It may be a scam if…
When ever there’s an economic downturn, the scam artists come out of the woodwork. Well guess what? They are here and they are here in full force. If you’re having trouble making your mortgage payments, and/or if you’re already in foreclosure, here are a few tips to remember if you get a phone call or if someone shows up at your front door and they say they “want to help”. That’s your first clue that something is amiss. If they say they can “stop your foreclosure”. DON’T believe them. (Only the bank can do that). If they say”they will buy your property”, You can believe them, but DON’T trust them.(They will only purchase your property if it’s well below markt value. Well…anyone will do that. If they say you should “sign your property over to them”. Don’t trust them. Call someone, anyone,Your CPA, Your attorney, Your REALTOR…Anyone, Someone.. Just DON’T trust them..And last but not least… If they say to “make your monthly mortgage payments to them”. Either hangup the phone or gently SLAM the front door.
wallace…
Appraisals and the Catch 22
So, the other day at the marketing meeting I was bemoaning the trials and tribulations of a certain transaction with yet another appraisal gone bad and a very reputable appraiser in town who was eaves dropping asked if he could interject some of his experiences. Well, being the perfect gentleman that I am I said absolutely please enlighten us. Boy, oh boy…. He Did!!!!
He went on to tell us that the very same large financial institutions that own most of the inventory we mice are scurrying to sell has delivered down to the appraisal department or their HVCC management company a commandment to undercut the market value by 10-15%.
Wow!!!! We all say as we stand in utter disbelief. That declaration got the minds rolling and we stood around for the next few minutes comparing notes from our previous escrows gone awry and low and behold if that dude wasn’t absolutely right on mark.
I just don’t want to believe it…. Why would the seller of property want the appraisers to come in below market value? Uh, I am beginning to feel like the super computers Captain Kirk used to destroy with his keen sense of logic, thanks to Spock.
Kelly…
The American Dream. Is it still Alive?
Well, I’m sure that there are some, maybe more than some, cynics that would love to argue that the American Dream is dead. In these days where the seller isn’t really a seller, you know, the kind that blood runs through their veins, the process can feel very detached. There’s almost never a connection between the buyer and the seller these days. The seller could care less about who buys their proprty. It’s just a monetary transaction. No emotion. The buyer still has a basic human need for a connection to the seller but it’s not going to happen. And since this is not going to happen, the buyer can never feal fully engaged with the purchasing process. Absent this connection, what drives the buyer to perform? I believe that it’s still the “American Dream” that moves people forward. It’s our desire to own a piece of Mother Earth, so-to-speak. It still makes people proud to get their slice of the pie, what they rightly deserve, a place to call home and somewhere to hang their hat. In our current real estate market there is a huge sense of accomplishment when you finally close the transaction. There’s one hurdle after another and sometimes it may seem anticlimactic, but it is big, really big !!!!!!! You get bragging rights. You’ve done it and now it’s yours. You can paint it, wallpaper it, scrub-a-dub-dub-it, landscape it, un-landscape it, and the list goes on. You can personalize it to the point it screams your name. And when night falls, you can sit down in your over stuffed chair, put your feet up on the ottoman, and with a beer in your hand, you can fall asleep to the fading sounds of the 10:00 o’clock news.. This my friend IS the American Dream”
HVCC (Home Valuation Code of Conduct) or How we misplaced the baby after throwing out the bath water.
HVCC? Home Valuation Code of Conduct….
Really?! Here is one more example of how a well intentioned albeit not well thought out regulation is complicating the transaction by messing with the appraiser. Let me explain….. We now have an additional level of management that draws money away from the already low (in my opinion) cost of an appraisal from the guy/gal doing the work. There are two major flaws. One, the appraiser no longer has that relationship with the loan officers or lenders that he/she worked so hard to establish. Two, the management company or as I like to call it, the parasite, now retains all the appraisal leads and a portion of the appraisers income in an effort to shield the appraiser from the abuse he/she received from the lenders or real estate agents…….
ABUSE?! You may ask, what abuse? It seems that while the Banks were becoming filthy rich with the stated income loans that the appraisers were pressured to find the stated value of the home. No!! you say. Yeah it’s true. Bad, Bad appraiser for being so easily swayed and Bad, Bad bank for so fiercely swaying and Bad, Bad lender for so fiercely swaying and Bad, Bad Realtor for going along with the whole thing. Oh, and don’t forget the buyers and sellers played a part in this as well. After all, doesn’t market value start with the seller and the buyer?
