Foreclosures on the rise

[Caterina Platt]

My biggest beef with the whole thing, is the same junk that was done in the S&L crisis is happening here. Numbers are cooked by a pressured appraiser. But this type of fraud is not fostered by the appraiser alone, there is the LO and the borrower included dancing to this off key tune. In the case of the many manufactured homes I see reselling at 25-50% of the original mortgage, there is a very rich dealer, salesperson, and several questionable finance companies involved.

AVM's will remove the appraiser, but the LO will still find a way to manipulate them. Is it just too hard to revamp the whole industry??? Too big a task so we'll just blame the appraiser, and keep the rest of the bad system in place and hope for the best. We'll all be seeing the same things replay in another 10-15 years again.

 

[Francois K. Gregoire]

My biggest beef with the whole thing, is the same junk that was done in the S&L crisis is happening here. Numbers are cooked by a pressured appraiser. But this type of fraud is not fostered by the appraiser alone, there is the LO and the borrower included dancing to this off key tune. In the case of the many manufactured homes I see reselling at 25-50% of the original mortgage, there is a very rich dealer, salesperson, and several questionable finance companies involved.

AVM's will remove the appraiser, but the LO will still find a way to manipulate them. Is it just too hard to revamp the whole industry??? Too big a task so we'll just blame the appraiser, and keep the rest of the bad system in place and hope for the best. We'll all be seeing the same things replay in another 10-15 years again.

Caterina and Others,

There are things going on in recognition of the problems within the mortage lending industry, including the state of appraisal regulation. This was posted at the beginning of the month, but has gotten little attention.

http://appraisersforum.com/forums/viewtopic.php?t=1372

One of the areas to be examined concerns mortage fraud. Please take a look. The Senators ask a number of questions. What kind of answers would you provide?

 

[Rick D. Elliott]

Hi! I have been away for the forum for a few months and the changes are new, and, I may make some typo errors. (sorry) But I want add my 'two cents' about foreclosures and a recent class attended.

Foreclosures is a sad event for any homeowner. Homeownership is a blessing ... &, can be, a real nightmare too! Sometimes life's events happen voluntary (e.g., expensive lifestyles, etc.) and sometimes involuntary (e.g., inability to pay: death, divorce, disability, debt, etc...?). What is one's misfortune can be another's opportunity ... things of life that can be difficult to understand ... without faith in God, I believe! (No preaching I promise, just an affirmation

Onward. A class by First American Title Insurance Company and the Utah Division, I attended was, "Negotiating Short Sales on Over Encumbered Property." I received 3 hours of CEU (continuing education) credit for both my appraiser's license and my sales agent license. (I attended my local Realtor Board in Provo, Utah. It was free to both Appraiser and/or Realtors!) I highly recommend this seminar.

Just some highlights and overview: it was an 'INTRODUCTORY' seminar. The masterful instructor was a "DREI" (Distinguished Real Estate Instructor), Mr. Jack M. ("Scotty") -- not trying to embarrass or bring unwanted attention, just cursory for hopes you either take a class from him or, look for people with such designations -- dynamic instructors assured!

I look forward to the future "advanced seminar" which, reportedly, will include "CASE STUDIES."

The course included announcements that Freddie Mac is concerned with foreclosures (dated materials show since 3/98). The terminology of foreclosure: i.e., Notice of Default, Trustee's Sale, Redemption Period, Involuntary Inability to Pay, etc. Our instructor recommended not using BPO's, but favored appraiser's doing 'complete appraisals, at least in a summary format!' (Very progressive for a Titleperson/Realtor, I think!) The different forms included many useful checklists like "Short Payoff Eligibility Checklists" and Freddie Mac's Short Payoff vs. REO worksheets ... and MORE.

DISCLAIMER: I am only providing CURSORY OBSERVATIONS and do not claim to be an expert, promoter for the company or sponsor, or forumite who can EXPOUND/EXPAND/ELABORATE on the course or subject matter.

My observations & resolve is this: Realtors can be progressive and offer alternatives to individuals experiencing distressing events that hinder their ability to make the scheduled payments on their home loans; Appraisers involved in value-decision reports must "perform valuation services competently and in a manner that is independent, impartial, and objective" and I believe 'appraisers are experts in the development of value opinions.' I will stive daily to help, assist, perform appraiser and/or Realtor activities (I always disclose & let client's choose: either or; or both "hats" of professionalism; 26 years as an appraiser, < 6 months as a Realtor -- I have a progressive Broker who allows me opportunity to do both practices.), as agreed to perform.

