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What Did Chase Know & When Did They Know It?

April 21st, 2015

Just Wondering: Has Anything Changed?

We have previously asked the question “What did Chase know and when did they know it?”(AppraiserNews.com October 7, 2013 & April 4, 2014) regarding the faulty appraiser selection process of various AMCs (appraisal management companies) and Chase, their client. It is worth repeating what we said then as the situation has not apparently changed: Chase is utilizing AMCs that procure appraisers for Chase assignments through “broadcast” emails to a large number of appraisers with the assignment generally awarded to the appraiser offering the lowest fee quote and fastest “turnaround” time.

Here is what we previously wrote about this unhealthy situation: “Appraisers are all too familiar with this scenario: An email arrives which offers a fee that is far below ‘customary and usual’ for an appraisal involving a complex property.  When contacted by an appraiser who explains that the property is complex and deserving of a higher fee, the staff of this AMC typically pleads ignorance and states that they are unable to make a determination of property complexity.  In many cases, an appraiser can make such a determination within several minutes.

This AMC is one of the top AMCs as to innovative technology, data gathering and reporting.  Recently, they announced their selection by Freddie Mac as a technology provider for data validation services.  Remember: this is the same company that solicited appraisers through a ‘broadcast’ method and claimed not to be able to easily make a determination of property complexity.

In our October newsletter, we noted that federal regulators would be revisiting the issue of ‘customary and reasonable fees’ by the end of the year.  Last newsletter, we discussed the proposed rule by the six federal agencies which included the implementation of minimum requirements for state registration and supervision of AMCs including the use of licensed or certified appraisers only. The proposed rule also places obligations on AMCs to ‘ensure the usage of competent, independent appraisers’.”

In that newsletter, AppraiserNews.com expressed some hope that “…because of this proposed rule and other pressures…AMCs…are in the process of ending this ‘broadcast’ method of procuring appraisers.  It is also our hope that the same pressures (including liability factors) will end the utilization of BPOs (broker price opinions) which we referred to (previously) as ‘dirty little appraisal substitutes’.

Several questions:  Did Freddie Mac understand the manner in which appraisers were selected by the AMC with which they are partnering?  Does the appraiser selection process utilized by this AMC matter to Freddie Mac or is the apparently superior technology offered by the AMC the only relevant issue?  As we have discussed in recent newsletters, ‘Big Data’ offers many tools to appraisers and regulators.  We welcome the efforts by Freddie Mac to try to improve appraisal review through advanced analytics. 

At the same time, it is disappointing for appraisers to see Freddie Mac partnering with AMCs that have utilized these ‘broadcast’ methods of procuring appraisers.  After reading Michael Lewis’ book ‘Flash Boys: A Wall Street Revolt’ it led us to ponder the question of how little the S.E.C. seemed to know or care about the impact of high-frequency trading on the financial markets.  It also led us to think about how both AMCs and high-frequency traders profited by acting as middlemen in the ‘shadows’, receiving little scrutiny.  Recently, the S.E.C. chairwoman and the New York attorney general have both announced investigations into high-frequency trading.  Also recently, the six federal agencies have announced proposed new rules for AMCs.

Final questions: Why did it take so long for federal regulators to concern themselves with questionable AMC practices?  Also, will they now take appropriate corrective measures as well as ending BPOs?

Finally: What did Chase know and when did they know it? (And when will Michael Lewis write a book on AMCs, the big banks and the appraisal industry?)”

Fast forward to April 21, 2015: Has anything changed? Will we still be asking the same question a year from now?

Links to our past articles are found here:
October 2013 Appraiser News
April 2014 Appraiser News

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Recent Real Estate Reports

Yesterday, the Federal Housing Finance Agency (FHFA) released their most recent Foreclosure Prevention Report, for January 2015. Some of the highlights:

~Nearly 21,800 foreclosure prevention actions were finalized in January with 13,500 of these permanent loan modifications. Since the start of these actions by the FHFA, more than 3.4 million permanent loan modifications have been completed.

~18% of the modifications involved principal write downs (a decline from the previous month) and 48% involved extended terms only (up from the previous month).

~Short sales and deeds-in-lieu of foreclosure were down 11% from the previous month to 3,500. ”Serious delinquencies” dropped to 1.86%, the lowest point since December of 2008.

