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A Kick in the Nuts with Appraisals.... Realtors and Consumers Take Note!

By
Mortgage and Lending with Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 NMLS ID# 158606

Andrew Coumo threatened action against Fannie Mae and Freddie Mac making claims that Fannie Mae and Freddie Mac failed in providing proper oversight with appraisals.  It's argued that Fannie Mae dropped the ball as there was not a proper degree of separation when ordering appraisals.  Needless to say, a new rule is being implemented to change the way that appraisals are ordered. 

TIMEOUT COMMENTARY:  Coumo has decided to punish 98% of the consumers because 2% of the consumers were really hurt by bad appraisals, straw borrowers and the lot.  Don't get me wrong, the mortgage industry didn't act harshly enough or quickly enough when fraud was perpetrated.  However, 98% of the consumers will be hurt by this new Fannie Mae rule.  Why?????  More to come...see below.

THE ACTION?  What is the result?  The result is that no one, and I mean NO ONE in production will be allowed to order an appraisal, influence anything on an appraisal, or even at the minimum talk to an appraiser regarding any file that has been originated by anyone in production. 

TIMEOUT COMMENTARY, PART II:  Here's what really kills the consumer.  A client contacts me and says I'm thinking about refinancing.  I think my house is worth about $300,000.  I have a mortgage of $240,000 and I'd like to take out another $20,000 to pay down some bills.  "Larry, do you think that this is possible?"  Normally, I'd call whatever appraisal company and say, Hey Kevin, the property at 123 south main street is considering refinancing.  The client believes that his property is about $300,000 in value.  Do you think the client is right on or is he smoking crack?"  You'll notice that I'm not influencing the appraiser, but rather, INQUIRING. 

Andrew Coumo believe that it is an undue influence....and apparently Fannie agree.  He thinks that the conversation should go a little more along these lines:

"Larry, I'm thinking about refinancing, blah, blah, blah (same story as above).  I NOW SAY...listen, I'm clueless, Fannie Mae has changed it's guidelines.  It'll cost you $350 for you to find out what your house is worth....I know it sucks, but it hey, that's your government at work for you....YOU IN????"

Now, of course, I'll use my good looks, charm and tact to make it less of a bombshell response than that, but hey, that's the way it'll be after May 1, 2009.  Now it's now like ex-Illinois Governor Rod Blagojevich....you now have to pay to play.  No free peaks.  I wasn't influencing...I wanted good facts to take back to the client.  Rat bastards!  Sorry, but it really rags my goo. But alas....I digress again.

The new rule??????  Someone independent of production needs to order the appraisal.  So what does that mean exactly?  I can hire a national appraisal firm to go ahead and be in charge of ordering the appraisal.  Here's the problem with this one.  They have appraisers on staff of whom we've blacklisted because of unethical practices.  Yeah...you got it.  You fire Larry Bettag from ordering an appraisal from an appraiser with integrity in order to ensure that some jamoke from some national company picks an appraiser in my backyard that may or may not be ethical (I'm sure that some of the appraisers are kissing butt so that a lot of the business goes directly to them).  Yeah...that's real fair.  Or what about the dude who has had 3 fines and 2 suspensions in the last 3 years and who really sucks at appraising, but is on this national appraisal list.  Hello???????????  What about the appraiser who schmoozes the national appraisal ordering entity so that he is ensured a minimum amount of referalls.  A couple of beers = a couple of referrals. 

Another option??????  Our company hires one or two people to work out of the corporate office who's sole duty will be to be the only interface between the appraiser and the mortgage company.  Now that I've received the appraisal, I see that they forgot the comp on 246 North Main Street.  Can I call the appraisal company to discuss this??????  Abso-frigging-lutely not!!!!  Not one bit.  Plus, now the cost of doing a loan is higher for the consumer as the mortgage company now budgets extra staff for appraisal ordering.  Yeah Cuomo...it's great for the consumer.

I'm sorry Mr. Consumer, but because our industry did a bad job policing itself, 98% of the consumers will now be hosed.  What's the rule on creating rules??????  Rules are made for those who don't want to follow rules or get along and do the right thing.  Thanks Mr. Jerk fraud loan originator....you need to be in prison for fraud, but now I can't serve my clients as well because of the jerk moves that you've done.  Soooooooooo stupid.

