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.
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:
Big banks JP Morgan Chase and Wells Fargo reported a sharp drop in loan volume in the first quarter of this year. This is important as they are the two largest mortgage lenders in the U.S. Two factors influencing this drop are a rise in mortgage interest rates and a significant increase in all cash purchases of homes, both over the last 12 months.
Both Fannie and Freddie have just revised their forecast for new-home construction and total home sales for this year. “Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected,” says Frank Nothaft, Freddie Mac’s chief economist.
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’.
The announcement from Chase, the second-largest home lender behind Wells Fargo, is a strong reminder that the housing market has not yet fully recovered from the downturn, with home sales and overall mortgage lending still below prerecession levels—and not expected to turn a corner any time soon.
12.2 Percent Rise in February Represents 24 Consecutive Months of Year-Over-Year National Home Price Increases
New CoreLogic® HPI Forecasts™ Indicate National Home Prices Are Expected To Rise 10.5 Percent Year Over Year In March 2014.
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.