Appraisal Management News

Posts Tagged ‘Coester Appraisal Group

Mortgage Principal Can Be Cut Without Moral Hazard

leave a comment »

by Mark Fleming via American Banker

At the end of October, the Obama Administration announced changes to the Home Affordability Refinance Program that conceivably will make as many as 2 million more homeowners eligible for refinancing over the next two years. This will lower the default risk for the government sponsored entities and their ultimate backers, the American taxpayers, and should provide some level of economic stimulus.

But it will help housing only indirectly, because it doesn’t address the two strongest headwinds that are depressing housing prices: negative equity and shadow inventory. Addressing these challenges will require new thinking on the strategic use of principal reductions. Although the cost of this approach would be significant, it could be far less than the $699-billion price tag usually associated with negative equity and could save as many as three million more at-risk homeowners.

The drop in mortgage rates to record lows in 2011 has not resulted in the expected surge in refinances. The reasons for the lack of refinance activity include: the prevalence of negative equity; insufficient borrower credit quality or income; GSE hurdles, such as loan-level price adjustments, and investors’ unwillingness to give up their rights to require lenders to repurchase loans that did not meet GSE guidelines. Repurchase risk makes lenders less willing to take on more liability and due diligence risk (although Harp II attempts to address some of these concerns).

There already have been many government efforts to aid borrowers in refinancing, which include version one of Harp, Hope for Homeowners and the FHA Short Refinance program. They have not produced sufficient volume to dramatically influence housing market conditions because the eligibility criteria were too tight, the rates offered were too high, or borrowers had qualification constraints.

We have seen adjustments made to Harp, but only time will reveal the full economic stimulus effect of increased refinance activity.

It’s important to note that a bond investor’s interest income is a borrower’s interest expense. That means that refinancing millions of borrowers and offering them lower rates would reduce household mortgage expenses, but it would also reduce investors’ interest income by roughly the same proportion.

History, as a guide, shows that in prior large refinance waves, with only one exception, there was no real discernable impact on consumer spending. The only exception occurred in 2003, when the mortgage market experienced the largest refinance wave ever recorded. Even then, the impact on consumer spending was small and transitory, and the potential refinance wave this time would be smaller. In any case, refinancing existing mortgage balances does not address the fundamental issue of negative equity.

The large number of homes with negative equity is holding back purchase demand for homes by reducing household mobility and elevating the risk that seriously delinquent borrowers will move into foreclosure because they don’t have enough equity to refinance or sell their homes.

As of the third quarter, 22 percent of U.S. homes — nearly 11 million borrowers — were upside down. The average such borrower was upside down by $65,000 and aggregate negative equity was more than $699 billion. If negative equity diminishes, it will greatly aid the housing market recovery by unlocking pent-up demand and reducing foreclosure risk. As would be expected, re-default rates for modifications with principal reduction are much lower than other modification.

There are many concerns with principal reduction, but moral hazard and costs to banks and taxpayers are the two that stand out.

Moral hazard occurs when individuals behave differently when insulated from risk than they do when fully exposed. If servicers give principal reductions to borrowers who are delinquent and in a negative equity position, which insulates them against negative-equity risk, borrowers who are current may purposely become delinquent so that they can also receive a principal reduction.

However, there are many ways to deal successfully with moral hazard:

  • Servicers can offer borrowers a principal reduction, but at some cost. This would be similar to a car insurance deductible and could be structured in different ways. For example, servicers could reduce principal in exchange for the borrower giving up a portion of future appreciation.
  • A shared-appreciation mortgage that reduces principal could be taxed as a capital gain rather than as ordinary income as is the case today.
  • Servicers could also change mortgage terms to include recourse in the event of a default, such as the right to non-housing assets in addition to foreclosing.

Basically, servicers could address the moral-hazard risk associated with principal reduction through appropriate loan terms.

The cost of principal reduction is another large hurdle. It’s certain that not all $699 billion dollars in negative equity needs to be forgiven. There are 6.3 million borrowers with first liens only who are current on their mortgage payments and underwater by an average of $52,000, representing $314 billion in total. Within that segment, servicers could target moderately upside down borrowers (110% to 150% LTV) who are most likely to respond to principal-reduction offers. That would help nearly 3 million borrowers (or nearly one third of all negative equity borrowers), at a cost of $118 billion. Although $118 billion is clearly not trivial, it is much more manageable than $699 billion.

