As part of the new UCDP system, properties will be rated based on a “Standardized Condition and Quality” basis:
Fannie Mae And Freddie Mac Will Require “Electronic Appraisals” For Home Loans Originated After Dec 1, 2011 Featuring “Standardized Condition And Quality Ratings” For Properties
13 04 2011Comments : Leave a Comment »
Tags: Appraisals, Appraisers, Electronic Appraisals, Fannie Mae, Freddie Mac
Categories : Appraisals, Condominiums, Fannie Mae, Federal Government, Financing, First-Time Homebuyer, Freddie Mac, Housing Market, Mortgage Industry, Purchases, The 203k Guy
Real Estate Appraisals: Home Values Will Increase Only If Homeowners Renovate, Upgrade And Maintain Homes Prompting Neighbors To Do The Same
13 01 2011
“Inflation alone does not result in higher real estate values,” Lenny said. What do are “continued maintenance, upgrades, and a community mind-set that knows it is well worth making upgrades to existing homes when they see their neighbor’s upgraded home sells for a higher price than one nearby with fewer upgrades.”
Sales comparisons are limited to three to four months, rather than six, and within one mile, Lenny said. (His own neighborhood is more than one square mile in size.) Inclusion of a listing in the report is required, meaning that a house for sale is compared with those that have gone to settlement.
Michael Lenny of Cherry Hill, N.J., has 49 years in the real estate industry, more than 30 of them as an appraiser.
“I have seen, over the years, a general breakdown in the lender/appraiser relationship from a trusted and respected one to what appears to be happening today – ‘Do the appraisal our way, or you’re off our list.’”
If the lender insists, however, that an appraiser cannot appraise a property for more than the highest price paid in the neighborhood, then “I ask how will home values increase if attention is also not given to upgrades, not to mention square footage, lot size, lot location, and the list goes on for items that are and have been typical adjustments by an appraiser in the appraisal report?” he asked.
That is “truly sad,” Lenny said, because “the most important aspect of getting an appraisal in the first place is to have an independent and professional opinion.”
Mortgage appraisers are being told there is no need for the “cost approach to value,” he said. The income approach is rarely used in residential appraisals unless the property is considered a rental. “That leaves just the sales-comparison approach, and that is where the rules and guidelines come into play in an appraisal report,” he said.
Under these conditions established by lenders – those selling to Freddie Mac, Fannie Mae, or FHA – home values will never increase, Lenny said.
Because of these rules, even a buyer who can put down 40 percent “still falls within the ‘guideline’ that the subject property cannot appraise for a price higher than exists on record.”
Read more: http://www.kansascity.com/2011/01/13/2580680/insiders-unhappy-appraisal.html##ixzz1Aw2smyPn
Comments : Leave a Comment »
Tags: Appraisals, Apraisers, Home Valuations, Resale Value, Valuations
Categories : 203k, Appraisals, Financing, Mortgage Industry, Rehabs, Remodeling
Real Estate Appraisals: Computerized Real Estate Appraisals Have Been Criticized As Producing Low Home Valuations
30 12 2010“…criticism is being leveled at computerized real-estate appraisals, which depend on models that use prices from home sales and other data to determine the value of a house. Because of the volatility in the housing market, they are underestimating prices, some homeowners, real-estate agents and fee appraisers say…”
Lenders use computerized appraisals primarily for home-equity loans, preapprovals for mortgage refinancing, loan modifications and mortgage originations of less than $250,000. Automated appraisals are cheaper and faster than in-person appraisals. They run as little as $20, whereas appraisals done by people can cost hundreds of dollars.
The computerized models are used as a check on in-person appraisals, which often were too generous during the housing boom, according to federal banking regulators and state attorneys general. The regulators said banks often held sway over appraisers, encouraging them to value homes at certain prices in exchange for future business. In the wake of the housing bust, regulators imposed tough new rules, prohibiting banks from picking individual appraisers for individual properties.
