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Loan Mod Overhaul, Toxic Asset Appraising

November 23rd, 2010 by Bill Collins Leave a reply »

  • Multi-State Investigation by Attorneys General May Lead to Revamping of Loan Modification Process
  • Toxic Asset Appraising: The Future of Appraising?
  • Press Release: Narrative1 Releases New Commercial Appraisal Productivity Tools, Speeds Process
  • Rates and Dates
  • Regarding Implementation of Customary and Reasonable Fees
  • Ask Angie
  • Tell us what you think!
  • Closing Remarks
  • Multi-State Investigation by Attorneys General May Lead to Revamping of Loan Modification Process

    What began as an investigation into “robo-signers” has expanded into investigations of widespread irregularities in the foreclosure process and efforts by many state officials to bring about a settlement including the reduction of principals on tens (or hundreds?) of thousands of mortgages, particularly for homeowners who are “underwater” on their mortgages.  Numerous published reports in the past week have discussed the idea of settlements involving writing down loan balances which would involve negotiations with Fannie Mae and Freddie Mac and the approval of their regulator, the Federal Housing Finance Agency and the U.S. Treasury.

    In an article on November 17th, the Wall Street Journal cited a report by Inside Mortgage Finance showing the top 10 mortgage providers in 2010 by market share: Bank of America: 19.9%; Wells Fargo: 17.2%; Chase: 12.4%; Citi: 6.2%; Ally Financial: 3.4%; U.S. Bank Home Mortgage: 2.0%; SunTrust Mortgage: 1.7%; PHH Mortgage: 1.5%; OneWest Bank: 1.4%; PNC Mortgage: 1.4%.

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    Toxic Asset Appraising: The Future of Appraising?

    Investigations into mortgage fraud, principal write-downs, portfolio analysis: all of this leads us to the conclusion that appraisers will find increases in assignments involving the appraisal of these so-called “toxic assets” with refinancing assignments projected to decline (see the Mortgage Bankers Association study later in this newsletter) and purchase appraisals flat.  On November 11th, the New York Times, in an article by Julie Creswell (“Hunting for Bargains Among the Bad Assets”) stated that:
    “It is the biggest rummage sale in Wall Street history—what one investment company calls ‘the Great Liquidation’. Two years after Washington rescued Wall Street, hundreds of billions of dollars of bad investments—in many cases, the same ones that poisoned banks and then the economy—are going up for sale…The question is what this stuff is worth.”  The article quotes Peter L. Briger Jr., co-chairman of the Fortress Investment Group, as saying that: “You’re going to see over the next five years, more financial asset liquidations than you’ve seen in the sum total of the last 100 years…If you’re in the market for financial services garbage collection, there’s plenty to do right now.”

    Ms. Creswell states that:
    “Take, for instance, commercial real estate loans. The nation’s banks, from giants to tiny community banks, still hold nearly 45%, or $1.5 trillion, of commercial mortgage loans outstanding. Other institutions own the rest.

    Many of these loans, analysts say, are hardly worth the paper they are written on.

    Yet little of such troubled commercial real estate debt is being offered up in the market for sale, analysts say.  That is because the banks are holding the debt on their balance sheets at prices much higher than what buyers are willing to pay.  If the banks sell the loans for less than they are valued on their books, they will be forced to take write-downs against their losses.”

    The article notes that banks may have their commercial real estate assets “…valued at 75 or 85 cents on the dollar, and hedge funds and others may be looking to buy closer to 30 or 40 cents on the dollar depending on the level of distress” and quotes Constantine Korologos (a managing director with the real estate consulting practice at Deloitte) as saying that “The reality is that it’s probably worth something between the two.”

    A recent article in the Wall Street Journal by Andy Kessler, a former hedge-fund manager and author, discussed what he felt was the real reason for Federal Reserve Chairman Ben Bernanke’s $600 billion quantitative easing program.  The author offered his opinion that Mr. Bernanke was fearful that further quick drops in residential and commercial real estate would occur and endanger the banking system.  Mr. Kessler noted the recent reports showing declines in housing starts and price declines along with the declines in commercial real estate due to job losses and high vacancy rates.  He went on to say that: “Mr. Bernanke is clearly buying time with our dollars.  If real estate drops, we’re back to September 2008 in a hurry.”

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    Press Release: Narrative1 Releases New Commercial Appraisal Productivity Tools, Speeds Process

    Narrative1, developers of commercial appraisal software, announced Monday new commercial appraisal productivity tools that speed the narrative appraisal process.

