WELCOME
presented by
THE CURRENT ECONOMY
presented by:
LOU BARNES
presented by
Source:
Fed Z-1
3/10/11
pg 104
Source:
DOLA State
Demography
Office
Source: DOLA Division of Housing
Source: DOLA Division of Housing
Source: DOLA Division of Housing
Source: DOLA Division of Housing
Source: DOLA Division of Housing
TAKING BACK CONTROL
OF THE APPRAISAL PROCESS
presented by:
SCOTT HAMLING
presented by
Overview
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Manage Premier/CCMC appraisal department
Learned appraisal business in college with father
Experience training realtors – Kentwood Co.
Changing landscape of appraisal industry
Today, appraisals are one of most important
elements to the sale of a property
• I’m here to help you with appraisal challenges!
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History
• In 2009: Home Valuation
Code of Conduct (HVCC)
• HVCC: crime for loan
production employees to
choose appraisers or contact
an appraiser about valuation
• HVCC has been replaced
with Dodd/Frank Act
• Dodd/Frank: Federal crime for loan production employees to
contact appraiser about valuation
• Important: Dodd/Frank does cover realtors!
• BUT: Realtors have right to discuss valuation with
appraisers
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Mistakes To Avoid
#1) Always use local appraisers (national lenders work with
national appraisal companies)
#2) Listing agent should always meet appraiser at the property!
Appraised value sticks:
• FHA – 4 months
• VA – 6 months
Appraisal comes in low, now what?
Less than 10% chance of raising value of an appraisal
Appraisers have no incentive to do a great job –
you need to be proactive in protecting your transaction!
Selling Agent
Responsibilities
• Take control of financing portion of transaction
• You MUST work with a local loan officer
• That loan officer MUST work for company that
has control of quality of appraisers used.
Premier Mortgage Group:
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In-house appraisal management division
Identified best appraisers in the market
Strict guidelines and lending training for appraisers
Our appraisers do great work, are paid well
presented by
Listing Agent
Responsibilities
• Seller will be angry with YOU if deal does not
close (not buyer, buyer’s agent, or lender)
• Get it right the first time – less than 10% chance
of increasing the valuation after appraisal
– If considering an offer, find out if buyer’s lender can
control appraisal process or employ an AMC
– If they use an AMC, voice concern (loudly) that AMC’s
do not provide good service
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Listing Agent
Responsibilities
• Keep schedule flexible to accommodate appraiser
• Meet appraiser at the property every single time!
– Bring helpful information for appraiser
– If appraiser mentions HVCC or Dodd/Frank and does
not want you there, call lender to request next appraiser
in the rotation
• A contract extension is much simpler than
raising a low appraisal
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Listing Agent
Responsibilities
Appraiser packet suggestions:
1. Contract
2. Listing brochure
3. List of all property upgrades, completion dates and costs
4. The sketch if property was measured before listing
5. County assessor records
6. Listing history
7. 1004MC form obtained from MLS listing service
8. Comparables to support sales price (listed, pending, sold)
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Listing Agent
Responsibilities
Before looking for
comparables:
1. Pull up a 1004MC form
2. This form will dictate the
comparables needed
3. Example:
– 1004MC shows
values are declining
– Investor requires minimum
3 comps that closed in past
3 months
– PLUS 2 listing or pending sales
4. All comparables must adjust for
at or above appraised value
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1004MC Report:
Adding Over 100 Listings
1) Click the “User” tab at the bottom left of the home page
2) Click on “Preferences” in the left hand column
3) On the field “Number of Listings In Grid”, click the “User Defined”
button on the right and type “400”.
4) Very important – at the bottom of that screen hit “Confirm Changes”
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Accessing
1004MC Form
Accessing
1004MC Form
presented by
Accessing
1004MC Form
Accessing
1004MC Form
Accessing
1004MC Form
Accessing
1004MC Form
Comparables Report to
Provide Appraiser
Comparables Report to
Provide Appraiser
presented by
Comparables Report to
Provide Appraiser
Comparables Report to
Provide Appraiser
Determining List Price
–to- Sale Price Ratio
Listing Agent
Responsibilities
Meeting appraiser at the property:
• Setup as for a buyer showing (clean and well-cared for matters)
• Offer to help hold measuring tape (maybe time to offer the sketch?)
• Meet somewhere you can spread out materials you prepared:
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Review 1004MC form
Explain why you chose the comps you have
Show other comps you found, and explain why they are poor comps
Tell about the property’s special features
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Listing Agent
Responsibilities
Meeting appraiser at the property:
• Turn appraiser loose (do not follow from room-to-room)
• Before appraiser leaves:
– Ask if able to meet minimum FHA standards
– “Really appreciate if you would contact me if problem with values”
• If there are value issues – don’t panic!
– Stay friendly with appraiser
– Offer to do more research on comps
– Consider contract extension
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Next Steps
Too much material? I’m available for follow-ups!
