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Archive for March, 2010

Appraiser News – Will New Loan Modification Program Help Appraisers?

March 30th, 2010

Underwater, Unemployed or Late with Mortgage Payments: Help is on the Way?

The White House announced a series of initiatives on Friday that were designed to assist several distinct groups, including many of the 7 million households behind in their mortgages, those currently unemployed and those homeowners who, while gainfully employed, were among the 11 million “underwater” homeowners.  The $50 billion estimated cost of these measures reportedly will come from funding previously allocated for housing programs in TARP (the Troubled Asset Relief Program).  The New York Times discussed these new White House moves in an article on March 27th and a link to that article follows, along with a “Q & A” which also appeared in the publication.

A Bold U.S. Plan to Help Struggling Homeowners

Answers to Questions About New Mortgage Modification Program

The FHA is to play a prominent role in these modification efforts and HUD Secretary Shaun Donovan and FHA Commissioner David H. Stevens both issued press releases on Friday, links to which are here:

Housing Program Enhancements Offer Additional Options for Struggling Homeowners

From the Desk of David H. Stevens

Prior to the announcement by the White House on Friday, published reports were corroborating a fact known by appraisers, that loan volume was way down, as reported in this CNBC piece on March 19th:

Fannie/Freddie/FHA Loan Volume Falling Fast

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“Conflict” Breaks Out Between Appraisal Institute, NAR and Others Over BPOs

On March 8th, four appraisal organizations (the Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers and the National Association of Independent Fee Appraisers) wrote to Treasury Secretary Timothy Geithner along with other public officials in financial leadership positions regarding their concern over the use of BPOs for “short sales”.  The letter noted that:

“… we strongly believe continuing to allow “broker price opinions” (BPOs) in the property valuation component will not adequately protect the public interest (consumer, borrowers, etc.) or the interests of the various parties to the loan (lenders, loan servicers, etc.) and is likely to exacerbate mortgage fraud.

The letter went on to say that “generally speaking, real estate agents and brokers are not independent or properly trained valuation specialists. They have an inherent bias towards quick results and action which produces a fee for themselves irrespective of whether the lender/ services/ investor/ property owner/ borrower gets a fair return on the short sale.

We believe that such conflicts can and should be mitigated by implementing basic requirements reestablishing independence and competency in the valuation process. Specifically, any arrangements to encourage short sales must require competent appraisals prepared in accordance with the Uniform Standards of Professional Appraisal Practice. Such a requirement is a minimum safeguard to enhance the fiduciary responsibility of lenders, eliminate conflicts of interests, and ensure independence and objectivity in the short sale process.”

On March 12th, the NAR quickly made known their very different opinion on this matter in a letter addressed to Timothy Geithner and HUD Secretary Shaun Donovan, along with other public officials involved with this issue.  The letter stated that:

“I am writing on behalf of the 1.2 million members of the National Association of REALTORS® (NAR) to support the Home Affordable Foreclosure Alternatives (HAFA) program and the use of broker price opinions (BPOs). NAR is concerned about misinformation that has been provided to the Treasury Department by the Appraisal Institute with regards to the use of BPOs and the real estate agents who provide this service.”

The NAR letter went on to defend the use of BPOs and the entire letter can be viewed by clicking on the following link: National Association of Realtors Letter

The entire letter composed by the appraisal organizations can be viewed by clicking on the following link: AI, ASA, ASFMRA, NAIFA Letter

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Our Thoughts on BPOs and the Current Conflict

We have been very clear about our position towards BPOs and support the Appraisal Institute and the other appraisal organizations who authored the March 8th letter.  Please visit our website www.EndBPOsNow.com for additional information and for contact information if you would like to join the effort to End BPOs Now!

One additional note: Many appraisers are also real estate agents and members of the National Association of Realtors.  Is it possible that this fact has somewhat muted the response of the Appraisal Institute and the three other appraisal organizations to the March 12th NAR letter? Maybe appraisers who are also members of the NAR who agree with our position regarding BPOs should let their appraisal organizations know that they fully support a stronger stand in the effort to end BPOs!

