Jack M. Guttenburg Nails it!

Here's what he writes about the changes in the appraisal industry and it's unintended effects on the housing market.


The objective of HVCC was to prevent pressures being imposed on appraisers to raise values. But HVCC also prevents the loan officers, mortgage brokers and realtors who work with borrowers from pressuring appraisers to get a deal done in time to meet a deadline. Further, they can no longer keep their clients informed about the status of an appraisal because they are no longer in the loop.

In addition, the loan officers, brokers and realtors who fashion deals for consumers used to have access to informal value opinions from the appraisers with whom they worked. Such opinions allowed them to abort house purchases and refinances that clearly would not fly because of inadequate property value. This source of information is now closed to them, with the result that deals that previously would have been screened out are now going through the system to be rejected, imposing needless costs on everyone involved.

HVCC has also pretty much eliminated the ability of a borrower to use the same appraisal with multiple loan providers. Before HVCC, mortgage brokers could use one appraisal with any of the wholesale lenders with which they dealt, and lenders sometimes accepted appraisals ordered by others. Today, brokers are out of it, and lenders using AMCs will not accept appraisals ordered by other lenders because they cannot be sure that the other lenders are following the HVCC rules. The upshot is that borrowers often have to pay for more than one appraisal.

In sum, the HVCC "cure" for the appraisal problem of overvaluation has been implemented in a market where the problem has become undervaluation, and HVCC is making that problem much worse. It should be scrapped. When normal markets re-emerge, it will be time to reconsider how appraisals can be made independent without disrupting business relationships that have served borrowers well.


Read entire article here:
http://finance.yahoo.com/expert/article/mortgage/187349

Good News? Maybe.....

http://finance.yahoo.com/loans/article/107648/its-time-to-invest-in-real-estate.html?mod=loans-home

What's Happening with Appraisals?

The debate over appraisals is inflamed by a natural tension: Real-estate agents and mortgage brokers, who need to complete transactions to collect their fees, are unhappy when an appraiser nixes the sale price. But it also suggests that there may be unintended consequences to an attempt by New York Attorney General Andrew Cuomo to reform the appraisal business.Using the threat of litigation, Mr. Cuomo last year prodded the government-backed mortgage investors Fannie Mae and Freddie Mac into adopting a new code of conduct for appraisers. Since those two companies provide funding for the bulk of U.S. home mortgages, the code, which took effect May 1, has become the national standard for most home loans.The code bars loan officers, mortgage brokers or real-estate agents from any role in selecting appraisers. One result is that more lenders have outsourced the selection to appraisal-management companies, or AMCs, which take a sizable cut of the appraisal fee, often 40% or more. The AMCs pay appraisers as little as $175 to $200 per assignment, compared with the $350 or more that many get when they work directly for a lender."Many appraisers are struggling to survive on the fees paid by the AMCs," says Bill Garber, a spokesman for the Appraisal Institute, a trade group based in Chicago. Appraisers are being asked to work faster even as their fees are cut, and that conflicts with the goal of getting reliable appraisals, he says.Entire article here....http://customsites.yahoo.com/financiallyfit/finance/article-107568-2325-0-your-homes-value-threatened-by-appraisers

Take today's Housing News With a Grain of Salt

First-time buyers purchased 30% of all homes in July;

• Distressed homes accounted for 31% of transactions;

• The month-to month gain was aberrational, marking was the single biggest gain since 1999;

• Total housing inventory rose 7.3% to 4.09 million existing homes a 9.4-month supply;

• National median existing-home price fell 15.1% from July 2008 to $178,400;

For entire article:

http://www.ritholtz.com/blog/2009/08/strong-seasonal-gains-in-existing-home-sales/

The Market Divides

Very interesting take on the energy of the current market. We are finding this to be pretty accurate.


https://news.fidelity.com/news/article.jhtml?guid=/FidelityNewsPage/pages/real-estate-bottom&topic=real-estate

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What's going on in Quechee?

Weird update on sales and pendings: We went from turgidly SLOW activity throughout the winter with a couple of firesales in the $100,000s to: 4 house currently under contract priced at:

- $326,900, $599,000, $639,000, $659,000!

That's a huge change and a maybe the beginning of a trend. Are they smart people who cashed up before the stock market went totally strange and are dumping money into real estate? I hope so!

Quechee Sales

Four homes have sold in Quechee Lakes since September 18th of 2008. That's right...four. All have been, if not fire sales, very undervalued. Are we seeing the beginning of the Over-correction phase of the pendulum?