Realtors and appraisers value differently:
• Realtors value properties using PPSF
• Appraisers value by making adjustments for differences
I can help you understand this difference and how to find
adjustments like an appraiser
Contact your Premier/8Z loan officer to schedule
a meeting
presented by
CONDOMINIUMS
presented by:
CRAIG NAGEL
MELANIE NYGREN
BARBARA WEADE
presented by
FHA Financing
Effective Immediately:
• If condo project was approved by FHA after 2000
– Recertification available within 6 months of expiration
– Full re-approval required after 6 months of expiration
• If condo project was approved by FHA before 2000
– Full re-approval required
Initial Project Approval Dates
New Expiration
1972-1985
1986-1990
1991-1995
1996-2000
2001-2005
2006-2008 (Sept)
December 31, 2010
May 31, 2011
July 31, 2011
August 31, 2011
September 30, 2011
March 31, 2011
FHA Financing
FHA Association Re-Certifications
• Premier can do re-certifications / approvals
– $900-$1100
– 2-3 week turnaround
• Or, HUD/FHA has 4-6 week turnaround
FHA Financing
What you can do to speed the process:
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Have the HOA complete the Certification form
Check with lender for HOA status
Obtain copy of HOA budget
Find out about any special assessments
Check if HOA has fidelity/employee dishonesty
coverage
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FHA Financing
FHA temporary allowances extend to 6/30/11
Maximum FHA Concentrations (current):
• Existing construction - 100%
• New construction – 50% (after 30% of units have sold)
Maximum FHA Concentrations as of 7/1/2011
(unless extended again):
• Existing construction – 30%
• New construction – 30% (after 50% of units have sold)
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FHA Financing
FHA mortgage insurance has changed:
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1% upfront MI (was 2.25%)
30yr - 0.85%-0.90% monthly MI (based on LTV)
15yr – 0.25% monthly MI (LTV > 90%)
Avoid monthly MI with 10% down and 15yr loan
presented by
Conventional Financing
Primary
Residence
Second
Home
Investment
Property
No owner
occupancy
requirements
with 80% or
lower LTV*
No owner
occupancy
requirements
with 75% or
lower LTV*
70% owner
occupancy
required unless
CPM (then
51% owner
occupancy
required
70% owner
occupancy
required with
LTV above 80%
* Only on fully
completed projects
presented by
Commercial In Project?
• If over 20% of total sqft in complex is commercial
– An issue with conventional financing
• If over 25% of total sqft in complex is commercial
– An issue with FHA financing
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Condo-tels
Widely expanded definition by Fannie and Freddie:
Water - Sand - Snow
Condo near one?
If so, likely will need a portfolio lender.
presented by
Condo-tels
No nightly rentals are allowed
• May cause to be ineligible for Fannie or Freddie:
– VRBO or other vacation rentals (search Google)
– Any nightly rentals within Master Association
– Central Reservation desk exists (even if not in the
subject property complex)
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Red Flags
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Special assessments
Pending litigation
One entity owns over 10% of project
2-4 units: all but 1 unit must be owner occupied (or a
second home)
• 20+ units: must have fidelity bond coverage:
– (3 months assessments) x (number of units)
• Line item in budget for 10% reserves (full review only)
• Owners need to be in control of the HOA (not developers)
• Owners need H06 (walls-in) coverage for 20% of
appraised value
presented by
ENJOY A QUICK
BREAK
presented by
FORECLOSURES
& SHORT SALES
presented by:
JONATHAN GOODMAN
TERI EVANS
presented by
Post Short Sale
Deficiency Claims
4750 Table Mesa Drive
Boulder, Colorado 80305
Facsimile (303) 494-6309 Telephone (303) 494-3000
http://www.frascona.com e-mail: jon@frascona.com
presented by
Post Short Sale
Deficiency Claims
Excerpt from U.S. Bank letter:
U.S. Bank will agree to a short payoff with a net to U.S.
Bank no less than $152,181.88. US Bank will retain
the right to collect any deficiency balance. U.S. Bank
will release its lien upon said property, provided that
any remaining proceeds from the sale other than
previously agreed items are forwarded to U.S. Bank.
presented by
Post Short Sale
Deficiency Claims
Excerpt from Green Tree letter:
(“Green Tree”) will accept and consider payment in the
amount $8,750.00 on the account as sufficient to
release the deed of trust/mortgage…Upon receipt and
verification of good funds, Green Tree will release the
deed of trust/mortgage. However, the remaining
obligation due under the Note, or any former
subsequent modifications to the Note, shall remain fully
due and payable.
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Significant
Credit Events
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Foreclosure
Deed-in-Lieu
Short Sale (settled for less than owed)
Chapter 7 Bankruptcy (liquidation)
Chapter 13 Bankruptcy (restructure)
presented by
How Long
To Buy Again?
How soon can someone buy again after a
foreclosure?