Streamlined refinance plans will improve household monthly obligations but it remains to be seen if the will create meaningful economic stimulus. Plans to reduce principle are more likely to greatly aid the housing market recovery by unlocking pent-up demand and reducing foreclosure risk. It is important that these plans also have features that address the moral hazard risk. Targeting principle reductions as described above would aid the greatest number of borrowers for the least amount of money, reduce current and future distressed shadow inventory and put less downward pressure on prices today and in the future.

best appraisal management company

nationwide appraisal management

appraisal management company

coester appraisal group

coester appraisal management

coester valuation management services

reverse mortgage solutions

dodd-frank

Written by appraisalmanagementnews

November 22, 2011 at 8:28 pm

NAR Economist Discusses the Industry’s ‘Improving Factors’

leave a comment »

by Natalie Dolce via Globe St.

ANAHEIM, CA-The US economy is sluggish…GDP growth after the recession should be sustained 4% to 5% to compensate for the downfall, but it is at a subpar performance—at 1% to 2%. So said National Association of Realtors’ chief economist, Lawrence Yun at the NAR conference on Friday at the Anaheim Convention Center, an event that expected to draw approximately 18,000 realtors and guests. “The unemployment rate is still at 9% and if this current slow expansion were to persist at this rate, it would take 10 years to bring it to where it needs to be.”

Despite the high rate of unemployment, Yun did focuses on the positives, noting that “at least job creation is happening…though slowly.”

Corporate profits are record high, said Yun. “Not only a Disney, Microsoft or Apple-type company, but the financial industry has recovered nicely as well,” he said. There is plenty of cash within companies, he said, which is another improving factor, but the issue, he said, is that they aren’t spending their cash.

“Businesses have been collecting plenty of profit, but they are hesitant to spend,” he said. “The good news, is that because of the healthy cash situation of large businesses, I don’t see another US hitting another recession coming up in the next few years.”
It has never been a better time to borrow money and go out and spend it, Yun said, but companies aren’t borrowing. Another struggle for the US, according to the economist is that small businesses aren’t recovering. “Small businesses cannot go to Wall Street and borrow money, so they rely on their housing equity to start their small businesses but because of weak housing equity recovery, which is the source of funds for small business owners, small businesses will continue to struggle,” he said.

Other improving factors for the CRE world, according to Yun, include: no recession in sight despite shaky Europe; stock market recovery from 2008…including REIT; huge corporate cash reserves; expanding corporate cash reserves; expanding international trade; commercial prices bottomed and rising; international buyers taking advantage of currency; and inflation hedge.

Earlier in the day, during an opening session, NAR president Ron Phipps outlines obstacles and opportunities facing the real estate industry. “For the first time in generations, the American dream of homeownership is being threatened,” said the broker-president of Phipps Realty in Warwick, RI. “We need to keep housing first on the nation’s public policy agenda, because housing and home ownership issues affect all Americans.”

According to Phipps, “mortgage availability remains a real concern since the private market has yet to return. While the housing market is still in recovery, we firmly believe that lower loan limits will only further restrict the mortgage markets.”

NAR’s 2012 president, Moe Veissi, also shared his perspective and insights into some key issues facing the industry. “It’s a difficult time in many ways for real estate; some would go as far to say that homeownership itself is under attack.” With that said, he pointed out that challenging times often present opportunities.

 

coester appraisal group
best appraisal management companies
fha appraisals
dodd-frank
best appraisal management company
valuation services
reverse mortgage

Written by appraisalmanagementnews

November 15, 2011 at 9:27 pm

The Five Star Institute Announces Top Women in the Mortgage and Housing Industry Banquet

leave a comment »

Mortgage Group Will Honor Industry Trailblazers at the 2011 MPact Conference and Expo

via Five Star Institute

The Five Star Institute, a mortgage industry group, announced today that it plans to honor several distinguished women in mortgage and the housing industry at the 2011 MPact Conference and Expo, held Dec. 4-6, 2011.

MPact will feature the honorees at the 2011 Top Women in the Mortgage and Housing Industry Banquet immediately before former U.S. Secretary of State Condoleezza Rice delivers her keynote address.

The Five Star Institute developed a list of several criteria to assess and determine final candidates for the banquet. The criteria included industry impact, "Big Picture" thinking, name brand equity and reputation, and a record of accomplishment with other companies.

The Five Star Institute is pleased to announce the following final honorees:

  • Caren Jacobs Castle, President, United States Foreclosure Network
  • Francene DePrez, CRP/SGMS, President, Fidelity Residential Solutions
  • Colleen Hernandez, President and CEO, Homeownership Preservation Foundation
  • Margaret M. Kelly, CEO, RE/MAX World Headquarters
  • Christine Larsen, COO of Trust and Securities Processing Division, JPMorgan Chase
  • Rebecca Mairone, National Mortgage Outreach Executive, Bank of America
  • Roseanna McGill, Chairman, PrimeLending
  • Frances Martinez Myers, President, Employee Transfer Corporation/ETCREO Management
  • Deb Still, President and CEO, Pulte Mortgage
  • Ivy Zelman, CEO, Zelman & Associates

"This select group of mortgage and housing industry leaders gives testimony to the strength of our democracy and exemplifies the importance of real leadership, above and beyond gender," says Ed Delgado, CEO of the Five Star Institute. "It is our great esteem and pleasure to recognize these trailblazers for their substantive and continuing contributions to our industry and markets at a time when we need strong leadership the most."

Additionally, the 2011 MPact Conference and Expo is focused on increasing the viability and success of mortgage industry professionals working in originations, servicing, data and analytics, and the secondary market.

 

 

 

best appraisal management companies

appraisal management company

fha appraisals

dodd-frank

coester appraisal group

appraisal management

best appraisal management company

reverse mortgage

Written by appraisalmanagementnews

November 9, 2011 at 3:18 am

Credit Scores to Factor in More Consumer Data

leave a comment »

Mary Ellen Podmolik via Los Angeles Times

Many consumers applying for a mortgage are going to start sharing more personal information with lenders next year, like it or not.

FICO scores, the industry standard for determining credit risk in mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, largely have been based on a person’s credit history. But in an attempt to develop a more well-rounded picture of a person’s finances beyond credit, tools are being developed to help the lending industry dig deeper.

Fair Isaac Corp., or FICO, the company behind the widely used scoring formula, and data provider CoreLogic recently announced a collaboration that will result in a separate score that will be available to mortgage lenders and incorporates information that will include payday loans, evictions and child support payments. In the future, information on the status of utility, rent and cellphone payments may also be included.

Separately, the big three credit reporting companies — Experian, Equifax and TransUnion — recently began providing estimates of consumer income as a credit report option. And Experian this year began including data on on-time rental payments in its reports.

The new information could prove to be a double-edged sword for consumers: It may open the door to homeownership to some consumers who have, according to industry speak, a "thin file" or worse, a "no file," meaning that they lack sufficient credit histories.

On the other hand, the extra information may make a borderline borrower look even worse on paper. Also, it’s unlikely to quiet critics who complain that too much emphasis is put on a single number.

Still, there is thought among researchers that consumer transparency, if it demonstrates both good and bad behavior, has its place.

"You’re trying to convince someone to loan you an awful lot of money at a low interest rate," said Michael Turner, president of the Policy and Economic Research Council. "Only you know whether you’re going to pay it back. There is a harmony in this data exchange."

The FICO-CoreLogic partnership won’t result in a credit score that will rule out a borrower for a mortgage backed by Fannie Mae, Freddie Mac or the FHA, which together own or guarantee at least 90% of the mortgages being written. That’s because the report required for such a loan does not rely on CoreLogic data. However, it could affect mortgage fees or interest rates charged by lenders that in today’s lending environment have heartily adopted risk-based pricing.

"We’re fascinated to see, as we get into the data, whether that may expand the universe of people who can get a mortgage," said Joanne Gaskin, director of product management global scoring for FICO. "Banks are saying, ‘How do I find ways to safely increase loan volume, to find the gems out there?’"

As a result, there’s a rush by credit reporting firms to provide financial companies, including mortgage banks and credit card providers, with a wealth of information on individual customers.

"Before the [housing] bubble burst, there was a huge amount of interest in targeting the unbanked," said Brannan Johnston, an Experian vice president. "It was a desperate dash to try and grow and go after more and more consumers. When the bubble burst, that certainly dialed back some. They want to grow their business responsibly by taking good credit risks."

FICO scores have been around since the 1950s, but they didn’t become a major factor in mortgage lending until 1995, when Fannie Mae and Freddie Mac began recommending their use to help determine a mortgage borrower’s creditworthiness. The score, which ranges from 300 to 850, factors in how long borrowers have had credit, how they’re using it and repaying it, and whether they have any judgments or delinquencies logged against them.

The change comes as mortgage lenders reward the most creditworthy borrowers with low rates and tack extra fees onto loans for those with lower credit scores.

There are concerns about whether inquiries and charge-offs from payday and online lenders should be included in determining credit scores.

"Payday loans are extremely onerous," said Chi Chi Wu, a staff attorney at the National Consumer Law Center. "They trap people in a cycle of debt. To report on them is to cite that person as financially distressed. We certainly don’t think that’s going to help people with a credit score."

The extra information may also help more affluent homeowners who aren’t on the credit grid.

Two years ago, David Pendley, president of Avenue Mortgage Corp., worked with a college professor who didn’t believe in using credit. "He was putting down 40% and he had the hardest time getting a loan, even though he had $120,000 in the bank and he was 22 years on the job."

Eventually, Pendley secured a loan for the customer through a private bank, but he paid for it. "He didn’t get the lowest rate possible," Pendley recalled.

 

 

best appraisal management companies

appraisal management company

fha appraisals

dodd-frank

coester appraisal group

appraisal management

best appraisal management company

reverse mortgage

Written by appraisalmanagementnews

November 9, 2011 at 3:05 am

Google Enters the Mortgage Loan Business

leave a comment »

Business News Express via Melissa O’Neill

LoanSifter, Inc. (www.LoanSifter.com), provider of the mortgage industry’s most complete and intuitive product and real-time pricing platform, announced today a strategic relationship with Google Inc. that gives consumers access to mortgage loan products and real-time pricing based on LoanSifter’s technology, including side-by-side comparisons of mortgage loan products from multiple lenders through Google’s Comparison Ads.

Google’s Comparison Ads help consumers shop for mortgages online by retrieving quotes based on the borrower’s specific loan criteria.  Through a strategic relationship between both companies, Google will leverage LoanSifter’s industry-leading technology – which automates pricing for lenders using the largest real-time database of investor pricing and eligibility content available in the mortgage industry — to provide Google users with information on mortgage products and pricing from the lenders using LoanSifter.  When Google users get these rates, LoanSifter’s lenders will receive qualified online leads.

Greg Ulrich, production manager at Fairway Independent Mortgage Corporation in Colleyville, Texas, believes that Google’s popularity provides a great opportunity as another channel for borrowers to reach the company, without substantial investment costs.  ”This saves us money, allowing us to pass a greater savings to the consumer,” Ulrich said.

“We chose LoanSifter for our Google auto-quoting because it enables us to customize our pricing more accurately and effectively,” Ulrich added.  ”Other vendors require manual supervision, which would have been problematic in keeping up with market shifts.”

Consumers who search for popular mortgage-related terms or phrases on Google are drawn to Google’s proprietary mortgage Comparison Ads, where they can anonymously provide details such as their desired loan amounts and credit scores.  Google will then retrieve multiple reliable offers from dependable lenders, placed side-by-side so the borrower can compare them.  After investigating different scenarios and choosing a lender, the borrower is then able to contact the lender by phone or e-mail.  Borrowers do not have to fill out lengthy forms or click through walls of advertisements in order to access up-to-the-minute loan products and rates, and the leads generated to lenders are anonymous, so that borrowers can protect their private information until they are ready to move forward in the mortgage process.

“Our relationship with Google will be of tremendous benefit to both lenders and consumers,” LoanSifter President Bruce Backer said.  ”A growing number of borrowers are using the Internet to find the best possible mortgage deals, and Google’s immense popularity makes it a first stop for many.  Borrowers benefit from the side-by-side comparison in an open marketplace, while lenders benefit from LoanSifter’s ability to accurately price mortgage scenarios on their behalf.”

 

 

 

 

 

 

 

best appraisal management companies

appraisal management company

fha appraisals

dodd-frank

coester appraisal group

appraisal management

best appraisal management company

reverse mortgage

Written by appraisalmanagementnews

November 8, 2011 at 11:14 pm

Coester Warns On Lenders Not Being Ready for UCDP and UAD Deadlines

leave a comment »

Brian Coester, Coester Appraisal Group

The Uniform Collateral Data Portal (UCDP) and Uniform Appraisal Dataset (UAD) deadlines are right around the corner and with the constant changes in appraisal regulations over the past years it’s easy to get lost in it all and just say ‘My Appraisal Management Company is taking care of this.’

The reality is — with these new UCDP and UAD changes, the updates are probably not being handled properly and you are probably not ready for the changes; changes that are taking effect December 1, 2011.

The UCDP is a part of Fannie Mae and Freddie Mac’s Loan Quality Initiative (LQI) that started these programs over two years ago under the Collateral Data Delivery (CDD) program. Brian Coester, CEO of Coester Appraisal Group, has been conducting presentations and educational seminars for local Mortgage Bankers Associations (MBAs) around the country. Coester expressed his shock at the lack of preparation by both Appraisal Management Companies (AMCs) and lenders. “We had six AMCs at our last MBA seminar and none of them had any idea about what was going on nor were they registered to handle the files for their clients. We’ve been preparing for this for more than a year and it’s shocking that a such a big change would go unnoticed or unaccounted for."

