SAMCO's appraisal requirements are fairly simple and straightforward. Our appraisal audits are completed by experienced appraisal professionals who understand that many real estate assignments are atypical and nonconforming with respect to Appraisal Standards and Fannie/Freddie approved forms.
SAMCO's community bank clients, who are your clients as well, typically utilize Fannie/Freddie guidelines as their appraisal standards. Conforming to these appraisal standards may be stressful in the beginning, but it is extremely important that these guidelines and SAMCO's requirements are met with every appraisal report. Non-compliance may result in a lower quality rating with SAMCO and fewer assignments. I know you don't normally hear this stated so boldly, but there is an exceptionally good reason for this - our clients. You and I have a responsibility to provide the best product possible for the community bank. Have you heard of "cram downs"? This is when a Fannie/Freddie loan is forced back onto the community bank.
Across the country the foreclosure rate has fallen dramatically. No state has had an increase in its foreclosure rate for the past two years. This is probably due to the steady improvement in home prices, encouragement in the employment sector, and still great mortgage rates.
But there has been a wide difference between the states, Florida, Illinois, Ohio, Kentucky, Indiana, and Wisconsin are all states that SAMCO has a significant number of clients and they all had, by comparison to other states, high foreclosure rates and a relatively weak recovery the past two years. Arizona and California experienced the sharpest declines in their foreclosure rate.
Fannie Mae is the leader for Appraisal Standards. Freddie always follows suit and the Federal Home Loan Bank (FHLB) uses Fannie’s Standards. So when Fannie changes an appraisal requirement the industry changes.
On April 15, Fannie changed its Selling Guide to reflect changes in appraisal updates, photo’s and comparable sales. Significant changes were also made to re-titling and reorganization of content that, hopefully, will make searching for specific information easier.
Some of the changes are:
The Consumer Financial Protection Bureau established a hotline for consumer complaints in 2012. In 2013 they received 163,700 consumer complaints and mortgages made up 37 percent of those complaints. Loan modifications, collections, and foreclosures made up most of those mortgage complaints. When a consumer files a complaint, the CFPB tries to assist by helping borrowers. THEY ARE NOT THERE for the lender! Their mission is for the consumer. The CFPB is just starting being an advocate for the consumer. They will be advertising and promoting awareness of being available for complaints, whether about an appraisal, closing issues, or misunderstandings.
One of the large changes in the bank regulatory environment is the new focus on customer satisfaction with the mortgage process. Central to the Bureau’s mission is listening and responding to consumers. The Bureau has made it easy for the consumer, via their website, and encourages consumers to report their experiences with financial institutions. Just three quarters of the way through last year the CFPB reported that over 139,000 complaints had been registered, and over 50% of those complaints were with the mortgage process! Not good for the community banker!
Last month JP Morgan Chase announced a pullback from residential mortgage lending and their expectations for 2014
Home lending has been "the most painful business ever," JPMorgan CEO Jamie Dimon said at an investor presentation, when they announced another cut of 6,000 mortgage jobs for this year, on top of 11,000 last year. With that came a forecast that its mortgage division would not turn a profit this year, though Dimon restated ‘we are here for the long game’.
A new report by RealtyTrac shows that 96 percent of the counties that they track are better off than they were four years ago. But still, there’s a ways to go in the housing market, with only 8 percent of the 410 U.S. counties analyzed faring better than they did during the housing boom eight years ago.
RealtyTrac analyzes housing market health by gauging four main categories: home price appreciation, affordability, percentage of bank-owned REO sales, and the unemployment rate.
Ever since the Home Valuation Code of Conduct was announced the market share of AMC's has been increasing. Before the HVCC (pre-2009) AMC's had a market share of approximately 20%. Not a very high number. Todays estimate of AMC's Origination Share is 60% of the total market. The HVCC originally just placed a buffer between appraisers and loan officers to prevent pressure being placed on the appraiser to inflate values and only concerned Fannie-Freddie funded loans. With the 2010 Inter Agency Appraisal and Evaluation Guidelines that were announced by the joint federal financial regulatory agencies the focus became the need for quality control with qualitative reviews.
One of many issues that the Dodd-Frank Act touched was supervision of appraisal management companies. Banks and appraisers both, are overseen by multiple agencies, it’s only fair that AMC’s are also. Minimum requirements for state registration and supervision of appraisal management companies were provided in the Act. On March 24, six federal agencies jointly issued a proposed rule to implement these requirements. The agencies are the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Agency and the National Credit Union Administration.
Under the proposed rule, participating states would require that an AMC: