A Way Around Appraisal & HVCC Issues
HVCC appraisal issues are ruining a lot of purchase and refinance transactions. All mortgage lenders are not subject to the quirks of Appraisal Management Companies though.
MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
We just had a purchase deal transferred to us from another lender after the appraisal they ordered through an AMC came in well under the purchase price. What's more, the loan originator's efforts to dispute the low value were ignored. They even tried to get a second appraisal, but weren't allowed.
We took over the transaction and got the loan Clear-To-Close in 5 days, but couldn't close it until the 7th day due to the new federal guidelines.
How were we able to get a better appraisal value?
Well, as a federally chartered bank, we're allowed to have our own HVCC compliance process.
We still have to randomly assign our appraisal orders, but we're able to select the appraisers that are in the pool being assigned to. The appraisers in that pool are some of the best in the area. Also, to be compliant, no one that has anything to do with the origination or processing of the loan application can order or contact the appraiser.
This allows us to avoid having to deal with out-of-area appraisers (as was the case in the deal we took over) and lazy appraisers that just want to use the first few comparables that pop up in their searches, quickly throw together an appraisal and don't care about quality.
This edge in appraisals has been a huge benefit for our organization and its reputation.
Now, don't misunderstand this and think we can bring in any value needed to make a deal happen. The appraisers in our randomly assigned pool are very good - too good to put their licenses at risk by fluffing values. We also have underwriters that as the situation warrants will require a second/review appraisal.
So, we still have transactions, mostly refinances, that go nowhere because the property is not worth enough in today's downtrodden real estate market. That's to be expected with close to 50% of the financed properties in southeastern Michigan being upside down.
But, if you're tired or concerned about dealing with appraised values that are truly under market, perhaps we should have a conversation?
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Drew,
Hi, my name is Cathy Zaccardelli and I am a Certified Residential Real Estate Appraiser. Your article is informative and does describe what is now a typical day in the mortgage and appraisal industry. Your idea about keeping good appraisers in your pool is a good one as are your thoughts on better appraisers, ones that care about the industry, won't take chances on unrealistic values.
It's funny tho, some agents are wishing us luck on appraising properties, like they know the house sold too high. If agents want these deals to go smoothly, they should be prepared with comps should the appraiser fail to turn some up. Appraisers are ready, willing and able to look at all sales, and yes we do miss some here and there. I just finished one with an indoor/inground pool. Conversation with local agent identified the perfect sale and made my appraisal much more comprehensive.
Alot of times, agents do not have comps to support their listing values. They are actually stunned when we call them and ask them what sales they used to determine a listing price. The answer is many times "I didn't use any sales, this is what the seller needs". The agent is setting not only him/herself up for failure, but doing the seller a disservice.
Again, thanks for the putting that story out there.
Cathy
Thanks for the comments & compliments Cathy.
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