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“The Girl With the Dragon Tattoo” and the Financial Crisis

An interesting Op-Ed piece by the Times’ Frank Rich on March 20th discusses the coincidental timing during the same week in September 2008 when Lehman Brothers collapsed and the Swedish novel “The Girl With the Dragon Tattoo” was published in the United States. The book, which had been written years earlier before the death of its author, Stieg Larsson, in 2004, decries influential financial journalists “who treat “mediocre financial whelps like rock stars” and who docilely “regurgitate the statements issued by C.E.O.’s and stock-market speculators.” He pleads for some “tough reporter” to “identify and expose as traitors” the financial players who have “systematically and perhaps deliberately” damaged their country’s economy “to satisfy the profit interests of their clients.” Mr. Rich goes on to say:
“What’s remarkable is that Larsson wrote all this in a book completed years before the meltdown of 2008 — and was referring only to Sweden. And yet the overlap with our recent history is profound — so much so that surely both his prescience and the universal resonance of his villains account for some of his novel’s marathon ride through the zeitgeist, its ability to touch the nerves of so many readers in America and throughout the West.

If anything, the animus driving “Dragon Tattoo” seems more timely every day.”

The book is a good escapist read for over-worked appraisers and the movie is now out!

While we can’t give you a link to the movie, here is a link to Frank Rich’s article: Obama, Lehman and “The Dragon Tattoo”

While we are on the subject…..

While “The Girl with the Dragon Tattoo” is ostensibly a work of fiction, the release of Michael Lewis’ book “The Big Short: Inside the Doomsday Machine” provides the results of the author’s investigation into the collapse of the subprime mortgage market.  Mr. Rich’s article discusses the book briefly and the author has also been featured on 60 Minutes and in the Huffington Post which reported on March 15th:
“It may be tempting to think Wall Street is full of criminals who got off easy during the financial crisis.

But bestselling author Michael Lewis cautions against such an easy conclusion.

‘I think the story is much more interesting than that,’ he said during an interview on CBS’s 60 Minutes. ‘I think it’s a story of mass delusion.’

According to CBS, the result of his 18-month investigation attempts to explain, ‘how some of Wall Street’s finest minds managed to destroy $1.75 trillion of wealth in the subprime mortgage markets.’

A link to the Huffington Post article and the 60 Minutes piece is here: Michael Lewis: Wall Street Collapse A Story Of Mass Delusion

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Double Dip, Anyone?

Meredith Whitney, CEO of the Meredith Whitney Advisory Group, discusses her concerns regarding a retreat in the housing market in this CNBC.com video from March 16th.

Housing Market Sure to Double-Dip

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Commercial Real Estate Following the Residential Market Down the Same Slippery Slope?

Many commercial analysts have been reporting troubled conditions in most commercial property classes throughout the nation.  The New York Times in an article on March 17th provided an illustration of how this is occurring in one city, Phoenix, Arizona.

Phoenix Meets the Wrong End of the Boom Cycle

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Rates & Dates

The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending March 19th reported that the average rate for 30-year fixed-rate mortgages was at 5.01%, up from 4.91% for the week ending March 12th.  Freddie Mac also reported an increase in their most recent survey for the week ending March 25th with 30-year fixed-rate mortgage rates rising to 4.99% from the previous week rate of 4.96%.

Additional information from the Mortgage Bankers Association can be found by going to their site at: Mortgage Bankers Association – Research and Forecasts

Additional information from Freddie Mac can be found by going to: Freddie Mac: Primary Mortgage Market Survey (PMMS)

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Ask Angie

We want to congratulate the winner of the last contest:  Leo Savoie, SRA and Certified General Appraiser with APEX Appraisers, Inc. of Birmingham, Michigan.  Leo was the first person to provide the correct answers to Angie’s last contest: “You never know what is enough unless you know what is more than enough.” (William Blake) and “If the facts don’t fit the theory, change the facts.” (Albert Einstein)

Today’s question: Who said:

“No question is so difficult to answer

as that to which the answer is obvious.”

The choices are:

1. Lisbeth Salander

2. Carl Jung

3. George Bernard Shaw

4. Robert Louis Stevenson

5. None of the above

The winner of this week’s contest receives either a copy of the book “The Girl with the Dragon Tattoo” or a free copy of the Directory of Appraisal Management Companies for FHA Appraisers.

Angie’s Hall of Fame: Those who have been crowned winners more than once during the past two years and who have been retired from competition for the rest of 2010:

Suzanne Fahien

Pat Reass

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Tell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: bill@appraiserhelp.com with your thoughts!

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We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at www.appraisernews.com

Regards,

Bill Collins, Appraiser Help Inc.

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