The FHFA report was in line with other such reports signifying the return of a more normal real estate market such as CoreLogic’s last week which reported that the national foreclosure inventory fell by more than ¼ in February to 553,000 homes or 1.4% of all homes with a mortgage. This figure continued a 40 month trend of declining foreclosure inventory. Completed foreclosures continued to fall, declining to 550,000 in February, down by 16.1% from February 2014. Seriously delinquent loans fell by 19.3% from the same month in 2014.

Earlier this month, CoreLogic reported that all cash sales fell in January for the 25th consecutive month to 38.9%. This was down from the peak of 46.5% in January 2011. CoreLogic noted that cash sales typically constitute approximately ¼ of all sales and that this level could be reached by the middle of 2018 if January’s trend continues.

Links to the CoreLogic reports (including a state by state map of cash sales by state and a graphical depiction of distressed inventory) are found here:

Cash Sales Made Up 39 Percent of All Home Sales in January 2015

National Foreclosure Inventory Down 27 Percent Year over Year in February

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AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.

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Just Released! Appraiser Help’s 2015 Directory of AMCs and National Appraisal Companies is Now Available!

To help appraisers evaluate how AMCs will work for their appraisal practices, we have compiled this expanded directory of over 275 AMCs and National Appraisal Companies, listing complete, contact information and other details for each company.

If you’re looking to maintain or expand your mortgage appraisal practice, our Directory of Appraisal Management and National Appraisal Companies is a great place to start. Order it today for $79.99 and download it immediately!

Please visit our website now to make your purchase securely or contact us at (877) 434-2825 for more information on this comprehensive directory!

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Rates & Dates

Freddie Mac, the Mortgage Brokers Association (MBA) and HSH Market Trends reported little change in mortgage interest rates last week.

In their survey on April 16th, Freddie Mac reported that 30-year fixed-rate mortgages rose from 3.66% to 3.67%. They also noted that last year at this time the 30-year rate was 4.27%.

The Mortgage Bankers Association (MBA) reported on April 15th (for the week ending April 10th) that 30-year rates with conforming loan balances ($417,500 or less) rose to 3.87% from 3.86%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased from 3.81% to 3.84% while rates for FHA backed mortgages moved downward, from 3.69% to 3.67%.

Mortgage applications fell 2.3% from the previous week with the share of refinance applications as a percentage of all applications rising to 58% from 57% last week.

FHA mortgage applications constituted 13.5% of all applications (up from 13.2% last week) while VA applications comprised 11.1% of applications (up from 10.7%).

On April 17th, HSH.com Market Trends reported that 30-year mortgage rates fell to 3.77% from 3.78% the previous week. Rates for FHA-backed mortgages also declined, from 3.61% to 3.57%.

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

Additional information from HSH can be found by going to: HSH.Com

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Appraiser Help has Released its 2015 Directory of AMC’s and National Appraisal Companies. Click the link above to learn more and to download your copy today!


Ask Angie

Angie would like to congratulate the winners of her last contest: Virginia appraiser Brian Runge and Georgia appraiser DJ Van Fossan. Brian Runge Real Estate Appraisals covers the southeast Virginia counties of James City and York while DJV Appraisal Services covers the Metro Atlanta Counties of DeKalb, Fulton, Gwinnett and Cobb. They were the first to answer correctly that Yogi Berra was the author of the following quotes: "Baseball is ninety percent mental. The other half is physical”; "I’m not going to buy my kids an encyclopedia. Let them walk to school like I did”; and "It’s like deja-vu, all over again”.

Today’s Questions:

1. Who said: "You read constantly that banks are lobbying regulators and elected officials as if this is inappropriate. We don’t look at it that way”.

a) Jamie Dimon
b) Elizabeth Warren
c) Donald Trump
d) Biniam Gebre
e) None of the above

2. Who said: "All businesses tend to pass costs onto customers”.

a) Jamie Dimon
b) Elizabeth Warren
c) Donald Trump
d) Biniam Gebre
e) None of the above

3. Who said: "Economies of scale are a good thing. If we didn’t have them, we’d still be living in tents and eating buffalo”.

a) Jamie Dimon
b) Elizabeth Warren
c) Donald Trump
d) Biniam Gebre
e) None of the above

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

One Free Regular Listing on AppraiserHelp.com

A Free Copy of the 2015 Directory of Appraisal Management Companies (Available to Members of AppraiserHelp.com and FHAAppraisers.com FREE!)

 

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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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