Appraiser Income

Edward DeMarco, acting director of the Federal Housing Finance Agency, told the Senate Banking Committee April 18 that Congress must act in order to bring private capital back into the housing market, a move he has been urging for years, National Mortgage News reported.

Fannie Mae and Freddie Mac cannot complete the transitions needed to encourage more private investment in the mortgage market until Congress makes a concrete plan, DeMarco told lawmakers.

“I think that with a $10 trillion single-family mortgage market, the government doesn’t belong at zero or at 10. It belongs somewhere in between,” DeMarco told lawmakers, National Mortgage News reported. He further said he believed that the government could and should play a role in setting standards, rules and transparency guidelines, which would go a long way toward facilitating an effective role for private capital in funding and bearing the credit risk in the mortgage market.

DeMarco also thanked lawmakers for stopping the use of agency guarantee fees to offset government spending in unrelated areas. “By indicating that the Congress of the United States has agreed it does not want to use Fannie and Freddie to be funding part of the government, it then removes that as an issue or a barrier to actually doing something to bring these conservatorships to an end and rebuild the housing finance system. I think the markets would take that very seriously,” he said, National Mortgage News reported.

He also advised against having the U.S. Department of the Treasury sell off preferred shares of the government-sponsored enterprises. “I think it would certainly generate confusion and questions in the mortgage market about the role that private capital would have in the future if there was a thought that there was some sort of reconstituting Fannie and Freddie as they have been, with the charters they had,” he said, National Mortgage News reported.

In response to committee questions about the role that community banks would play in the mortgage market with the FHFA’s new single securitization platform, DeMarco said the agency is working to get data standards and electronic reporting standards in place that would work with the whole market. He said an industry standard would make it easier for a community bank to acquire technology from a vendor and be able to put it in their institution — even a very small institution.

Even as DeMarco testified, rumors have surfaced that he likely will be replaced as acting director, a role he has held since 2009. DeMarco repeatedly has resisted Obama administration efforts to institute principal reduction programs at the GSEs, National Mortgage News reported. Top candidates for replacing DeMarco are said to be Rep. Mel Watt, D-N.C., and economist Mark Zandi.

Reposted from Appraiser News Online.

Real estate appraisers’ ranks thinning
Study: Nearly 6 in 10 appraisers are more than 50 years old
By Inman News, Tuesday, April 9, 2013.

The number of people working as appraisers has dropped 15 percent since 2007 and could decrease another 25 to 35 percent during the next 10 years due to retirements and fewer new entrants into the profession, according to an analysis released today by the Appraisal Institute.

At the same time, the share of appraisers with a state certification, which requires more education than a license, is at a record high, indicating that the appraiser population is more qualified overall, the Appraisal Institute said. At the end of 2012, 87 percent of appraisers were certified, up from 72 percent at the end of 2006.

The Appraisal Institute analyzed data from the national registry of the Appraisal Subcommittee (ASC), which the U.S. Congress created in 1989 to oversee the real estate appraisal process in federally-related transactions, from 2006 through 2012.

During that time period, the number of appraisers decreased about 3 percent per year, to 83,400, driven largely by a decline of nearly 16,000 licensed appraisers, the Institute said. Meanwhile, the number of certified general and residential appraisers rose by nearly 6,000.

About a third of the decline in licensed appraisers was due to appraisers achieving certification. The vast majority of appraisers who left the profession during that time were appraisers who had only achieved licensed status and were either relatively new to the profession or did not get certified, the Appraisal Institute said.

The Appraisal Institute — an association of nearly 23,000 real estate appraisers in close to 60 countries — anticipates attrition due to age and a “sharp and long-term decline” in new entrants to the field may result in a 25 to 35 percent decrease in the total number of appraisers in the next decade.

Michael Saad, 49, an Iowa resident, was sentenced to six months’ imprisonment, followed by six months’ home confinement, for willfully overvaluing property for the purpose of influencing a federally insured credit union.

Saad was sentenced on On April 1, 2013. United States District Judge Stephanie M. Rose also sentenced Saad to two years’ supervised release and ordered him to pay $131,575.06 in restitution to Deere Harvester Credit Union.

Beginning in April 2007 and continuing until December 2007, Saad knowingly inflated the values of properties that he appraised in an effort to justify higher mortgage loans for borrowers. Saad misrepresented the square footage, age, number of bedrooms, number of bathrooms, and other information associated with the subject properties and the comparable properties listed in his appraisals.

United States Attorney Nicholas A. Klinefeldt announced the sentence.

This case was investigated by the Federal Bureau of Investigation and was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.

