Two recent surveys of both AMC’s and Lenders reveal that both believe that appraiser competency and quality are the most pressing issues for our industry today. I know that a lot of appraisers would take offense at this, but it’s true. There are many great appraisers and good appraisers. But there are also a large number of appraisers that just do not want to enter into the 21st century and understand that the product they produce is completely read, from front to back. Todays’ appraisal must PROVE the value. The days of taking an appraiser’s word for it are gone. This means goodbye boilerplate and hello well-written explanations of reasoning and logic.
More than 10,000 community banks have exited banking through failure, mergers, and acquisitions since 1984. In the mid to late 1980’s, there were roughly 15,000 community banks providing financial services to their local communities. Thirty years later there is only one-third as many community banks, many of which have total assets less than $100 million. These ag banks tend to be small with a limited number of employees, and banks acquiring ag banks tend to be about four times larger than the banks they acquire. The clear majority of acquisitions of ag banks were by other community ag banks through merger and acquisition.
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New home sales (single family) sales increased 12.2% in 2016 to 563,000 units, according to data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. A 5.8 month supply of homes (259,000 units) is currently in inventory. The median sales price of new houses sold was $322,500. The National Association of Home Builders reports high builder confidence for not just new housing in 2017, but in remodeling also.
The other night at 3:00 in the morning my smoke detector/CO2 alarm started beeping. Why doesn’t this every happen during the day, that will always be one of life’s great mysteries, but what do you do then?
Well, if there is no smoke, it’s probably the CO2 part of your alarm being activated. The first thing to do is open all of your windows, then shut off all gas appliances. Check everyone in the home for nausea (CO2 poisoning). If anyone is sick (headache, nausea, confusion, drowsiness) then get to a neighbors and call 911. If no one is sick, then simply call the Fire Department for a CO2 check.
Ellie Mae reports 50 days for loan closings and average FICO scores. In the December Origination Insight Report, Ellie Mae provides data from a sampling of loans that flow through their Encompass mortgage management software in the Ellie Mae Network. Closing time for all loans increased slightly to 50 days. Refinances were 52 days and time to close a purchase increased to 48 days, both up one day from the previous month.
Newly released Home Mortgage Disclosure Act data for 2015 showed that the first place for denial of first-lien purchase mortgage loan applications went to the applicant’s debt-to-income ratio at 23.4%. Right behind that was the applicant’s credit history at 20.4%. What surprised me was that coming in a distant third at 13.7% was the value or type of collateral not being sufficient. Most of that 13.7% would presumably be because the appraisal could not support the buyer’s and seller's agreed-upon sales price of the home.
Direct deposit, online and mobile payments, everyone, has heard about and, you would think, would be growing quickly as the typical form of payment. It’s easy, right?
Not only did housing starts break their downward trend for the year, but there was a significant increase, the strongest since 2007. Owner-occupied housing starts increased 25.5% in October, or an estimate of 1.32 million starts. This is up 23.3% from last year’s 1.07 starts. This is the largest month-to-month increase in more than 30 years. Millennials are receiving the credit for this as they move out of their parent’s homes and rental units. This also reflects improved employment and income prospects.
The Federal Reserve Left Short-Term Interest Rates Unchanged for the sixth straight time. This year looks like last year, when Fed representatives, consistently and constantly, told everyone that rates were going higher. Then in the last meeting of the year, they raised the short-term rate a paltry 0.25%. The big difference, this time, is that the vote was 7-3. The Federal Reserve Board isn’t like the Supreme Court with split decisions. The Board generally has a unanimous decision. The last time there was a dissent was in 2005.
At September’s meeting, many Fed reps commented that conditions are very good for a rate change upwards, but they wanted to wait to the last meeting of the year to see more positive economic signs.
Community banks often lend out of their typical marketing area due to the solid relationships developed with their customers. If a long time customer of the bank wants to purchase a vacation or second home in Wisconsin or in Florida they naturally come to their hometown banker.
But what happens when an appraisal fee of $450, which was disclosed on the initial loan estimate, is revised to $800. The appraiser discovered that the home was on a waterfront, and was much larger than the other homes, making it atypical for the area. Can the bank consider this a valid changed circumstance and re-disclose within three days and pass along the increase to the customer?