Well the week is coming to an end with data that is friendly for rates. All though the unemployment rate dropped today there were less jobs created for the report then expected. What does this mean? Most likely people lost their unemployment benefits and fell of the reporting cycle. As we are coming out of the Xmas holiday season I would expect to see the unemployment rate go back up as seasonal employment will have dropped off.
The Home Value Code of Conduct or HVCC as it is more commonly called in the business was created to take undue influence our of the appraisal process.
Back in the day we used to have relationships with our appraisers much like we did with relator's and we would order our appraisal's through people we got along with and gave us good service.
Unfortunately some mortgage folks and appraiser's took this a little too far by having appraisals on homes that should never have happened. They over looked issues and increased/inflated values on the homes that were part of the cause for our rapid increase in home values. Add to this the abundance of multiple offers on houses and it created a valuation frenzy.
Of course the no income, no asset, no job loans were and aid to this. I just want to know who the heck came up with those stupid loan programs?
With all of this going on there were a lot of appraisers that were really busy and a lot of new ones coming in that could not establish themselves and get business.
Then the valuation and mortgage blow up comes in to play and HVCC pops up. Now the premise of this is good but unfortunately appraiser's are all gun shy now as they want nothing to come back to haunt them and they want to make sure they cam get a steady check.
The idea now is that mortgage companies have to order their appraisal's through an appraisal management company. The management company assigns the appraisals on a random basis to an appraiser to complete. The mortgage company can not have any communication with the appraiser themselves. On a purchase the appraiser knows the sales price of the home but on a refinance they have no clue what value the customer is looking for.
Once the appraisal is complete it is sent back to the management company for review and then sent to the mortgage company and the customer. Now what we are seeing is that on a purchase where the appraiser knows the sales price they are hitting the value at least 99.999999% of the time but on a refinance they are hitting the values maybe 50% of the time.
So when the value is not hit you can dispute it with data and such but do you really think that the appraiser is going to vary their original appraisal? By doing this they would be admitting they were wrong on what they did and of course that causes concern about their ability at what they do. Heck they want to keep their jobs and get the appraisal assignments as they get paid regardless of what the value comes in at. Now the unique thing here is that because of the new management companies there are many appraisers that were not very busy in the past that suddenly are. So do they want to sacrifice the income they are making? Of course not.
So what has happened in an effort to keep appraisal's and appraisers on the up and up is that the consumer is suffering in many cases because of the new process. When the market value of a home is higher then the appraisal....we need to wonder who is right and who is wrong. When the appraiser does not know the value they may be taking the road of getting the easiest comps in the area that make sense without really looking at the differences or if there are better comps out there to compare the subject property to.
Well the weekend is ahead of us and I am sure that many of you have big plans. I get to drive with my son to his college apartment and shut all the storm windows as for some reason he does not know how to do that. And if he doesn't do it the management company will charge him $50 to do it. Seriously??? He is home on break and has to do that...just shows how the world is going.
Seriously though I could really use the help with you following this or liking it on Facebook so I can get it going more.......you are influential for me and I could use your help.
Ave a super weekend and I welcome questions so don't be afraid to ask!!
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