VARbuzz: Housing policy forum finds similar tales across Virginia
Banks can’t seem to get their acts together. Appraisers still don’t know the areas they’re working in. Government is doing too little. Government is doing too much. Consumers are clueless about what the market really means.
Sound familiar? At VAR’s first Housing Policy Forum, hundreds of Realtors from around the state got together, split up by region, and talked about what ails the market.
Across the board (except for Northern Virginia’s complaint of lack of inventory), the issues were the same.
As the six regions each read through their lists of issues, the echoes were clear. “I could probably say ‘ditto’ and sit down,” said Kemper Funkhouser, spokesman for Realtors from the Shenandoah Valley area, the fifth to present a list.
Putting those issues in context were “three wise men and a journalist”: Ken Harney of the Washington Post; NAR immediate past president Ron Phipps; Anthony Sanders, professor of real estate finance at George Macon University; and David Stevens, president and CEO of the Mortgage Bankers Association.
Not surprisingly, bank issues topped the lists — slow response time, last-minute demands, and tight-fisted lending.
“Mortgage lending is not really growing,” agreed Sanders. “We’ve swung to the part where it takes forever even to get a refi application processed.”
NAR’s Phipps (who’s also a working broker in Rhode Island) said he’s shocked that it takes so long for a bank to approve a mortgage, considering how much information is available on any borrower at the push of a button. “That’s, to me, inconceivable.”
Stevens thought that too much weight is given to credit scores, especially during a recession when everyone’s hurting. People who are perfectly capable of paying a mortgage are declined strictly based on FICO. “We have to find a way to lend to people who have been impacted by a recession,” he said, “and not think of them as criminals.”
If lenders top the list of targets of Realtor wrath, government is a close second whether because of too much action, the wrong actions, or the typical partisan circus.
“There’s a real fear that folks in government… are just not able to get anything done,” said Harney. Beneficiaries of that inability to act, though, are the GSEs: Fannie and Freddie.
“Given the tone in Washington — the inability to get anything done — is probably good for the GSEs,” Stevens said.
And that’s not a bad thing.
“There is a very important role for government,” said Phipps, “and that is to make sure the capital it available. I think the average consumer really likes the idea of having a 30-year mortgage.”
There was much more, of course — in a market like today’s how could there not be. We’ll give you the details in the next Commonwealth along with the full-length video recap.
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Ladies & Gentlemen & Fellow Professionals,
I agree with the sentiments expressed in the first paragraph of this column by Mr. Kantor that apparently reflected the issues discussed at the Housing Policy Forum. I was not present but would like to think that the reasons and actions behind each of these issues addressed were brought to light and analyzed at length.
1.) Why can't, or won't, the Government get its act together? Some would reasonably argue that Government legislation and other actions and significant inaction contributed greatly to the detrimental ramifications in the Real Estate industry and global economy.
2.) Why do some Appraisers "still don't know the areas they're working in." Answer, the Appraisal Profession is in turmoi with the environment and client relationships completely altered by the now defunct HVCC legislation (Government) implemented by Fannie & Freddie due to threat of investigation and prosecution by the former NY AG. Control of the the bulk of appraisal assignments are now directed through Appraisal Management Companies, either affiliated with the Lender or not, who are taking a large percentage of the Appraiser's fee (as reported on the HUD-1 Settlement Statment under "Appraisal Fees") to supposedly handle the appraisal management process and essentially provide a "transerence of Liability" from the Lender to the AMC for those agreed-to responsibilities and obligations. (i.e. The FDIC suing E-Appraise It; along with many other active and pending lawsuits) Consequently, the borrower, the true client in the loan scenario, is paying $500-$750 to the lender, labled on the HUD-1 SS as "Appraisal Fees" and paying the appraiser as little as they will accept with each assignment. Misrepresentation? So, currently, the majority of AMC's are utilizing the lowest possible denominator to choose the Appraiser for most appraisal assignments. Fee and turn-time. Period. AMC's don't ask if the Appraiser is GEOGRAPHICALLY COMPETENT, PROPERTY TYPE COMPETENT, REPORT TYPE COMPETENT or any other qualifications, experience, knowledge, education, professional designations, years in business or why one Appraiser's fee might be more than another Appraiser in the same market area for the same assighnment. So as a fellow Realty Agent, GRI, RAA and Certified Appraiser in the State of Virginia, I have personally experienced this process from dozens of Lenders and AMC's who choose to pad their profit margin by often choosing and utilizing the least experienced, or most desperate, Appraisers who will accept below Customary & Reasonable fees and Customary & Reaonable turn-times. They do not care if that Appraiser is not well-suited for that assignment or if they are competent in any respect because they know that Appraiser has to comply with USPAP guidelines to accept the assignment, (USPAP states that if the Appraiser is not competent, for any reason, to do an assignment, they must either become competent, solicit the assitance of a professional who is competent, with client permission, or decline the assignment) and that their "quality control" department will solicit numerous founded and baseless revisions to the report prior to it being sent to the Lender client. And they have the Appraiser's E&O Insurance if the lesser-experienced Appraiser should make a significant error or ommission. Win-Win-Win. Except for the borrower who is likely getting what the AMC paid $200-#300 for, not what they paid $500-$750 for. It would be very prudent for the borrower to qualify the Appraiser when the property inspection appointment is being set or during the appraisal property inspection to verify where their office located, do they work frequently in your neighborhood, are they a member of the local MLS, do they have any professional designations, how long have they been in business, are they a trainee or newly licensed appraiser or are they a Certified Appraiser, do they have a supervisory appraiser who must sign off on their work and make sure to provide them with competitive and comparable market data for consideration in your property's valuation. Do not expect or count on the AMC that is ordering your appraisal and choosing the appraiser for your Lender to qualify the Appraiser's credentials. A lot of AMC's who have 100 orders will send them out to their approved Appraisers at $200. Some will be accepted. Most will not. They will resend them out to the same list of Appraisers at $225, $250, $275, $300, etc., until they are all assigned. Didnt' know that? Don't believe it? I ask you this, who do you think will be completing your next refinance or sales transaction appraisal? If you are a homeowner, Agent, Broker, Lender, Title Company, Insurance Agent, Contractor or in any other Real Estate Industry-related profession or occupation, then you either have been, will be, or will continue to be adversely affected by the current structure of the Appraisal Industry. And No, the recent Dodd-Frank legislation did nothing to curb this gross injustice. So each and every fellow Agent/REALTOR who incessantly complains about poor quality appraisals needs to understand USPAP and report erroneous and error and ommission ridden appraisal reports to the Virginia Real Estate Appraiser Board. Utilize that energy to help regulate this related profession not simply complain about it current state of affairs. If not, there is a good chance you might get the same incompetent appraiser on your next deal or the one after that. (i.e. I completed an ERC appraisal assignment in Founders Bridge and the other Appraiser came 3-4 hours from Roanoke and were paid much less than my local fee. They mismeasured the property and over-valued the property, in my opinion and that of the RELO company, by $100,000 in a declining market.) The RELO company learned a valuable lesson and now has new requirements that attempt to prevent this GEOGRAPHIC INCOMPETENCE from occurring. This is but the tip of the iceberg on this matter which certainly deserves more exposure and open and honest discussion.
Is Government doing too little and too much? Depends on what specific issue you are asking about. Definitely Both. Good luck on that one in an election year. That is why it is critical for All of US to continue to support the NAR. Accompany this with State Appraiser Coalitions presenting and passing various State legislation nationwide and we are making progress. Slow progress, but progress.
Consumers are clueless about what the market really means. We'll, so are some realty agents, appraisers, other real estate related professionals and most of the Media who "educates" a lot of those consumers. It is OUR professional obligation and responsibility to educate our prospective clients, the consumer, on what their market really means to them based on their role within that market. We cannot fault them for being confused based on the spin and false facts that are swirling around in the Media and on the Internet. We have to overcome these often misrepresented facts and trends to assist our clients in making informed decisions in these confusing market conditions. No, this is not easy in declining markets.
The point I am attempting to make is it is simply not enough to voice complaint on these issues, but ALL of US real estate professionals need to look at the root causes of these matters and work to eliminate them to strengthen our related professions. Your feelback is welcome.