But wait...they forgot the other comp that a realtor wanted me to provide.  Sorry Mrs. Realtor, no can do.  I can't communicate with the appraiser, nor can you.  Pretty rough huh?

WHAT'S THE MORAL OF THE STORY??????

 IF YOU'RE THINKING OF REFINANCING OR BUYING....DO IT NOW!  It'll cost you less now than it will in the future.  Change is a great thing.  But as we all know, change for the sake of change alone isn't something good.  While I can't fight the rule, I don't have to like the rule. 

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Comments (17)

Mary Douglas
United Country Ponderosa Realty, Red Feather Lakes, Colorado - Red Feather Lakes, CO
REALTOR, Red Feather Lakes, Colorado

It is not a good rule, Larry. I don't like it either!

Feb 03, 2009 03:12 AM
Anonymous
Dave the appraiser

"because our industry did a bad job policing itself"

Since you've admitted that the MB/LO industry is the primary culprit, please show me the blogs you've written to encourage MB's/LO's to act ethically.

You're right though.  Bad apples always cause problems for ethical people.  Greed influences unwisely.

In the mean time, we'll just have to see how the new HVCC Agreement works out.  I see it as a breath of fresh air for those of us appraisers who've been threatened with blacklisting if we don't meet 'your' value, or are told to violate our controlling legal authority...a regulation named USPAP...that we must adhere to, just so 'you' can make a deal at a higher value than what was initially reported.

If you want to see if a property 'might' appraise for what the consumer feels is on target, use: www.eppraisal.com        It will show a range of values based on fairly good sales in the area.

Feb 03, 2009 04:48 AM
#2
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Mary...thanks.

Dave the appraiser.  I've written a myriad of posts stating that legislation is not what we need.  Rather we need prosecution.  I'm the first to admit that bad eggs need to be kicked to the curb.  I will tell you that our company is so stringent on who we can use for appraisals.  Quite the opposite of whast you're inferring here.  We find appraisers who stretch values to just sell their commodity.  We do have a black list, but it's for ethics and fraud, not for failing to reach a particular value.  From what you're writing...you're stating your ethical.  I don't know you, nor would I infer otherwise.  I'm saying that 98% are paying for the crimes of a few.  I think you'd agree.  You seem educated.  Stop by and introduce yourself, or at least put a name by the good comments you post.

Feb 03, 2009 05:35 AM
Kim Sellers
Lake Arrowhead, CA Coldwell Banker - Lake Arrowhead, CA
Lake Arrowhead Realtor - BRE#01412099 - Lake Arrow

Ok... you have me totally freaked out!!! I love our appraiser here on the mountain, they know what they are doing.  I have a few clients going this route via a loan... the thing that really bites big time is when a appraiser from down the hill comes up to our resort town and tries to do an appraisel, they don't belong to our local MLS as we are a monopoly and a closed MLS and the comps that our outside of that are not reflective to what is really going on in our area... Ok, I might have taken this way to the Right side, but that is the way of myself today.. Cheers.

Feb 03, 2009 05:39 AM
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Larry ... I agree that we have lots of regulation now over the mortgage industry, but perhaps this kind of regulation about refinancing a loan will be a good thing.  And I agree to encourage our folks to get their home refinancing completed now if possible.

Best wishes. Harrison

Feb 03, 2009 11:33 AM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Anonymous Bert...you're so bitter.  I've protected you publicly and privately.  Let go of your bitterness.  You, I believe, have it in you to be better than that.  Sorry bout that, But I still believe in you.  Doe me a favor and see through your misery.

Harrison.....thanks.  Glad you understand the gig.

Feb 03, 2009 12:37 PM
Michelle Chamberlain
Above All Financial Services -Pennsylvania Mortgage Broker - Secane, PA
Suburban Philadelphia Mortgage Broker

Not sure why this post is touching a nerve with appraisers, especially when I did not see you blaming appraisers for these regulations but rather bad loan officers and stupid government regulations.

I agree this is unnecessary and really what is to prevent someone from "production" to speaking with the now appointed appraisal orderer in order to pass over the needed value?  If people want to behave unethically they will find a way to do so.

BTW - that eppraisal.com site mentioned above gave me an approximate value for my home which varied almost $120,000 from the high to low end.  Don't think that site will be of much help to anyone trying to see if their client can qualify.  Just another zillow.

