Many times SAMCO, and other professional AMC's, are just lumped into one overall group by appraisers. Now, as an appraiser, you know that not all appraisers are the same as you, either in professionalism or quality. So why are AMC's considered that way? SAMCO is a champion for customary and reasonable (C&R) fees. I strongly encourage all new community bank clients (the only ones we work for) to view the over all fee's in their area. Sometimes a community bank has a relationship with 2 or 3 appraisers for a below market fee. One reason an appraiser can provide a below market fee appraisal, corners are cut in quality. Since the community bank has no professional oversight for appraisal quality that's OK with them, as an appraisal is an appraisal, right?
Here is a scenario that I think we have all experienced. You have been assigned an appraisal of a basic ranch home, in an established neighborhood. Your research finds a 1375sf home with a detached garage. You make the appointment, show up, introduce yourself, and begin your inspection. The walk through, and photographs on this 3 bedroom, 1 bath dwelling (on a crawl space) takes 5-7 minutes, and that's while chatting with the owner!
The single-family mortgage delinquency rate has been declining for eight straight quarters and it ended 2013 at the lowest level since 2008.
TransUnion reported Tuesday that the percentage of homeowners who are at least two months behind on their mortgage payments fell to 3.85% in the fourth quarter from 4.09% in the prior quarter and 5.08% a year earlier.
This marks the first time since 2008 that the percentage of loans that are 60 days or more past due dipped below 4%.
As busy as everyone in the mortgage business was this past year (not now though) it comes as no surprise what the reporting companies are announcing. CoreLogic reported in their December report that the 12 month sum of completed foreclosures is at the lowest level since 2007, with the rate of serious delinquency at the lowest level since November 2008. They also reported that foreclosure inventory was down 31% year ending December 2013. RealtyTrac announced that the shrinking number of distressed properties in 2013 helped reduce foreclosure filings 26% year to year. Both companies have many other great stats that will make everyone in the lending industry much happier.
This means if they have found an appraiser providing inferior work the lender is not to utilize these appraisers for Fannie loans. Sounds OK, but they only have four appraisers on their list, for the entire United States! It’s a small beginning, but it’s sure to grow as Fannie searches through its database for appraisers who have repeatedly provided inferior work.
On a regular basis SAMCO reviews individual State Appraiser Board Disciplinary Actions. We will now be doing this with Fannie also. In the past some ‘bad apples’ have tainted our profession. But with every passing year, the professionalism of our appraisal industry is growing. It’s great to be part of it.
It usually takes a few weeks after a loan application for the appraisal request to be sent to an appraiser. That is one of the reasons that January is such a slow month for appraisal work, the results of bank customers being consumed with holiday distractions in November and December.
So when an appraiser calls an Appraisal Management Company to ask for more business, the AMC doesn’t have anything for you! The results are as cold as the temperature outside (and for the southern appraisers, it’s REALLY cold up north!!). And then a good portion of the country has winter weather which also contributes to the slow down. Add those two together alone, and it’s not good for the appraiser.
A few weeks ago there was a great article in the American Banker about Community Banks being forced to rethink their mortgage strategies. It initially implied that many banks are leaving the consumer mortgage lending arena, but by the end of the article it was obvious that the community banker was staying in residential lending for their customers and community. Not only that, but positioned correctly it could be a profitable part of the bank’s strategic planning. There was a big BUT though, community banks need to improve their efficiency’s. Most community banks efficiency ratios are in the mid to high 70’s, when the ratio should be in the mid 60’s.
When the 2010 Interagency Appraisal and Evaluation Guidelines were printed in December of 2010 there were many new requirements and a restating of many old ones.
Section VIII Minimum Appraisal Standards at the top of Page 9 of 45 states:
SAMCO’s clients disclose appraisal costs in two different ways on the Good Faith Estimate and initial Truth in Lending Disclosure (both being replaced by the new CFPB Loan Estimate in August 2015). The first is to total both the appraisal management fee and appraisal fee into one total cost. The second is to separate and identify the two individual fees to the consumer.
A Fannie Mae Dec. 10 letter to lenders addressed appraisal quality, appraiser selection requirements, data quality issues and new processes to identify and monitor appraisers. Fannie Mae stated that there are appraisals being completed by appraisers who have has their license suspended or revoked. Fannie also reminded lenders that patterrns of discrepancy and inconsistancies in physical data are occuring and that Fannie reviews for that. Fannie will be contacting the appraiser directly about inconsistancies or errors. See the Dec. 10 Fannie Mae Letter.