The Federal Housing Administration may require a taxpayer bailout after all, possibly needing as much as $943 million, HousingWire reported April 10. If an FHA bailout occurs, it would be the first one in the agency’s history.

FHA Commissioner Carol Galante cautioned that a bailout is not a certainty, but one nonetheless was included in the White House’s proposed 2014 fiscal year budget.

The FHA’s mortgage insurance is reported to be negative $13.5 billion, but despite that significant deficit, the agency likely would not make a decision on whether or not to take taxpayer aid until at least September.

“The President’s budget projects that FHA may need a $943 million credit from the U.S. Treasury in October to make certain sufficient reserves are on hand today to cover projected losses over the next 30 years,” Galante said, HousingWire reported. However, she also noted that the FHA was taking action to reduce the likelihood that such assistance would be required.

Galante noted that were it not for the FHA’s reverse mortgage portfolio, the agency would have a positive surplus of more than $4 billion by the close of 2013.

Shaun Donovan, U.S. Department of Housing and Urban Development secretary, said that the FHA’s projected negative $13.6 billion in capital reserves has shrunk to $943 million due to the agency taking steps to improve the health of its mortgage insurance fund. Those steps have included recovering older loans, establishing new premiums and addressing faults in the reverse mortgage program, HousingWire reported.

FHA-backed mortgages are wrapped exclusively into Ginnie Mae mortgage-backed securities, which are guaranteed by the federal government.

Reprinted from Appraiser News Online

Job Opening: Executive Management Position

Metro-West Appraisal has an excellent opportunity for a Chief Real Estate Appraiser. Responsibilities and objectives include upholding high quality standards and staff appraiser development, and protecting the company by ensuring compliance with regulatory and legal requirements as they relate to real estate valuations.

Appraisal certifications/designations, previous management experience specific to real estate, industry knowledge and professional demeanor will be distinguishing aspects for consideration.

Primary job functions include, but are not limited to, the following:

Provide guidance to appraisers on staff on specific appraisal issues and state, federal and
client regulations
Provide training to Appraisers on recurring problems
Review escalated complex appraisal reports
Maintain monthly scorecards on Appraisers and clients
Act as client liaison on Appraiser quality issues
Direct QC team members on how to handle client/lender specific issues
Maintain knowledge of guidelines for GSEs, secondary market participants, client/lenders, FHA/HUD, state legal requirements
Point of contact for problem files where realtors/clients/homeowners are involved
Responsible to lead, coach and motivate employees through encouragement and reinforcement, to create a work environment that fosters teamwork, high morale and retention of workforce
Attend industry events and seminars
Host company webinars on procedural and educational topics

Position Requirements:

Position currently located in Northville, Michigan, with future plans of relocation to our
Detroit headquarters
Salary position, 40+ hours a week
Travel less than 10% annually
Appraisal certification

For consideration, please contact careers@metrowestappr.com.

Kentucky Passes Legislation Helping Appraisers Harmed by AMCs

On March 21, Kentucky Governor Steve Beshear signed into law House Bill 120, which created a new appraisal management company recovery fund to replace its current surety bond requirement.

The Kentucky Real Estate Appraisers Board will establish procedures for making claims against the fund and will administer the funds in order to provide restitution to licensed or certified real property appraisers who have suffered pecuniary harm by an AMC. Appraisers will be able to seek reimbursement for “reasonable and appropriate court costs.”

The legislation also extends the Kentucky AMC registration requirements to “portals” that “fulfill requests for appraisal management services on behalf of clients, whether directly or through the use of software products or online.”

The recovery fund is supported by an annual surcharge of up to $800 on each AMC registered in the state. The fund has a cap of $300,000, at which point the surcharge will be suspended until the fund needs to once again be replenished.

View details of the bill.

Republished from the Appraisal Institute

Hey Everyone, Fans, Appraisers and Haters.

My April 1st, 2013 (Aprils Fools Day) blog post that was a parody interview with fictitious AMC owners / CEO’s was not liked by all.

Although all the emails I received from appraisers stating they realized this was a joke, there was one AMC that threatened legal damage if the post remained up to readers.

Furthermore, I do believe in freedom of speech, but I do not have the time or money to fight this issue so I have decided to take the post down.

Next year I will produce a better ‘joke’ for us appraisers! I hope they don’t take me off their appraisal panel (new joke). 🙂

Take care,

Bryan Knowlton
http://www.appraiserincome.com

Editor’s Pick: One Appraiser’s Solution to Getting Paid
by Isaac Peck, Associate Editor

Here is one answer to “show me the money.”