Finally, I believe under carefully followed outline & proceedures, alternatives to FORECLOSURE and the costly & distasteful activities involved in such, 'at various stages', can be effected ... & under certain circumstances, PMI insurance can minimize costs to both seller/homeowner and lender(s), even on over encumbered property. I believe the secondary market participant, "Freddie Mac" is attempting to stem the 'rise' in foreclosures during this 'new age of liberty' (politically correct when referring to US 'activity to crush terrorism') & current period of turbulent economic conditions.

I believe this (emphasize) "Introductory" seminar is a ' relatively new' seminar (since apparently 1998?), but have others at this forum attended either locally, nationally, and/or both Realtor / Appraiser groups?? Comments & others' observations invited please.

 

[Caterina Platt]

Dear Francois,

Thank you for the link(s). I admit, I had not viewed the political/improvement of the industry forum in awhile and had not seen this posting. As always, myself and others here deeply appreciate your involvement and commitment to the bettering of our industry. I am curious how I can get involved.

Would a copy of our petition be germaine to the issue at hand?

I know that my particular board is having financial issues. They are short staffed, under funded, (apparently, could be that the funds are spread among a top heavy management structure) and unable to adequately enforce. Actions are often not taken against complaints due to the time frame it takes them to respond. The statute of limitations often negates the complaint. I have read the recent reviews of my state board on the ASC website (thanks to your posting, I know where to find them!) and it is troubling to see that my state board is largely ineffective.

I have spoken with an appraiser member of the board recently and offered my help in whatever way possible- volunteer to file, stuff envelopes, review reports, what have you. No response as of yet. This obviously, would not be an ideal or permanent solution to the problems as we should be appraising while the board is enforcing. But whatever it takes to get them back on track..... I hesitate to throw more funding into a system without first fixing the problems at hand.

What can we as individual appraisers do on this national inquiry level? Who, if anyone should we contact?

 

[Doug in NC]

What is a good source of foreclosure appraisal business? I want to get in on this action. Foreclosure work added to my relo business would be a big step in getting off the lender's leash. Thanks for any advice.

Doug

 

[Dee Dee]

Doug,
I would be interested in knowing more about appraising foreclosured properties as well. Have never had a request for one so I must assume that it is it's own niche.

Those of you who have experience in this arena, could you please advise?
Does it require that the appraiser be FHA approved? Is the liability greater or less? Who would one approach for these assignments?
Based on the threads I've seen in the past where foreclosure appraising has been mentioned, I get the impression that those who also do review appraising tend to have more of an 'in' to this type of work. Am I correct?

Dee Dee

 

[Bemis Pownall]

dee dee
I have been approved w/a foreclosure company for the past 5 years.
last month I recieved my first order. Been steady since. The turn times are much more workable.

 

[Oregon Doug]

Foreclosures are our friends! They have become about half of my business (a little more in some months) and it looks to be a growth industry in the comming years. With all the REO, divorce, estate and forensic appraisal & review, I have very little time for lender's any more (one good one remains on the client roster).

Oregon Doug

 

[Bemis Pownall]

Did a pending foreclosure today.

Lets turn the clock back 9 months to a year.
Women is refying and the first appraisal hits $165,000
LO says "your home has to be worth more"(LO's office is a good 90 miles from subject). Must be a psycic
LO tells her "my normal appraiser is out of town but as soon as he gets back Ill have him do your home".
LO's appraiser hits $180,000+/-

She goes to closing and SURPRISE monthly payment will be $1,800+/-..
The process has taken so long and she even skipped the last payment thinking her deal was to close soon, they had her cornered and she almost had no chioce but to close(or she was lead to believe).

Well good old Qwest gave her early retirement shortly after the closing, she lost her second job which she needed to make this new larger mortgage payment.

At this point she hasnt made a payment in 5 months, home is under contract($162,000). Remember it was appraised at $180,000 less then a year ago, the house was NOT trashed at this point, probally exactly the way it was 1 year ago.(very generic neighborhood tons of clone sales) Her slate will be as clean as one could be in this situation-if they accept the short pay.

LO(from refie) made $15,000 in fees which is the difference between the two appraisals, ironically. She walked from closing(of refie) with $6,000 and LO didnt even pay off all the bills he had agreed to. The money she got from closing was for home inprovement and she originally asked for $10,000.

Well once the home sells(2 weeks) she and her 2 daughters(10 & 1) will be on the street..

Makes me want to cry.

 

[bradellis]

Rick,

As far as I am aware, both Fannie and Freddir already require a full blown appraisal, in addition to the broker's BPO, on all forclosures.
I've personally done hundreds.

Brad Ellis, IFA,RAA