Las Vegas real estate, mortgage, appraisal blog

In a recent press release FNC has announced that they already have industry-proven platforms that will enable mortgage lenders to comply with the new Fannie Mae and Freddie Mac rules for appraisals. These new rules and regulations go into effect January 1, 2009 and a "Code of Conduct" mandates that there is appraiser independence, compliance for regulatory standards and tracking of market trend.

"Documentation of the entire loan process is critical, as is evidence of appraiser independence, compliance to USPAP standards, and indications of appraisal or appraiser violations," Rayburn said. "We provide clients with solutions for all of these issues."

Regarding appraiser independence, the FNC platforms feature auto- assignment-functionality that ensures appraiser independence; the system automatically assigns orders randomly yet equally to appraisers on the lender's approved vendor list. Likewise, FNC data and analytics give lenders the tools they need to have confidence in the appraisal at every step of the loan process.

Of particular importance will be FNC's Generally Accepted Appraisal Rules(TM), also known as the GAAR(R) Compliance series. GAAR, available through the CMS, CHQ, and as a stand-alone Web-based product, ensures USPAP compliance by thoroughly scanning the appraisal and flagging any suspected violations. FNC Chief Appraiser Kathy Coon, a former Appraisal Institute chair of education, helped develop the GAAR series as lead developer and subject matter expert.

"Months ago, we established this functionality as a stand-alone Web service, allowing lenders to call a Web page, load the appraisal, and know if the appraisal is compliant or not," Rayburn said.

As these rules go into effect the need for fair and honest appraisals from a reliable source, such as Appraisers Of Las Vegas, becomes apparent.

According to an article in Market Watch, Fidelity National is going to participate in the comment period for the new HVCC before the cutoff date, April 30th. Fidelity has also said they are unsure of how they will be affected by the changes.

In a filing with the Securities and Exchange Commission, Fidelity National said it will contribute the unit's assets to Lender Processing Services in exchange for additional shares of common stock of the new unit, and up to $1.6 billion in new debt of the unit.

Following the contribution, Fidelity will distribute all the shares of the newly formed unit to its shareholders and exchange its debt for an equal amount of the company's existing debt.

 

Fidelity National, which provides credit- and debit-card processing services, said last October its board has supported a plan to spin off its Lender Processing Services division into a separate public company.

 

Fidelity National Information Services Inc., which is seeking federal approval to spin off a unit that processes data for major mortgage providers, warned that its business could be harmed by heightened government inquiry into the U.S. lending crisis and new regulations that may result.

In a filing with the Securities and Exchange Commission, Fidelity National said that lawsuits or tighter regulations that may ensue from state and federal probes of mortgage-lending practices in response to the housing-market collapse "could have adverse consequences that could affect our business."

A recent press release from bills.com showed that close to six out of ten American homes are underinsured. This means that if there is any loss, due to fire or a tree branch or any other number of reasons, the policies may not cover rebuilding of the house. Andrew Houser, co-CEO and co-founder of bills.com said to look for the following coverage when looking for homeowners insurance:

1. Structures: A homeowner who has a mortgage generally must be insured at least for the amount of the mortgage. Many properties, however, require a higher benefit amount based on personalized factors. For example, the policy should cover rebuilding costs in the area. Rebuilding costs should take into account the style and quality of the home. (For example, a basic amount will not provide enough benefit to rebuild a recently renovated, gourmet kitchen.) Be sure recent additions are covered. Also, older homes might require extensive updating to meet new building codes.

Other specialized policies include guaranteed replacement coverage, which provides for higher construction costs in times of increased demand -- for instance, following a natural disaster, when many homes require repairs -- and "inflation guard" policies that automatically increase the benefit amount to account for inflation. "Be aware that standard homeowners' policies do not cover damage from flood, earthquake or lack of maintenance," Housser said. "Separate flood insurance can be purchased from the federal government."

2. Possessions: A typical homeowner's policy covers personal possessions in the amount of 50 percent to 70 percent of the covered home value. Owners can purchase policies that cover replacement value or actual cash value (the item's worth based on its original purchase price minus depreciation). People who have valuable belongings -- electronics, jewelry, silver, furs or art collections -- can purchase insurance riders, or additional coverage.