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VA loan – 2 years
FHA – 3 years
Conventional – 7 years
Jumbo – 7-10 years
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How Long
To Buy Again?
How soon can someone buy again after a
short sale or deed-in-lieu?
• VA loan – 2 years
• FHA – 3 years
• Conventional
– 2 years with 20% down
– 4 years with 10% down
– 7 year with less than 10% down
• Jumbo – 7-10 years
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How Long
To Buy Again?
How soon can someone buy again after a
bankruptcy without foreclosure?
• VA loan – 2 years after Chapter 7
– Chapter 13 - after one year of on time payments
• FHA – 2 years after Chapter 7
– Chapter 13 – after one year
• Conventional – 4 years after Chapter 7
– Chapter 13 – 2 years from discharge date
• Jumbo – 7-10 years after Chapter 7 & 13
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How Long
To Buy Again?
How soon can someone buy again after a
bankruptcy with a home included?
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VA loan – 2 years
FHA – 3 years
Conventional – 7 years
Jumbo – 7-10 years
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Tips for
Re-Establishing Credit
• Keep a couple of credit cards out of the
bankruptcy
• After the event – pay everything spotlessly
• Avoid checking account overdrafts
• Never charge over 25% of maximum credit limit
• Re-establish credit with 2-3 secured credit cards
presented by
KEY LENDING
GUIDELINES
presented by:
NANCY TERRY
ARIEL SOLOMON
KATHY STEIN presented by
Gifted Down Payment
Conventional Loans
• Fannie Mae released v8.2 in December
• Borrowers with less than 20% down
– No longer required to have 5% of own funds
• FHA still allows for 100% gifted funds
presented by
Assets Used
As Income
• Can now accept employer-controlled assets
as income (new with v8.2)
• Rule allows us to calculate income stream
• Assets must be liquid
presented by
Save a Seller to Sell
Another Day
• Can refinance with one day off market
• We have refinance options for borrowers
that are upside down due to current market
value
• Some refinances are non-qualifying
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Departing Residence
• Buyers retaining a primary home currently
owned and buying a new primary home
– Rental income included if sufficient equity
– Need Lease, Deposit and Rent
– 6 months reserves
– Reported on prior year tax return
– Multi-Unit - non-occupied units count
• Primary-to-Investment
– Must “make sense” that new home is primary
residence
presented by
Owner Occupancy
For property to be considered “owner
occupied”, buyers must be able to take
occupancy within 60 days of closing.
presented by
Short Sale or REO
Purchases
• Financing is no different
• Many banks and HUD:
– Require extra days for review of HUD1 prior to closing
• Appraisals can take longer
– Due to required final inspection
– Speed up process: utilities “on” during appraisal
• Short sales not “under contract” until bank has
approved the purchase
presented by
DTI & Qualifying
• Debt-to-income ratios
– FHA
– Conventional
– ARM’s
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Paying off debt
PUD purchases
Heloc on existing home or rental
Credit scores
presented by
Income Consistency
• Declining income
• Gaps in employment
presented by
Non-Occupant
Co-Borrower Qualifying
• Still can blend DTI ratios for conventional
• FHA as well with only 3.5% down
• Change to FHA’s MI as of April 18
Loans > 15yrs
Loans </= 15yrs
LTV
Before 4/18
After 4/18
> 95%
90 bps
115 bps
</= 95%
85 bps
110 bps
> 90%
25 bps
50 bps
</= 90%
None
25 bps
presented by
Income From
Other Sources
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Note income for qualifying
Alimony
Child support
Separate maintenance income
presented by
Updates Right Before
Closing
• Credit Reports
• Verification of Employment
• Disputed account on credit
presented by
Seller Carry Loans
• Owner carried 2nd loans or private 2nds allowed
• Seller carried financing – eligible for future
refinance
• Cash transactions and future refinancing
presented by
Good Time to Buy
Investment Property
• Can realize positive cash flow
• Good inventory, low prices
• Prices are down, good future appreciation potential
• Potential income tax advantage (consult CPA)
• Rental rates typically higher when housing market is lower
• Can still do 80% LTV – if 75% LTV rates are lower
• 75% of gross income used to qualify
• 2-4 conforming loan limits are higher than $417K offering
conforming investor rates
presented by
203KS Sneak Peak
• We now offer in-house FHA 203KS
• “Rehab” loan (nothing structural)
• Up to $35,000
presented by
90% Financing Available
on “Kiddie Condos”
• 80 – 10 – 10
• Available for:
– Non-occupant co-borrowers
– Condos with < 50% owner occupancy
presented by
Jumbo Loans Are Back
Jumbo loans are becoming more prevalent
in today’s lending environment.
presented by
FHA 90 Day AntiFlipping Rule is Back
For “fix-n-flip” transactions less than 90 days
from original sale date to new contract
presented by
Knowledge Is Power
Credit is available: preparation is the
key to successful closings
Get your Buyers and Sellers to us early!
Let us be your resource!
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