“The selling point was that [computerized appraisals] were faster and not prone to bank pressure,” says Steven Kane, a Colorado commercial and residential appraiser who is the author of two books on how to apply automated valuation models.
Computerized appraisals calculate a home’s value by using an index derived from historical repeat-sales data, or sales records of homes with similar property characteristics, such as square footage and the number of bedrooms and baths. In-person appraisals don’t incorporate as much transactional data as a computer model.
For more: http://online.wsj.com/article/SB10001424052970204204004576049974087536438.html
Comments : Leave a Comment »
Tags: Appraisals, Home Valuations, Mortgage Loans, Valuations
Categories : Appraisals, Fannie Mae, Financing, Homes, Purchases, Refinance
FundMyRemodel.com Home Appraisal Update: FHA Appraisals Are Very Comprehensive And Require Appraisers To Perform A Thorough Property Inspection
12 11 2010FHA appraisers do an inspection bordering on what a home inspector would do for potential buyers, Burnett said. FHA loans require appraisers to check electrical systems, 
look for water stains and do other work that would not be required for a conventional loan purchase. Burnett said he’s seen appraisers working on FHA purchases use binoculars to see if roof shingles are curling. “It’s to that level,” he said.
Home appraisals involve paperwork and physical property inspections, and buyers should know the Federal Housing Administration is stricter about them for its government-backed loans than are brokers using conventional mortgages.
An appraiser inspecting a property under a conventional mortgage usually takes some measurements and photos inside and outside the home and, after a brief look, leaves, said Bill Burnett, president of the Virginia Association of Mortgage Brokers and of Homestead Mortgage in Lorton. It’s not that fast for an FHA loan.
While appraisal rules are much tougher with FHA loans, the credit and qualification requirements are less stringent when compared with a conventional mortgage. Homebuyers can get FHA loans with down payments of 3.5 percent, while most private and conventional lenders seek down payments of 10 percent, Burnett said. The trade-off makes sense, said Frank Donnelly, vice president of the Mortgage Bankers Association of Metropolitan Washington.
Part of the FHA mission is helping first-time buyers and low-to-moderate-income buyers, and it is a bad idea to put buyers with lower levels of savings into a home needing major repairs. Burnett said first-time buyers not only need to be ready for a more stringent process, they also need to know what their rights are, including their options if the appraised value of the property comes in low. “Today, with values in some areas continuing to fall, they better know about that,” he said. For conventional and FHA loans, appraisals must be ordered through an independent third party. The cost for appraisals on conventional and FHA loans has increased as much as $100. “It’s greatly slowing down the process,” Burnett said.
Comments : Leave a Comment »
Tags: Appraisals, FHA, FHA Appraisals, Underwriting
Categories : 203k, Appraisals, FHA, Financing, Purchases, Underwriting
FundMyRemodel.com Mortgage Lending: FHA Appraisals Are More Detailed And Comprehensive In The Inspection Of The Interior And Exterior Of The Home
14 09 2010 
- They check to see if the appliances are functional. In other words, if there is a dishwasher or stove, it must work.
- Whatever heating the property has it must be in good working order. If it is oil heat, then the outside tank unit must be safely away from the home.
- For all homes built before 1978, the indoor paint must be in good order. In other words not chipping, peeling, or flaking. For all homes built after 1978, the exterior paint must be in good order. So there would not be any exposed surfaces. If there is a problem with the paint in either the interior or exterior you cannot just paint over it. You must go through the process of scrapping the problem areas and then painting.
- They also check the water pressure by flushing toilets and turning of faucets checking to see if the hot and cold water is working properly.
- They check to see if the water heater is working properly.
- They check the attic for proper ventilation, look for exposed or frayed wires, and evidence of a previous fire. They also check for any light coming in the attic which would give evidence of weakness in the attic.
- They also check the crawl spaces for debris or evidence of standing water. While there they look for any foundation support problems.
- They inspect the roof for leaks.
- They look at the interior flooring to be sure there are no safety or health issues.
