simpleguy

Two Congressmen Want a Moratorium Imposed on the New Appraisal Rules

The author is right. Here's why...(please note I am not a guy that is a fan of bureaucracy).

Loan Officers/Lenders now order appraisals through the end Investor(big bank). That bank hires an AMC(Appraisal Management Company), who in turn hire a local appraiser.

In short, we have put the end investor and an AMC into the appraisal process, adding two tiers of “management” to solve the problem/reach the goal of not having the Loan Officer/Lender influence the property value.

The result has been this:
1. Borrower's are losing their flexibility, appraisal costs are going up and turn around times are long(means longer rate lock-in times which cost more). Plus here’s another gem….once an appraisal has been ordered through an investor, the appraisal, though theoretically "portable" to a new investor, is usually not accepted if you switch investors.
2. Appraisers are getting screwed, they get paid less because they have deals “dished” to them and the AMCs(appraisal management companies) are charging $100 or more to be an order fullfillment center. And if you have ever used one(even before this), it is a fiasco at best.
3. Appraisal costs are going ballistic.

Before these rules went into effect appraisers were picked by the Loan Officer/Lender.
Sure they had a relationship, but........
1. The appraiser had to be approved by the investor(usually with 5yrs. of experience).
2. Appraisers are licensed just like real estate agents and loan officers.
3. Appraisers are required pledge allegiance so to speak to an ethics standard.
4. Appraisers must carry E&O insurance(errors and omissions).
5. If the appraisers made gross errors, they would get "blackballed", lenders would put them on their "no fly" list.
6. Appraisal turn around time about 5days, now 2-4weeks.

I have to ask
A. Why would an appraiser risk his or her livelihood with all the stops above in place?
B. Appraisals are subjective....both before and after this new "policy" I have personally seen homes with 2 appraisals. These homes had values in the $600k range and the appraisals were over $70k apart.
C. Regardless of this new policy, lenders and investors are using neat new tools called AVM's(automated valuation models) to "double check" appraisers. They are actually coming back to the appraiser and saying........"there is a home that sold closer to the property in question.......why didn't you use this in your appraisal?" Nevermind that it may be a manufactured home and the subject property is a 3 story McMansion.
D. Why not just put a “bounty” on bad appraisals and let the state that licenses them do what they are there to do?

U.K. Telegraph Pulls Mark Patterson Piece...How Intriguing

I agree with Robert B. Ferguson. The banks should have been allowed to fail. There are hundreds of well run "mid-level" players that should have been rewarded/benefited from running their institution responisbly. Instead the end net result is they got screwed and so did the taxpayer.

I heard a politician say recently something to the effect of.... "When have you ever seen government inject itself into a highly complicated problem and come out with a solution that is better/easier?"

One Way to Invest in Social Unrest

Why do we even have to go there with the whole "gun culture" thing?

but in this gun culture without adequate safety nets it is quite scary to see the damage inflicted on the police force"..........

Please, I read this for stock ideas, not ideology.