    "With map search, comp searches are faster, more intuitive and efficient. Comps are displayed visually, with full details and photos. Simply pan and zoom the map to search. Selected comps are automatically imported to appraisal grids and comp sheets, along with location maps. It’s super-fast!" says Tom Armstrong, MAI, developer of Narrative1.

    "Narrative1 data import tools allow users to easily import comps from various data services and MLS systems, allowing appraisers to efficiently harness the volume of data available today. When combined with map search and automatic narrative report integration, the time savings are huge," says Armstrong.

    Appraisers interested in more information about Narrative1 Commercial Appraisal Software can visit www.narrative1.com, or call 1-800-990-7011. Information kits and demos are available and there is special pricing Thanksgiving week.  

    Company Info:
    Narrative1 Commercial Appraisal Software, LLC
    Tom Armstrong, MAI
    1-800-990-7011 www.narrative1.com,

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    Rates & Dates

    Freddie Mac reported that rates for 30-year fixed-rate mortgages jumped to 4.39% for the week ending November 18th, up from the 4.17% rate reported on November 11th.

    The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending November 12th reported a decrease to 4.28% from the previous week’s average of 4.46%.  The MBA also reported that the delinquency rate for mortgage loans (those loans at least one payment late but not in the foreclosure process) was at 9.39% last quarter, essentially unchanged from last quarter’s rate of 9.40%.  In their statement, the MBA also reported that the percentage of loans on which foreclosure actions were started during the third quarter was 1.34 percent up slightly from last quarter and the percentage of loans in the foreclosure process was 4.39 percent, down slightly from the second quarter.  The seriously delinquent rate (loans that are 90 days or more past due or in the process of foreclosure) was 8.70 percent, slightly down from last quarter.

    An article by Mark Gongloff in the Wall Street Journal on November 19th speculated that the most recent data reported by Freddie Mac could lead to a spurt in refinancing activity from those “fence-sitters” rushing to lock in rates followed by a decline in refinancing activity thereafter.  The article noted that the MBA reported several days earlier that refinancing activity had dropped 16.5% during the past week to its lowest point since July.  While long term projections are suspect, the article also noted that the MBA has estimated that refinancing could fall to $370 billion next year from $921 billion in 2010 and $1.3 trillion in 2009.

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

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

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    Not just for FHA Appraisers – Connect with over150 AMCs with updated information.

    Regarding Implementation of Customary and Reasonable Fees

    We have had numerous inquiries from appraisers about the “customary and reasonable” fee provision of the Dodd-Frank Bill that is scheduled to take effect on April 1st, 2011 and will be reporting on developments as they occur.  As we indicated in our last newsletter, the VA fee schedule is likely to be utilized as one of the guides for setting fee schedules and here is the link again for those appraisers who are curious about the fee structure in their geographic area: VA Appraisal Fee Schedules and Timeliness Requirements – Home Loan Links

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    Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

    Appraiser Help is happy to announce it has renewed its partnership with McKissock 100% Education to provide generous discounts on Continuing Education courses for Appraisers. Go to Discounted McKissock Continuing Education to start saving today and to learn more!

    Ask Angie

    We would like to congratulate our most recent winner: Joe Randazzo, a Certified Residential Appraiser with Alta Associates Appraisals in W. Orange, New Jersey.  Alta Associates Appraisals provides appraisal services in the New Jersey counties of Essex, Bergen, Morris, Passaic, Hudson and Union. Joe was the first person who responded correctly that John Lennon was the author of the quote ““Life is what happens to you while you’re busy making other plans” and that Joni Mitchell was the author of the quote “No one likes to have less than they had before. That’s the nature of the human animal.”

    Today’s questions:
    Who said:

    1: “I love Thanksgiving turkey. It’s the only time in Los Angeles that you see natural breasts.”

    a) Johnny Carson
    b) Arnold Schwarzenegger
    c) Jon Stewart
    d) David Letterman
    e) None of the above

    2: “I celebrated Thanksgiving in an old-fashioned way. I invited everyone in my neighborhood to my house, we had an enormous feast, and then I killed them and took their land.”

    a) Sarah Palin
    b) Jon Stewart
    c) David Letterman
    d) Donald Trump
    e) None of the above

    3) “I think humor is a very serious thing. I use it as a way of weakening the reader’s defenses so that I can more easily take him to something more.”

    a) Jon Stewart
    b) William Collins
    c) William Shakespeare
    d) David Letterman
    e) None of the above

    The first person to respond with the correct answers wins a choice of either:

    One Free Regular Listing on AppraiserHelp.com

    A Free Copy of the UPDATED Directory of Appraisal Management Companies for FHA Appraisers (Coming in Late November)

    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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