- They then inspect the windows and doors. They cannot be broken, although the windows can have cracks as long as those cracks do not pose any safety or security issues.
- Are there any revealed wires? Do they pose a risk? Are they dangling? That is something they will look at.
- They will take a close look at the foundation for any cracks. That is an indication of an unsafe foundation and that will not pass.
For more: http://www.stockmarketsreview.com/realestate/2010/09/14/what-are-some-fha-appraisal-guidelines/
Comments : Leave a Comment »
Tags: Appraisals, FHA, Purchase, Refinance
Categories : 203k, Appraisals, Federal Government, FHA, Financing, Purchases, Refinance, Rehabs, Remodeling
FundMyRemodel.com: Appraisal Fees Vary Due to Distance, Difficulty, Complexity And Type
6 09 2010
- Location/distance of the home – depending on where the property is located, the appraiser may have to set aside several hours just to get to the property.
- Difficulty obtaining property information from public sources – some sources (county recorders office) will even charge the appraiser to obtain information necessary to complete the appraisal.
- Complexity of the home – the research and time required to complete the appraisal, as well as the appraiser’s liability increases significantly with the complexity of the assignment. This is the reason fees jump significantly with properties that are more complex.
- FHA or Conventional Financing – A borrower may be receiving a quote based on our Conventional Financing Fee Schedule. However, an FHA order will be quoted at a higher fee, due to the additional inspection and report requirements.
Comments : Leave a Comment »
Tags: Appaisals, Fees, Mortgage Loans
Categories : Appraisals, Financing, Homes, Mortgage Industry
Home Purchase And Refinance Appraisals: Dodd-Frank “Financial Reform” Act Eliminates HVCC And Allows Fannie Mae And Freddie Mac To Accept Appraisals Selected By Loan Originators
26 07 2010The “appraisal independence standards” will be written over the next 60 days. The newly enacted bill, unlike HVCC, allows Fannie Mae or Freddie Mac to accept any appraisal report completed by an appraiser selected or paid by a mortgage loan originator.
When President Barack Obama signed the Dodd-Frank Act this week to reform the financial markets, the Home Valuation Code of Conduct (HVCC) was officially set for elimination in 90 days.
The Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009 in an attempt to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisals. It’s a controversial regulation, leading to an increase in demand for appraisal management companies (AMCs) and complaints from independent appraisers who claim they’re being cut out of the market.
For more: http://www.housingwire.com/2010/07/23/obama-signs-bill-eliminating-hvcc
Comments : Leave a Comment »
Tags: Appraisals, Dodd-Frank Act, Fannie Mae, Freddie Mac, HVCC
Categories : Appraisals, Fannie Mae, Financing, Freddie Mac, Purchases, Refinance, Remodeling
New Fannie Mae Guidelines On Appraisals Regarding Appraiser’s “Requisite Knowledge” And More Detail On Home’s Interior May Benefit Valuations For Home Renovation Loans
17 07 2010Fannie’s new language says appraisers must have the “requisite knowledge” as well as experience and the right data to competently perform an appraisal. The lender, Fannie said, is ultimately responsible for hiring qualified appraisers.
Appraisal reports must also contain more pictures, including interior photographs of a home’s kitchen, all bathrooms, the main living area, any examples of physical deterioration and examples of recent updates like remodeling or renovation projects.- Another issue addressed is the use of short sales and foreclosures as comparable sales. If a distressed property is used, the appraiser has to “identify and consider” all differences, including any stigma that may be associated with a foreclosure, for example.
- Another change, and this one is a biggie, is designed to rein in lenders who are decreasing a home’s market value from an appraiser’s opinion based on a loan underwriter or automated valuation methods, a practice that can quickly kill a deal.
- Fannie Mae says lenders must raise concerns about market value with the appraiser who did the report, and if that doesn’t do it, they have to get another appraisal before deciding whether to underwrite the loan.
“The changes are merited; we needed to do something,” said Alex Chaparro, a local real estate agent and national chairman of the National Association of Hispanic Real Estate Professionals. “You have a lot of first-time buyers who are losing deals, and they don’t understand why.”
