Another Hurdle for Appraisers

March 29, 2010

Residential

Appraiser's May Suffer Further Job Loss

Appraiser's May Suffer Further Job Loss

Starting April 5th, 2010 the government is going to start the Home Affordalbe Foreclosure Alternative program, or HAFA for short. HAFA was created in 2009 with a goal of working with home owners to make their mortgage payments more affordable to avoid home foreclosures.

Highlights of the Home Affordable Foreclosure Alternative Program Include:

  • Not allowing the servicer to require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.
  • Allowing the borrower to obtain a pre-approval for short sale conditions before their home is put on the market. Currently, servicers will not discuss acceptable terms until an purchase contract has been received.
  • Prohibiting the servicer from requiring a reduction in the real estate commissions as a condition of the short sale approval. This is another step forward since short sales require a lot more effort and experience from real estate agents and is the type of transaction where they should be paid the most
  • Using standard processes, documents, and timeframes (but see previous mention of servicers losing files so the timeframes don?t start)
  • Providing financial incentives to borrowers and servicers. Borrowers will be entitled to a $1,500 relocation incentive if they meet the requirements of the program. Servicers and investors will each be eligible to receive up to $1,000 each paid by the US Department of Treasury
  • Requiring the loan be reported to the credit bureaus as ?paid in full for less than the full balance?

Real Estate Agents Will Run the BPO’s

HAFA will be using real estate agents to run the comparable market analysis (CMA) on the home. Some banks also call these CMA’s “Broker Price Opinions” or BPO’s. Some may have issue with this. The main group that may have an issue would be the appraisers. Appraiser’s are properly trained, licensed and have an unbiased opinion when it comes to valuing a property. They have no chance of obtaining a listing or selling the property to a client. Therefore, they truly are a disinterested third party. BPO’s are completed by real estate agents in hopes of obtaining the listing. Thus . . . no longer a disinterested and unbiased third party.

More Job Loss for Appraiser’s

Not only has the Home Valuation Code of Conduct, (HVCC), hurt the appraisal business, now another program is set to remove the appraiser from the equation. Once again properties may be over- or under-valued. Not only that, this opens the door to short sale fraud.  Stay tuned, I will explain short sale fraud in a second post.

We would like to thank Paulfeeney for sharing today?s photo via the Creative Commons License.
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About Katie Anderson

Katie Anderson is a respected and successful broker at Sudler Sotheby's Realty as well as a certified appraiser. She specializes in representing clients who purchase and sell condominiums, town homes, single-family homes and income property in the Chicago land area. In her small amount time in the real estate game (she became an agent in 2003) she has assisted in excess of 400 deals and over $200 million in sales and continues to use her skills as a certified appraiser. Katie resides in Chicago's Bucktown neighborhood with her loving husband and 4-year-old-daughter, where she spends much of her spare time with her family and friends. You can contact her at katie@thechicago77.com or at andersonbraack.com

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  1. Fannie Mae Lights a Fire Under Short Sales | The Chicago 77 - June 9, 2010

    […] a servicer decides to use HAFA for such mortgage loans, the servicer must follow the Treasury’s HAFA Program, obtain any necessary third-party approvals, and comply with the reporting requirements of […]