request from another lender for any loan my company denies or for any loan submitted that was not a product offered by my company. Process requirements for transferring appraisals will be provided soon.

What about the Pesky Application date issue? Surely you've got some credit reports and apps lying about from before May 1^st?

Q. When is compliance with the Home Valuation Code of Conduct (HVCC) required?

A. Applications dated on or after May 1, 2009 are required to be in compliance with the Code. Appraisals for loans delivered to FAMC must be ordered through our appraisal management process for all applications dated on and after that date.

And this was provided by Fannie Mae:

There have been numerous questions from our customers regarding the application date for purposes of determining required compliance with the HVCC. Fannie Mae Q & A specifically addresses this question and answers as follows:

Q. Is the Definition of Application Date the Actual date of the application or the date of receipt of the application by the lender?

A. The Application date is defined as the date the borrower(s) signed the application certifying that the information is correct.

FNMA's definition of APPLICATION DATE with regards to the HVCC requirements. It is the actual date the borrower signs/dates the 1003. A closed loan with an incorrect date is unsalable and incurable.

Scenario #1:

Borrower's application taken by phone on April 16^th, signed and dated by the Loan Officer on the 16^th.

Borrower signs on May 5.

This loan must have an HVCC complaint appraisal because borrower's signature on the application is after May 1^st

Scenario #2:

Borrower's application is taken by phone on April 16^th, signed and dated by Loan Officer on the 16^th.

Borrower does not sign the initial 1003, however signs the Final

1003 at Closing on June 15^th.

This loan must have an HVCC complaint appraisal because borrower's signature on the application is after May 1^st.

Posted by Raoul Badde on June 24th, 2009 8:05 PMPost a Comment (0)

Will Monetizing the $8k tax credit put $$ in YOUR pocket. HUD ML09-15 released

June 7th, 2009 3:36 PM

Only 30 more days until the Mid-Year marker.
Is your 2009 going better than 2009??
If you're reading this e-mail I would have to say YES!

I've received numerous calls/e-mails in the last 2 days since HUD reposted ML09-15. The last time I posted on this I was concerned that we might not get access to this HUD announced program. But we kept up the good fight. :)
First we're told we would monetize the $8k homebuyer tax credit very soon (Sect'y Donovan in early May). Then someone at the Arizona HOC went public and indicated (as much as they knew) that this policy was not going to be put into place. NAR went from doing back flips and cartwheels to trying to remove their unusually large feet from their mouths. BUT: this is the Government we're talking about here and I'd be amazed if anyone within the same division EVER knew what was really going on.
So, true to form: ML09-15 is back! Monetization of the $8K tax credit. Awesome you say? Now my thin buyers can come in with even less?? We can sell homes to everyone! Again: not so fast says HUD.
Given the dire circumstances that our national housing market is in and the heightened state of awareness all involved in housing carry, the era of 100% financing is not due to rebound that soon.
So, it turns out that we will be able to ease some of the newer closing cost pain brought about by HUD changes to down payment and closing cost financing. The credit will NOT go against the 3.5% statutory investment but it WILL be permitted to offset over-all closing costs. Not a bad gig when you consider that this good for singles that earn up to $75k and couples that earn up to $150k. That's a lot of folks and a lot of houses. Especially considering that we're closing loans for folks (couples) that are making around $15-18/hr. each for full time work. Many have the down but get gifts for closing costs as well.
A quick Synopsis of the $8k Credit is posted here:
From the Letter (HUD):
"The homebuyer's downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum down payment, but may be used as additional down payment, buying down of interest rate, or other closing costs."
From Potomac Partners (whom I've posted here numerous times):
HUD will continue to permit "government agencies and instrumentalities of government" to offer tax credit advances with second liens that can be used for the down payment, closing costs and prepaid expenses. Currently, ten state housing finance agencies have programs that will apparently monetize the tax credit. These states are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee. Information on these programs is available here

More from the Letter:
Conditions:

The proceeds of the sale of the tax credit may not exceed the anticipated tax credit due the home-buyer based on the computations of form IRS 5405;

The borrower must submit a signed certification that the tax credit is not subject to offset due to other indebtedness.

A copy of the borrower's tax refund and/or the IRS 5405 must be collected and retained in the FHA case binder.

Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer. In FHA's view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)

Due Diligence
FHA expects that entities purchasing tax credit assets will employ appropriate due diligence measures including, but not limited to:

Require the homebuyer to draft and provide the IRS form 5405 "First-Time Homebuyer Credit."

Contact the borrower's employer and review pay stubs to confirm there are no outstanding garnishments.

Review the homebuyer's credit report to ensure there are no unpaid student loans, or other obligations that could be offset against the credit.

Validate that all of the eligibility requirements for the tax credit are fulfilled

Review previous tax returns and IRS tax assessment letters, if any, to determine that the borrower does not have unsettled obligations to the IRS

More from me:
If nothing else your customer (after closing cost credits) will be able to get THE LOWEST rate in the market at the time of lock for the extra $$ in points you can collect to buy down the rate.

The Quandary: How long to wait for this to get put into play for you and me? As usual we will all have to sit on our hands and wait anxiously for our investors to deliver and answer.

You've got FHA's position.

Now we need access to the source of funds (ie. who delivers the check at closing?). And did you see? There's no real capitalistic play here (ie. Nehemiah and their $500/unit charge) @ 2.5%. Not too many are going to want to lay that kind of $$ on the line for 2.5. I understand that a 2 year Treasury note is yielding less than 1% but for my money a mistake by the borrower on the tax form above and poof.

Then you need the large primary buyers to come with their answers (10 days -3 weeks). Now you need all the mid-tier players to interpret the same guides and salability/risk issues that present themselves that with brand new programs (1 week-3 weeks). So, by mid-end of July our customers will have access to this program.

That's great news and will extend the summer buying season well into the new school year (a typical lull period for business).

But remember: Legislatively this credit expires on 12.1.09! That means you will have mid-tier and primary players begin pulling access anywhere from 30-45 days prior to the credit expiration. Wow!
We will have 90-120 days to sell this product actively and then be off to the next issue (2009 holiday sales season)...120 days? Hmmm. Maybe not so many houses after all?
At Least NAR has national TV spots talking up the $8k credit eh?
So, do you market this? Only to your Realtors and existing prospects that are going to close in Late July and August. Carry a stack of the IRS forms above in your files and be prepared. Once you see the income limits exceeded back the borrower's away from this idea. An effective marketing piece needs 60+ days to begin producing results.
Secondly: do you even bother? For my money? No. this will be a convenient alternative. For most it will lead to one or two additional loans in the above listed time frames but for the work and pain of finding a home are they worth it? Could you close an additional 4 loans trying to figure out ways to close those two?
At least now we know what HUD wants: Skin in the game. Bless 'em! :)

********

Have a great Spring and Summer Selling season.

You'll need the following links to download these forms:

Education Station
Government Loan Programs

Remember to Go out and have fun!

Posted by Raoul Badde on June 7th, 2009 3:36 PMPost a Comment (0)