What does it all mean? It means more work for appraisers and lenders, but the goal is more accurate appraisal reports and greater likelihood that good transactions will be underwritten.
Comments : Leave a Comment »
Tags: Appraisals, Appraisers, Fannie Mae, Guidelines, Remodeling, Renovation, Valuations
Categories : 203k, Appraisals, Fannie Mae, Financing, Refinance, Rehabs, Remodeling
Home Mortgage Appraisals: Fannie Mae Admits To Mortgage Lender Problems By Prohibiting Lenders From Reducing Appraised Valuations Unilateraly
13 07 2010“…some lenders have taken this to another extreme and have actually been reducing the valuations their own appraisers brought in, for fear of potentially having to buy back a loan they thought they 
had sold to either Fannie or Freddie.”
They base their lower valuations on a computer value (such as Zillow – we all know how inaccurate Zillow is). The computer values do not reflect the condition of a house – they don’t increase values for remodels, are often lacking information even on room additions – so, like Zillow, they can be grossly inaccurate. There is never an on-site inspection with computer models, as there is with a real appraisal.
Fortunately, Fannie has announced that effective September 1, lenders will no longer be permitted to reduce appraised valuations. Instead, they will be required to contact the appraiser to resolve discrepancies between their 
value and the computer model. If the disagreement cannot be resolved on that level a second appraisal must be ordered by the lender. It has not yet been disclosed who will be responsible for the cost of the second appraisal, should one be required by the lender.
In addition, Fannie is looking at some other issues that have arisen due to HVCC (which was recently adopted by FHA as well.) Among issues being researched is the increasing number of inexperienced and non-local appraisers employed by AMCs.
Comments : Leave a Comment »
Tags: Appraisals, Fannie Mae, Underwriting, Valuations
Categories : Appraisals, Financing, Refinance, Rehabs
FHA 203k Renovation Financing: “As-Is Value” Appraisal And “Value After Rehabilitation” Appraisals Are Required In Different Transactions
16 05 2010
As-is Value. A separate appraisal (Uniform Residential Appraisal Report) may be required to determine the as-is value. However, the lender may determine that an as-is appraisal is not feasible or necessary. In this instance, the lender may use the contract sales price on a purchase transaction, or the existing debt on a refinance transaction, as the as-is value, when this does not exceed a reasonable estimate of value.
- Further, on a refinance transaction, when a large amount of existing debt (i.e., first and second mortgages) suggests that the borrower has little or no equity in the property, the lender must obtain a current as-is appraisal on which to base the estimated as-is value.On a refinance, the borrower may have substantial equity in the property to assure that no further down payment is required on the new loan amount. In some cases, the borrower will not have an existing mortgage on the property. In this case, the lender should obtain some comparables from a real estate agent/ broker to estimate an approximate as-is value of the property.Another way of establishing the as-is value is to obtain a copy of the local jurisdiction tax valuation on the property.
B. Value After Rehabilitation. The expected market value of the property is determined upon completion of the proposed rehabilitation and/or improvements.
For a HUD-owned property an as-is appraisal is not required and a DE lender may request the HUD Field Office to release the outstanding HUD Property Disposition appraisal on the property to the lender to establish the maximum mortgage for the property. The HUD appraisal will be considered acceptable for use by the lender if. (1) it is not over one year old prior to bid acceptance from HUD; and (2) the sales contract price plus the cost of rehabilitation does not exceed 110 percent of the “As Repaired Value” shown on the HUD appraisal. If the HUD appraisal is insufficient, the DE Lender may order another appraisal to assure the market value of the property will be adequate to make the purchase of the property feasible. For a HUD-property, down payment for an owner-occupant or non-profit organization is 3.5% of the accepted bid price of the property and 100 percent financing on all other costs.
Comments : Leave a Comment »
Tags: 203k, Appraisals, Financing
Categories : 203k, Appraisals, Financing, Refinance, Rehabs
