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Ken Ray Down Payment Assistance

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rtubbs

Junior Member
Joined
Jan 15, 2002
I don't do may FHA appraisals but I do try to keep up with what's going on. Am currently working on an appraisal where the sales contract has the following additional provision:

"...seller to make a 3.5% contribution to the Ken Ray down payment assistance progrm..."

I'm not in to sports that much but a simple search tells me that Ken Ray is/was a ball player. Nehemiah, AmeriDream, Ken Ray; where does it all end. Anyone else heard of Ken?
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
Ron,

All those programs are the same. They should change the contracts from "seller" to read "appraiser to make 3.5% contribution"...because isn't that what they really expect... :lol: :lol: :lol:
 

Mary Fee

Freshman Member
Joined
Apr 18, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
I'm sorry if this offends anyone, however, it is amazing to me the number of people that think they should get something for nothing.

I absolutely hate these seller assisted programs. We-as appraisers-are always the bad guys. Everyone is trying to "help" the borrowers except for us. Baloney!! The Realtors and brokers are trying to make a commission! They usually just tack the 3.5% on to the listing price and assume that we are too stupid to realize it. (Gee-it was on the market for 90 days at $100,000, now we've changed the list price to $104,000 and BOOM its in contract). If it couldn't sell at $100,000 why do they think its suddenly worth $104,000?

I'm sorry, but if they can't save a couple of thousand dollars to make a downpayment, what makes them think that they will be able to make their payment when an unexpected expense comes up. Never mind the fact that their ratios have been stretched as far as possible. Don't worry, FHA/HUD will go after the appraiser, afterall, the house wasn't worth what you paid for it-its the appraiser's fault-not yours!!

Maybe the only way to make everyone unbiased is to make all parts of the transaction a set fee. ie-The Realtor makes $300, the loan officer makes $300 and the appraiser makes $300. That way when my appraisal comes in for FMV instead of the contract price I'm only "losing" the Realtor and LO [email protected] instead of $3,000.

I wonder what everyone would think if the appraiser made the same amount as the Realtor. If we made 3% or 4% of the purchase price or refinance amount, do you think we would be as unbiased as the Realtors/LO's say they are?

I'm so glad today is Friday! Can you tell that I'm tired of dealing with the PTB's (powers that be). Maybe I shouldn't submit this, however, sometimes I just need to get it off my chest. Thanks for letting me vent.
 

Rob Bodkin

Junior Member
Joined
Nov 9, 2002
Professional Status
Certified Residential Appraiser
State
Washington
The thing that concerns me most about these programs, IMHO, is that they take what appears to this appraiser as a seller concession and mask it as a "gift", carefully skirting HUD's rules.

The fact that HUD has no problem with the "gift funds", even though you can see list + gift = sales price, makes me wish they would adjust the rules that they play by to enable the seller to make the "gift" directly. That would seem more honest.

If a home will reasonably appraise for the "post gift" sales price, then that is just the market. It's no different from other seller concessions that we have had for years.

If a house is on the market and does not sell for 100K for 6 months and they find a cash strapped borrower who will pay 104K, regardless of the obvious market evidence, then it would be a sham.

That is the other drag, we are put in the position of having to tell everyone, including the Realtors, what reality is. But isn't that what we get paid for anyway?

In general I don't have any more of a problem with these deals than if the borrower were to get a gift from their mom for the down payment.

I am frankly glad that I/We do not do the underwriting. I don't want to know their credit/cash available/race/job status etc. Our work stands alone and the less my personal opinions enter into it, the safer and happier I think I am.

my 2 cents

Rob Bodkin
Freestone Partners




The appraisers who assume that these deals are always snake bit
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
One of the most difficult things about these programs is finding the sales without the use one of these programs or verifying a comp concession adjustment because of one of these programs.
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
There are subdivisions in our area where a review of sales prices over the past three years will show two distinct bands of value. The upper value band is almost invariably made up of government sponsored sales. As you look up each sale, most of them sold for $2000-5000 above the listing price. Makes it pretty easy for the casual appraiser to justify those "homeowner's estimates of value" the lender includes for a refinance. Of course, the arguement could be made that these artificially inflated prices now represent the true market for those neighborhoods. It's going to be sad to see the foreclosures that appear to be inevitable. Hope I'm wrong.
 

Ted Martin

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Kansas
I ran into my first one of these a few months back it was call CHAPA not Ken Ray but was the same scam.

Programs like CHAPA probably have a place, but not the way this one was written. I have the feeling that the original intent was for the sale price to stay the same and for the buyer to reimburse the seller for the transaction fee. The seller would still be getting full price, the lender would be making a less than 100% loan and the buyer would be into the property for it's real market value so they could get out if they needed to without taking a bath. I would guess that CHAPA has nonprofit status and that the seller fee to CHAPA is a tax deductible donnation. That way the seller would get a little extra incentive to do the deal. I don't think that adding the downpayment onto the top of the sale price was the original idea.
 

Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
Ted,

You are correct, bumping the contract price was not the intended protocal if you read the literature on these programs. Well, at least let's say, that's not written into the guidelines anyway.

Wally,

I'm experiencing the same in many neighborhoods that fall into the FHA allowable price range. I've gotten to the point of tossing all FHA sales aside in hopes of 3-4 good conventional, cash or VA sales. Problem I've noted lately, Realtors are getting wise and noting some sales I know for a fact were FHA seller gift programs in MLS data as 'conventional' or 'cash'. Pretty tricky, eh? Bump them neighborhood values.

Your point as to the 'typical for the market'... I think we should still back the contribution out regardless. If it becomes prevalent in conventional and VA programs, then we may have a different case. However, we should always remember the term 'cash equivalent' basis. In my mind, these don't reflect the cash equivalent. Is anyone else forseeing the issue of possibly having to go back to completing 'financing addendums' with the points and rates as a part of the appraisal? If these things keep flourishing, I'm afraid we may have to.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Problem I've noted lately, Realtors are getting wise and noting some sales I know for a fact were FHA seller gift programs in MLS data as 'conventional' or 'cash'. Pretty tricky, eh? Bump them neighborhood values.

I'm seeing the same thing here. Or, areas where almost everything is FHA or VA and the Realtors have been told the FHA appraisal needs at least 1 conventional sale on the grid - so they put conv on the MLS sale data so appraisers will have one to use.

Since I can pull up the actual recorded mortgage, I call them on it. They really hate that! I'm also seeing more and more where the sale price on MLS does NOT match the recorded deed stamps that buyer/seller signed was the sale price.

Sad, there are very, very few that I trust. Very sad situation.

This is part of what goes in the 'Market Conditions' section on page 1 of URAR:

The average list price to sale ratio is 90% - 105% depending on pricing, condition, and financing concessions paid by seller but added to sale price.

The percentages are figured from a list of area sales pulled for my initial comp search.
 
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