The new age of home loan approvals has certainly made its presence felt in the world of real estate in 2009. Over the last few months, a file of mine, illustrated one of the roadblocks that have become customary in today’s mortgage world. A customer I began working with about four months ago, finally closed on his first home in rural Ohio. Despite the patience of the customer, the hard work and due diligence of the realtor, and the persistence of the entire mortgage company, this file’s struggles were just an example of what the industry’s new regulations have created for all involved. The good news is that despite the changes that some loan officers, realtors, and appraisers have come across these days, quality mortgage companies are still closing loans in a timely fashion.
While there were numerous complexities involved with this loan, the issue that became most problematic was the appraisal. While the new laws regarding appraisals have brought about much debate, it is time to try to understand the hesitance of mortgage investors and be prepared for roadblocks that will occur, instead of complaining. It is the current administration’s goal to remove fraud from the home purchasing and loan process and they are taking measures that in some cases greatly hamper the efficiency of the lender. One area they really have focused on is inflated or problematic appraisals. This was the biggest issue with this gentleman’s attempt to purchase his first home.
While it is no doubt frustrating for all involved when an appraisal comes back incomplete or insufficient, this is an issue all have to get used to. The Ohio loan mentioned above ran into multiple appraisal issues. The first issue was a lack of comparable homes sold recently in the area. This has become quite common these days because home sales are down in many areas, especially rural ones. The end result when sales are down in a given area is that the appraiser is forced to use homes that were sold too long ago to reflect the current trends in the real estate market. This in turn results in a less than satisfactory appraisal of the property and the appraiser is forced to do more research, which adds more time to the loan process. Unfortunately, not only did this happen in regards to this single family home, but further issues arose when the investor discovered this home was purchased less than 180 days ago and thus required a second appraisal. This once again slowed the process and closing down which frustrated all involved.
Despite the appraisal issues involved with this loan, the loan closed last week and all involved were happy. All in all, the appraisal requirements from investors nationwide have hampered and even halted the ability of many to purchase a new home in a timely fashion. As evidenced by my Ohio file, the issues that can come about in regards to an appraisal can be frustrating to all involved in a transaction, but the bottom line is that strong companies will tackle the new issues and get the loans closed. The lesson I learned in my three plus months work on this file is instead of questioning all of the new regulations just deal with them and do what the investor requests. It is not difficult to understand why these investors have changed many of their guidelines. Wouldn’t you have changed your lending guidelines, if your loans had seen such a high delinquency rate?
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