So, now let’s look at what is happening during a typical transaction. The buyer goes out for months with the Realtor and writes offer after offer after offer and finally after months of this, is successful in nailing the perfect home down. Escrow is opened and a fully executed contract is delivered to the lender along with a visit from the buyer to the lender to sign applications and give the lender a check for the appraisal. At this time an order is input into the system and if all parties are lucky the request gets assigned to a seasoned appraiser who knows the area and will actually look at the comparable properties and use data that closely resembles the subject property and the appraisal will come in at value without a problem. How’s that for a long sentence? So you may think. What can then happen is someone in their infinite wisdom (usually the person who decides they really don’t want to do the loan) asks that the appraisal be reviewed because they are skeptical of the value? Or what is usual, the amateur appraiser gets the assignment and goes out, looks at the subject property, goes back to the office and pulls up property in the area and prints off the first 3 sales, pendings and actives. Oh, did I mention that most information in the MLS starts at the lowest price first? He/she then compiles the information and fills out their appraisal and submits it to the lender at a price that does not even closely resemble the sales price. This appraiser (in my opinion) tackles the assignment this way because he/she has to crank out as many appraisals, good or bad, so they can make enough to stay in business. You know, they get paid whether the appraisal comes in at value or not.
This “cannot be” you say. There were mutliple offers on the property and some were for more money than the actual sales price and you sat down with your Realtor before writing the offer and went over numerous comparables that easily warrant the price you offered. How can this be? Can we talk to the appraiser in hopes to find a common ground? NO! Can we talk to the lender so they can talk to the appraiser in hopes of saving the sale? Yes, and they can’t talk to the appraiser…. They can however talk to their manager who can talk to the manager of the appraiser, who may or may not choose to talk to the appraiser, and even if they do very seldom do you now get a more correct appraisal because everyone is now skeptical of YOUR intentions… Bad, Bad Realtor…..
It’s obvious there was a problem and creating the HVCC appears not to be the answer.
So, for a better answer to the problem. Start from the top and work your way down after creating legislation that makes those acts of coercion and harassment illegal and incarcerate those who take part in that behaviour. The greed did not originate at the bottom and trickle up you know. It always flows downhill.
This too shall change as the market changes and for now the home buying experience has become more muddled and difficult for the buyer, the Realtor, the loan officer, and the escrow officer, while the banks (Freddie Mac & Fannie Mae) sits and controls the inventory and the rules of the game from their Ivory Tower.
Kelly…
Getting the Short Sale approved (two loans) can be a win-win-win-win-win. That’s win x 5
Well, it’s getting more and more complicated and in order for a short sale with two loans to happen, the second lien holder has to drop the lien and if they don’t, there’s no sale. Unfortunately for the seller, and the REALTOR, both of the lenders (lien holders) have some control. I just want to point out that even though everyone feels like they’re losing, given today’s set of circumstances and the reality of the real estate market, everyone is winning. Well, kind of. Hear me out. The first lien almost always realizes more, and some would argue much more, out of the Short Sale as opposed to a foreclosure. The reasons are simple. No expensive legal battles (the foreclosure process). No holding costs once they own the property (maintenance, taxes, utilities, etc). No repairs to get the property in-shape to market it for sale. No vandalism or liablity on a vacant property. No “cash-for-keys” or lengthy eviction process. Depending on their equity position and where the property is located, it has been estimated that the first lien holder may net an additional $100,000.00 by utilizing the Short Sale process as opposed to going through a foreclosure. Sounds like a “win” to me. Now, for the second lien holder, if they cooperate, even on a very basic level, they will net something. Under the current set of “circumstances” they almost never have any equity positon left. Which means that if the first lender forecloses, the get zero dollars. So, what we’re seeing in daily practice, is that the first lienholder usually allows the second lienholder to net somewhere in the neighborhood of $3,000 to $5,000. to get them to cooperate and remove their lien when the property closes escrow. Sounds like a “win” to me. You do have to be careful here as some second lien holders are now trying to negotiate “outside” deals with the homeowners to net more to them but it’s illegal unless you have full approval of the first lienholder. You can always ask Mike & I for more information on this point. Now for the seller. You may get to negotiate with both lien holders so that when they report the “payoffs” to the credit reporting agencies, they report it in such a way that won’t“ be as damaging to your credit report and subsequently, your FICO score. Sounds like a “win” to me. You can also ask Mike and I for further information on that. And for the REALTOR, it may not feel like a “win” because it’s 2 to 3 times the amount of work, and you’re at the mercy of third parties that have no real interest in the transaction. But you should eventually get a commission. Sounds like a “win” to me. And for the buyer. You only have to negotiate with the “real” owner/seller (subject to the lienholders approval) and generally not compete with multiple offers bidding the property way up over asking price because the property is usually listed closer to market value. Sounds like another win. Even with all of these “wins” for everyone involved, the process can be frustrating and lengthy. But it always starts with the first step. Go for it !!!!!
wallace…
