HVCC Appraisals

"Hey Mr. President - I voted you for you in 2008 but that was before I knew you would destroy my business with unnecessary regulations. If you wanted to fix the causes of the housing collapse all you had to do was eliminate liar and sub prime loans. Instead you have made it it nearly impossible to purchase a home with ridiculous appraisal and underwriting guidelines. If you want the economy to improve, fix the housing market. Start by eliminating the HVCC appraisal standard which keeps buyers from taking an appraisal from one lender to another and uses third party management companies to place the appraisal orders. I can't tell you how many deals have been lost because of this ridiculous procedure which wastes precious time and boggs down the home buying process"

I found the above post on Yahoo today and agree with the writer's frustration. Here's the skinny on an HVCC appraisal:

Politicians thought it would be a good idea to take the appraisal out of the hand of the home buyers, lenders and realtors and force everyone to use a management company to order and process appraisal orders. So instead of a potential homebuyer choosing the service provider he/she is paying for, it is controlled by a disinterested third party mgmt company. The homebuyer does not even own the appraisal once the work is completed even though they payed for it. The lender who chose the management company actually owns the appraisal which means the homebuyer can not reuse the existing appraisal with a new lender. Sounds confusing right? 

I have a deal I am currently working on where the clients applied for a home purchase loan through B of A who ordered the appraisal through LandSafe Mgmt. The appraisal came in at the purchase price which is great but B of A denied the loan for credit and income issues. The clients reapplied through a different lender who approved their credit and income but made them order a new appraisal with a new management company. Here's the kicker, the new appraiser used the exact same comps on the new appraisal but the value came in 15% less. Now these poor homebuyers have dropped nearly $800 for 2 appraisals which have the exact same comparable sales but 2 different values and they can not use either appraisal to purchase the home. Nobody wins in this situation, the homebuyers don't get their house, the sellers don't get their money, the realtors don't get paid, the title company doesn't get paid and the underwriter doesn't get paid and thats not even counting the future hit to the local businesses as no new appliances will be purchased, no new furnishings will be purchased and no handy man work will be needed.

If you have wondered why the housing market is so slow to recover and a drag on the economy the above example is a great place to start. Lets get our politicians to eliminate the HVCC appraisal rule, cut the red tape and let people get back to buying homes.

Interest Rates have never been lower!

This past Friday marked the lowest the 10 year treasury yield has been in 60 years. Mortgage interest rates follow the 10 year treasury yield which means interest rates haven't been this low since post world war 2.

For potential home buyers, record low interest rates means you can buy more house for the same payment.

For example, the principal and interest payment on a $200,000, 30 year fixed mortgage with a 4% interest rate vs a 6% interest rate is $954 vs $1199. Thats a savings of nearly $250 per month or $90,000 over the life of the loan.

If your on the fence waiting for the bottom of the market now is the time to jump in. With prices beginning to trend up, inventory shrinking, and super low rates, there has never been a better time to buy then now.