The practice of appraisal management companies (AMCs) slow paying appraisers or not paying at all continues to be a problem for the industry- to the tune of millions of dollars in unpaid invoices as a result of recent bankruptcies of three prominent AMCs. As a result, appraisers are looking for ways to protect themselves and their businesses.

One appraiser has a solution that has worked for 20 years: she combines commonsense screening techniques, before taking on a client, along with the imposition of liens against deadbeat payers.

Property Liens
…continue reading the rest of this post: One Appraiser’s Solution to Getting Paid

By Hugh Son – Mar 13, 2013 8:50 AM PT

Bank of America Corp., the second- largest U.S. lender, cut an appraisal unit’s staff by about 5 percent last month as the firm rid itself of overdue mortgages, said two people with knowledge of the move.

The dismissals from LandSafe’s workforce of more than 1,000 employees began Feb. 22, said the people, who requested anonymity because the matter is private. Those affected include appraisers, who estimate the market value of properties, and regional managers, according to a Feb. 25 staff memo from Tracy Sanderson, a LandSafe senior vice president.

“While we have known we were overstaffed since the fall, we did everything we could to delay impacts as long as possible,” Sanderson wrote. “We were hopeful that our volume would return and potentially reduce the number impacted.”

The bank has scaled back in mortgages after being saddled with more than $40 billion in costs tied to defective home loans. Most of those came to Bank of America through its 2008 takeover of Countrywide Financial Corp., whose operations included LandSafe.

Bank of America, once the biggest U.S. home lender, fell to No. 5 in the fourth quarter and has been eclipsed by competitors including Quicken Loans Inc., according to newsletter Inside Mortgage Finance. The field is now dominated by San Francisco- based Wells Fargo & Co. (WFC), which accounted for almost 1 in 3 U.S. mortgages last year.

Distressed Borrowers

About 70 percent of work done by LandSafe appraisers was related to transactions for soured loans, including the auction of bank-owned properties and short sales in which a borrower’s home is sold for less than the amount owed, said one of the people. The bank’s expected increase in originations this year isn’t enough to offset the drop in work resulting from having fewer overdue loans to service, the person said.

Bank of America had about 773,000 mortgage customers who were at least two months behind on payments at the end of 2012. That figure will drop to 400,000 by the end of this year, fueled by the sale of mortgage-servicing rights on $306 billion in loans announced in January, the firm said.

Terry Francisco, a spokesman for Charlotte, North Carolina- based Bank of America, confirmed the company was cutting LandSafe personnel and placing some elsewhere in the firm. The current staff will be able to handle an expected surge in new mortgages in 2013, he said.
Origination Outlook

“If they do more loans this year than last, I’d be surprised,” said Paul Muolo, managing editor of Bethesda, Maryland-based Inside Mortgage Finance, who predicts Bank of America’s refinancing revenue will drop. “They’re not competing aggressively on rates, they take a long time to close loans, and they’re living off refis that will decline when rates rise.”

Bank of America’s home lending dropped by half last year to $78.7 billion after Moynihan shuttered its correspondent business, which bought mortgages marketed by third-party lenders. Wells Fargo, JPMorgan Chase & Co. (JPM), Quicken Loans, and U.S. Bancorp originated more than Bank of America’s $22.5 billion in fourth-quarter loans, according to Inside Mortgage Finance.

Eliminating workers who served delinquent borrowers is part of Chief Executive Officer Brian T. Moynihan’s plan to pare expenses. Bank of America dismissed 3,000 such employees and 6,000 contractors in the fourth quarter, he said. About $3 billion of quarterly costs tied to legacy asset servicing eventually will fall to $500 million, Moynihan has said.

“There’s nothing more important in our company than to get this done as quickly as possible,” Moynihan, 53, told analysts during a Jan. 17 conference call.
Lenders Retreat

Some of his biggest competitors have said they will pull back in home lending. JPMorgan, the largest U.S. bank by assets, will cut as many as 15,000 mortgage-related jobs through 2014 as fewer employees are needed to service soured loans, the New York-based company said last month.

Rising interest rates may discourage refinancings, which accounted for 71 percent of originations last year, and new loans for home purchases probably won’t cover the shortfall, according to a Mortgage Bankers Association forecast. Total lending will slide 20 percent to $1.4 trillion in 2013, and 24 percent to $1.06 trillion in 2014, the group said.

Remaining LandSafe appraisers may see a “slight increase” in workload because of the adjustment, Sanderson told employees in the February e-mail.

Staffing is “at the right level for our expected volume,” she wrote. “Our hope is that we will get through this challenging environment and then start to grow again.”

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net