Every now and again a loan does not make it to closing. Common reasons for this are home inspection issues that cannot be resolved or a condo that cannot be approved. Unfortunately, some of these issues arise and cause a deal to cancel after some services have already been performed and therefore have to be paid for, and this is where debate will sometimes arise. Read the rest of this entry »
I have recently had a re-occurrence of an appraisal issue that keeps repeating itself. I am not sure if its part of the tightening of underwriting standards, or if it’s logical. But I’d like to explain the recent issue so everyone can be aware of it. This piggybacks off of Read the rest of this entry »
Many people don’t realize that if you borrow $1,000,000 ($1MM) or more on a mortgage, most lenders require two appraisals. They deem a larger loan such as this a riskier loan, and they want to take extra precaution in confirming the value of the asset. The problem is Read the rest of this entry »
Does anyone know what a proper comp is anymore? Yes, I believe they do. The problem lies in the fact that people do not go to the effort to do the research to uncover the facts and differences behind each comp. So I end up screaming at my computer or my telephone (just like the man in the picture) when I get responses from homeowners who are trying to refinance their home and claim a certain high valuation, or from a seller who is trying to justify a certain high price on a home they are selling. The lack of research is stunning. Below are some examples: Read the rest of this entry »
What Is An Appraisal?An appraisal is thought by most consumers to be an exact valuation of the home they are purchasing or refinancing. The reality is that there is no such thing as exactly valuing a home, since a home is worth what someone is willing to pay for it. And since different people are willing to pay different prices, the real value is hard to pin down, or even impossible. Read the rest of this entry »
Appraisers are held to a higher standard of property condition on FHA appraisals. I regularly get some of the most…I’ll say “interesting” appraisal conditions on an FHA loan. It is as if Read the rest of this entry »
If someone told you that the first level of your home was an unfinished basement, and did not count towards the livable square footage of your home, would you be upset? It would be as if someone arbitrarily erased part of your home, and made it smaller than it really was! This is a really important story for more people than you might think. Read the rest of this entry »
There are times when a lender might enter a loan application into the automated underwriting system, and the resulting approval may allow for a “PIW”. A PIW is a Property Inspection Waiver, which means that Fannie Mae or Freddie Mac has decided that due to the characteristics of the particular loan entered that they feel comfortable proceeding without an appraisal being done. Read the rest of this entry »
Appraisals seem to be the issue of the day in the mortgage and real estate world. Everybody seems to value property differently even in the best of real estate markets. In a more difficult real estate environment, appraising becomes even more contentious.
For example, banks have really tightened their underwriting policy on appraisals. On an FHA loan they may require two appraisals if if the loan is an FHA jumbo loan (which is one that is over $417,000), if the property is in a declining market, and if the buyer is borrowing the maximum loan to value (which is 96.5%, i.e. a 3.5% down payment).
Also on an FHA loan, even if it is a loan that is a conforming FHA loan (which is one that is below $417,000) the bank may require a desk review Read the rest of this entry »
I am working on an interesting loan that will make for a good case study someday, and I think homebuyers and Realtors will find it interesting too.
I am doing a loan for a homebuyer to buy a single family detached home in Falls Church, Virginia. The sales price was a little over $500,000 and the new loan is a Conventional Fixed rate 80% loan-to-value loan, which of course means we are subject to the HVCC rules. So I ordered the appraisal from the bank’s Appraisal Management Company (AMC).
For once, the appraiser was local, from Falls Church, VA so we all figured this appraiser would know the local marketplace and that we would be getting an accurate and fair appraisal. But the appraisal came in several weeks later at a price approximately $35,000 lower than the sales price. The seller was angry, the Realtors were upset, and the buyer was confused. Read the rest of this entry »