3. Living expenses: Be certain a policy covers this important category. For most homeowners, if a catastrophe caused a situation requiring reimbursement from the insurer, they would need to live elsewhere for a period of time while repairs are completed. The costs can add up rapidly enough to lead to financial disaster.

4. Liability to others: Most policies offer a certain amount of coverage -- usually a minimum of $100,000 -- to protect a homeowner who is deemed liable for an accident or injury on his or her property. However, in today's litigious society, many experts advise purchasing higher amounts of coverage, up to $300,000. Homeowners with many assets, high public visibility or hazards on their property (such as dogs or a swimming pool) might add an "umbrella" policy that can cover millions more in liability.

In order to understand how much coverage you should have you will need to first know what the value of your home is. State Farm says that one of the best ways to do that, initially, is by speaking with your appraiser. If you already own the home you can contact an appraiser to help estimate the replacement cost. Appraisers such as the ones here, at Appraisers of Las Vegas, are constantly vigilant in their knowledge of home values.

Since the announcement that the comment period for HVCC has been shortened from 90 to 45 days many appraisers and lenders are concerned. Blogs, appraisal groups and forums are being filled with complaints, concerns and sometimes simple confusion. An article on Appraisal Scoop gave some ideas and advice on how to address these to the appropriate people. The first part is that it's important to remember to take the time to read the Home Valuation Code of Conduct (HVCC) for yourself.

The goal is two-fold:

• Address the issues and concerns from appraisers and lenders regarding the HVCC and;
• Provide a framework that will give the OFHEO ways to implement the HVCC with minimal impact to their existing business and clients.

This is not the time to criticize the HVCC; this is the time to make it effective and to do so we must have a shared vision of the future. We must consider the business needs of all associated with the appraisal process and work together to formulate practical solutions that will transition the process from where we are today, to where we need to be to meet the spirit of the HVCC, with limited disruption of the lending process. 

Given the time constraints and vested interests within the current system, this is a tall order. That is not to say that it cannot be accomplished, only to point out the obvious. So what are the next steps? Forums and groups are a logical place to begin. Take a leadership role and get the membership started in the feedback and comment process.

The focus should be on the principles outlined in the HVCC, suggested procedures to make them effective and ideas on how to implement those procedures in ways that will minimize disruption of current FNMA and FHLMC business practices.

As the 45 day comment period comes looms closer it will be interesting to see any changes and reevaluations become necessary.

Although the HVCC is being praised by many for resolving issues such as blacklisting and appraiser independence, it is also making many nervous with its occasionally vague wording and AMC involvement. In fact, an article on AppraisalScoop.com shows that many appraisers are not as happy as appraisal organizations make them out to be.

Appraisers expect the organizations who represent them will choose the correct side of issues, those which will strengthen the ability of the appraisal profession to perform in a manner worthy of the public trust.

"Yet every appraiser with whom I have spoken has been incredulous that the coalition of appraisal organizations did not immediately stand in opposition to the so-called "agreement" brokered last week between New York Attorney General Andrew Cuomo and Fannie Mae/Freddie Mac to implement their "New Home Value Protection Code" including the "Home Valuation Code of Conduct" (HVCC)"

 

There is even a Top 10 list of problems that appraisers are having with the HVCC. With these changes coming soon, some in September and some in January, it seems a good time to really figure out what is going on and what needs to be amended.

The Federal Reserve stated Thursday that American home equity fell below 50 percent for the first time recorded since 1945. Economists are expecting equity to drop even further due to declining home prices eating into the value of what is usually a person's single largest asset. CNBC states:

Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak.

The latest Standard & Poor's/Case-Shiller index showed U.S. home prices plunging 8.9 percent in the final quarter of 2007 compared with a year ago, the steepest decline in the 20-year history of the index.

The news follows a report from the Mortgage Bankers Association on Thursday that home foreclosures skyrocketed to an all-time high in the final quarter of last year. The proportion of all mortgages nationwide that fell into foreclosure surged to a record of 0.83 percent, while the percentage of adjustable-rate mortgages to borrowers with risky credit that entered the foreclosure process soared to a record of 5.29 percent.

Part of the reason that foreclosures are skyrocketing still is the amount of what are referred to as "mortgage walkers", homewoners that are able to afford the payments but decide not to. Fed Chairman Ben Bernanke suggested Tuesday that lenders reduce loan amounts to give relief to homeowners.