Coester also warns that lenders are still unprepared and a Wells Fargo correspondent rep at one of the UCDP seminars confirmed this. Coester states, "The reps have indicated their correspondents are just getting around to looking at this. The problem arises because the time it takes to register and get what you need set-up and done, is 7-10 business days. Now they are telling people 20 business days, which falls just before the December 1, 2011 transition date. If lenders don’t jump on this they may not be able to close loans or sell loans at all.” Fannie Mae and Freddie Mac require registering for the UCDP which most lenders have not yet completed. “They think they don’t have to register or aren’t going to be held responsible for this. Most of the feedback though, is that they their investor would be handling this; the reality is that’s not the case." says Brian Coester.

Coester is fully registered for the UCDP and will be handling the complete end-to-end delivery, review, and submission files for its clients. "With us it’s pretty simple: login to the UCDP portal, type in our name, add us a Lender Agent, and you’re done. Very few companies will be able to say that it was that easy for them and we are glad we can help our clients." says Brian Coester. Coester admits that he has been working on the project for over a year now.

About Coester Appraisal Group:

Coester Appraisal Group is a nationwide Appraisal Management Company specializing in high quality appraisal reports that comply with all industry guidelines and regulations. With its headquarters in Rockville, Maryland, Coester Appraisal Group was founded in 1970 as a local appraisal company but has since developed into a formidable force in the appraisal management segment. For more information, please visit Coester Appraisal Group online at http://www.CoesterAppraisals.com.

 

 

 

 

 

appraisal management

fha appraisals

appraisal management companies

fha appraisal compliance

reverse mortgage appraisals

appraisal services

appraisal management company

coester appraisal

fha minimum property standards

best appraisal management company

Written by appraisalmanagementnews

November 1, 2011 at 4:55 pm

Coester Warns On Lenders Not Being Ready for UCDP and UAD Deadlines

leave a comment »

Brian Coester, Coester Appraisal Group

The Uniform Collateral Data Portal (UCDP) and Uniform Appraisal Dataset (UAD) deadlines are right around the corner and with the constant changes in appraisal regulations over the past years it’s easy to get lost in it all and just say ‘My Appraisal Management Company is taking care of this.’

The reality is — with these new UCDP and UAD changes, the updates are probably not being handled properly and you are probably not ready for the changes; changes that are taking effect December 1, 2011.

The UCDP is a part of Fannie Mae and Freddie Mac’s Loan Quality Initiative (LQI) that started these programs over two years ago under the Collateral Data Delivery (CDD) program. Brian Coester, CEO of Coester Appraisal Group, has been conducting presentations and educational seminars for local Mortgage Bankers Associations (MBAs) around the country. Coester expressed his shock at the lack of preparation by both Appraisal Management Companies (AMCs) and lenders. “We had six AMCs at our last MBA seminar and none of them had any idea about what was going on nor were they registered to handle the files for their clients. We’ve been preparing for this for more than a year and it’s shocking that a such a big change would go unnoticed or unaccounted for."

Coester also warns that lenders are still unprepared and a Wells Fargo correspondent rep at one of the UCDP seminars confirmed this. Coester states, "The reps have indicated their correspondents are just getting around to looking at this. The problem arises because the time it takes to register and get what you need set-up and done, is 7-10 business days. Now they are telling people 20 business days, which falls just before the December 1, 2011 transition date. If lenders don’t jump on this they may not be able to close loans or sell loans at all.” Fannie Mae and Freddie Mac require registering for the UCDP which most lenders have not yet completed. “They think they don’t have to register or aren’t going to be held responsible for this. Most of the feedback though, is that they their investor would be handling this; the reality is that’s not the case." says Brian Coester.

Coester is fully registered for the UCDP and will be handling the complete end-to-end delivery, review, and submission files for its clients. "With us it’s pretty simple: login to the UCDP portal, type in our name, add us a Lender Agent, and you’re done. Very few companies will be able to say that it was that easy for them and we are glad we can help our clients." says Brian Coester. Coester admits that he has been working on the project for over a year now.

About Coester Appraisal Group:

Coester Appraisal Group is a nationwide Appraisal Management Company specializing in high quality appraisal reports that comply with all industry guidelines and regulations. With its headquarters in Rockville, Maryland, Coester Appraisal Group was founded in 1970 as a local appraisal company but has since developed into a formidable force in the appraisal management segment. For more information, please visit Coester Appraisal Group online at http://www.CoesterAppraisals.com.

 

 

 

 

 

appraisal management

fha appraisals

appraisal management companies

fha appraisal compliance

reverse mortgage appraisals

appraisal services

appraisal management company

coester appraisal

fha minimum property standards

best appraisal management company

Written by appraisalmanagementnews

November 1, 2011 at 3:20 pm