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Small Town Banks

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Lanny A Freng

Thread Starter
Sophomore Member
Joined
Nov 28, 2006
Professional Status
Certified Residential Appraiser
State
Minnesota
With the downturn in the market has anyone had any experience marketing to the mortgage portfolio departments of local banks. I would guess there is a need to know what they have on the books with the foreclosures and all? Has anyone persued this, do banks need to know how many of their mortgages are upside down?
 

BRCJR

Elite Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
Lenders, typically, do not look at home loan accounts unless they are behind on mortgage payments.

Once foreclosure appears to be on the horizon, they may or may not have an appraisal done, as it will be sold at auction. If the auction does not bring an acceptable amount to the lender, most of the time, they will buy it themselves, if in fact, it appears it would bring a "close" to market value, if exposed in a typical manner.

Most local lenders (small town) have in place solid loan policies and generally do not get hit with a wave of REO. Case in point, I work for a regional lender (20 branches in two states) and we have only foreclosed on 4 properties in 2008. This is considered remarkable with the current situation at hand, in my opinion.
 

Bama Bayou

Senior Member
Joined
Oct 19, 2006
Professional Status
Certified General Appraiser
State
Alabama
Many, if not most, of the LO's at small local banks know more about real estate values than the local appraisers.
 

BRCJR

Elite Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
Many, if not most, of the LO's at small local banks know more about real estate values than the local appraisers.

Roll Tide ! (unless you are a War Eagle)
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
My clients are all "small town". I simply do not work for large banks or AMCs.

Depending upon their typical loans, they may or may not be involved in risky lending. I quit one such bank and I suspect it is months at most, away from disappearing. Lots of development loans. But the old banks..and bankers...tend to be adverse to some risks but on the other hand, in a small town, they also have a vested interest in promoting the local commerce. Typically, they repo only what they have to and do work outs on the rest. But having said that some are simply in too deep. I know a bank which has a number of repos. I do the appraisal after foreclosure. Most also involve bankruptcy. Which means I usually know a few weeks ahead that I have pending work. They have to get a current appraisal in file once they take posession.

These banks generally do use appraisers and they use the same ones they are comfortable with over the long term. They do not use Skippy. Inflate a few appraisals or indicate that you are 'liberal' and many of them will not use you. After all, its the "old man's" money or in many many cases, the banker/loan officer actually owns some stock in the bank. They are not going to risk their own livlihood just to churn loans.

OTOH, they may make a loan where they are comfortable with the borrower even when your appraisal is less than the loan amount or LTV. That's a call they make. Don't try to make that call for them. YOU are not a loan officer.

Secondly, they typically couldn't care less about fannie mae and if they have a mortgage dept., its usually a single loan officer/ originator who does only loan originations. For the rest of the loan officers, you typically can use the old form, a summary form, or a modified 1004 form. And for the commercial and ag lenders you use a narrative.

I always want to bank locally. I work for both banks where I have accounts. Only a family trust acct. run by a cousin is a larger bank (Regions) and I don't work for them. And I have a relationship that means if I want to buy a big ticket item (except land), I call the banker and tell them. They say "write the check and call us, we'll set up an appt. to fill out the paper work". I have a line of credit which I don't even need to call first at one bank. One property I will appraise soon (it s still in the foreclosure/bankruptcy stage) also had the bank getting several vehicles. They will price them at low book wholesale and i have my eye on one. They promised to call me as soon as they get the go ahead from the court...If I decide I don't like the vehicle I spotted a low mileage Jeep Wrangler 05 (20k) today & if I make a deal, I will just pull it out of the line of credit.

These kinds of personal relationships are hard to create overnight. If you have neglected the local bankers to take the 72 hr turnaround - low fee AMC fees....well, tough luck.
 

Joker

Elite Member
Joined
May 28, 2002
Professional Status
Certified General Appraiser
State
Ohio
My experiences mirror those who have posted before me. While we may not have been going like gangbusters the last 10 years, those of us who stuck with the local banks have remained working at a steady flow.
 

Tawfik Ahdab

Senior Member
Joined
Feb 19, 2003
Professional Status
Certified Residential Appraiser
State
Oregon
My best clients are small, community institutions.

Thanks to the reports I issue, I had no trouble getting the chief credit officer of a community bank (that didn't give me much business over the years) to have lunch with me.

I asked him about his portfolio loans and he stated that his board of directors wanted re-appraisals of some loan collateral on a random basis. He agreed to send me more business, and that translated into 3 appraisal requests in two weeks from one client alone.

You have to project credibility and expertise if you want to take that approach to marketing.
 

RitaB

Member
Joined
Aug 25, 2005
Professional Status
General Public
State
California
I just got your report Tawfik and it's amazing. A little intimidating. Good for you-obviously you've worked very hard to get to this level of trust and success in your community.

Thank you so much to you, Terrel and so many others for sharing your experiences with us.
 

Lanny A Freng

Thread Starter
Sophomore Member
Joined
Nov 28, 2006
Professional Status
Certified Residential Appraiser
State
Minnesota
I want to approach some of the local banks around here. I believe I bring a valuable asset to the table as I am a home inspector as well. I want to make it clear that I dont want to blur the line between home inspections and appraisals but I think it would be beneficial to a bank to have an appraiser with more depth of knowledge when it comes to homes. I can almost certainly walk through a foreclosed home and note more issues than the average appraiser.

These issues can make a significant amount of difference in the value of the home. Now I am not saying that most appraisers dont look at things when they go into a home but they don't see things that a trained eye can see. One example. An appraiser scheduled the appraisal on the home that I was inspecting at the same time I was there. He went through his routine and on his way out I asked him if he caught the wall in the basement. He said... what wall. I said, the wall that is bowing in and will probably need $7-$10K worth of work to correct. I have to think that bringing this to the table to get a realistic and accurate value of the house due to its condition would be in a banks best interest. Any thoughts on this?
 

RitaB

Member
Joined
Aug 25, 2005
Professional Status
General Public
State
California
Definately! How did you end up in Home Inspection? Were you in construction before? I considered going into HI then chose appraising, like a fool. HI is nice and unregulated but easy to get sued if you don't know what you're doing.

And I imagine realtor purchase work is out of the question too, if you're an honest inspector....
 
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