Michelle

Feb 03, 2009 03:29 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

It seems like a case of over-correction and over-reaction. We caused one problem. To solve it, we create another problem.

 

Feb 03, 2009 04:47 PM
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

Knee Jerk!

Failure to police the industry better is why we are here today. 

Will be interesting to follow.

Feb 20, 2009 01:54 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

Banks have had this rule in place for a while now -- and it is not all good!  Some of the national appraisers don't have a clue or they are clueless about the area they are appraising!  It is a very difficult situation!

Feb 20, 2009 02:18 AM
Ron Withers ----Retired Mortgage Professional
Kissimmee, FL

Larry,

Sounds like a good subject to say No Bull, No Mincing of Words, Let's Cut to the Chase!  Excellent post and well said. This knee jerk stuff has to nipped in the butt.  There is absolutely not enough input from the professionals on the street when it comes to enacting this kind of cram down.

Feb 20, 2009 04:23 AM
Audrey June-Forshey
RE/MAX Realty Services - Darnestown, MD
GRI, Gaithersburg, MD

I am so sick of all of these politicians.  They are making things worse.  Yes, were there people who broke the rules, bet they arent even in the business anymore along with the dishonest loan officers they worked with.  Now we are going to have another entire nightmare to deal with, and guess what, there will be unscrupulous people there as well.

Feb 20, 2009 01:42 PM
Audrey June-Forshey
RE/MAX Realty Services - Darnestown, MD
GRI, Gaithersburg, MD

I am so sick of all of these politicians.  They are making things worse.  Yes, were there people who broke the rules, bet they arent even in the business anymore along with the dishonest loan officers they worked with.  Now we are going to have another entire nightmare to deal with, and guess what, there will be unscrupulous people there as well.

Feb 20, 2009 01:42 PM
Anonymous
AJ The Appraiser

As an appraiser I'm concerned for the industry. The experienced appraisers are being forced to compete on an even playing field with the only people willing to work for the pathetic fees offered by these AMCs (rookies). This legislation is going to achieve one goal; to create a virtual monopoly of AMC provided appraisal services through 10 of the biggest corporations in the industry. I think Dave needs to grow a pair and defend his work. I have no problem speaking with a realtor prior to writing a file and an owner/broker/anyone after the file is written. I just got off the phone with a home owner 2 hours ago who did not understand why his value came in "so low". These people don't understand that 1/2 the homes for sale in my territory are foreclosures or short sales, so I explain it. It takes a few minutes, but who would give up 1/2 of their fee to put this "insulation" between the appraiser and THE CLIENT. There are alternatives that make much more sense, but those alternatives do not help Cuomo's election fund or help 10 corporations suck the life out of millions of borrowers. This legislation will put small appraisal firms out of business. Leave it to our government to use a problem created by an AMC as an excuse to push business to AMCs. This is a joke that no one laughs at.

Feb 25, 2009 10:19 AM
#15
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

AJ...I wish your weren't anonymous here.  I hate that.  You validate my points.  I can't order appraisals from integrous appraisers anymore because some jack loan officer hooked up with some 2 bit slut appraiser and screwed some client.  Now we all pay.  Now good companies wanting good appraisers are ordering from some pool, hoping and praying that they get a good draw on an appraiser.  Sick....

Feb 25, 2009 12:15 PM
Anonymous
David

Here is a good example of what HVCC does for appraisers.

In June of 2003 interest rates were around 5.25% (a near historic low).  We completed 96 appraisal orders for around $22,000+ that month.

In April 2009 interest rates were around 4.70% (far better than in 2003).  We received and completed 0 appraisals and made around $300 for final inspections.  We refuse to accept 1/2 price AMC work and waste no time in telling AMCs where to go (see skippy the appraiser with 2 years experience).

We've been in business for 17 years.  Anyone care to guess where the appraisal business is heading?

May 01, 2009 03:11 PM
#17
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

David....you need to elaborate.  The public has no idea what you're saying when you say that you haven't done any appraisals in 2009.  That doesn't make sense.....  There may be other issues, but I'm sure there's other ways to address your concerns.  Having big brother screw the consumer is not the answer here.

May 03, 2009 03:44 PM