Appraisal Changes

by Lorraine on December 21, 2009

I know that I’m behind in posting anything in my blog, but I have been quite busy setting up a new social networking site for people who love nature, native plants and wildness.   Needless to say my time has been taken up with that but I am still very much involved in the Reverse loan industry.

In the last few months, there have been several changes.   One was to reduce the amount of money a senior could receive from a Reverse loan by 10%.   The cut off before this went into effect was October 1st. and many people missed it and had to settle for a lessor amount on their loan.

The other issue will go into effect on January 1st.   Brokers and Lenders will no longer be allowed to order appraisals directly from the appraisers that they have had relationships with over the years.   Earlier in the year, the Home Valuation Code of Conduct was foisted onto the lending industry and all traditional loans with the exception of Reverse loans, had to order their appraisals through a management company.

The result has been chaos and in many cases resulted in worthless appraisals, killing purchase transactions and hurting the Real Estate industry that has already been hurt by the economy.   Now this method of ordering appraisals will be applied to the Reverse mortgage industry as well and I’m expecting that there will be problems with it.

I’m rushing to complete a loan today and order my HUD case number, so that we can mover forward and order his appraisal before the deadline.  If my appraiser cannot do his inspection by this weekend or the beginning of the following week, it may be too late for my client.

In speaking with one of my processors the other day, she mentioned to me that if a senior is in foreclosure and an appraisal is done through one of the AMC’s (appraisal management company), sometimes the appraisal is too low and a Reverse loan cannot be completed and seniors are losing their homes because of this appraisal process.

I am wondering how using HVCC is going to impact the senior community.  Its becoming more and more difficult to originate the loan and seniors are paying the price.

And if you are interested in my social networking site about nature, please check it out and remember it is in beta form.   There are some things that still need to be completed before it is launched.   It’s such a nice place to “visit” and escape from daily life.

http://naturalgreenlandscaping.com

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HUD Case Numbers

by Lorraine on October 13, 2009

Whenever a Reverse mortgage is originated a HUD Case number is assigned to that particular borrower and their loan transaction.   This is done after they have completed their HUD required counseling, provided a copy of the certificate to the lender, verifying that they have done so, at which time the case number is ordered.

Once this step is completed the lender may order the appraisal, open escrow or request payoff information on any existing loan that the borrower might have.   What’s important for the borrower to know, is that they are assigned only one case number via whatever lender they chose to create their Reverse loan.

If they wish to change lenders, they must request that the original lender release the case number to the lender that they have ultimately chosen to originate their loan.   Plus, if any appraisal  was ordered and completed under the previous lender’s name and registered with HUD it will be used to determine the amount the amount of money the senior will receive if it is less than the HUD lending limit of $625,500.

I recently had a situation where my clients (unbeknownst to me), applied for their loan through another lender prior to meeting with me and the appraisal  was completed by the lender and well under market value (even in our current real estate market).  Due to the poor appraisal, they are not able to receive as much money through a Reverse loan that they should be entitled to have.

They were very upset and thought that they would simply apply for their loan through a different lender and get a better appraisal.   They were unaware that a HUD case number would be assigned to them and they certainly didn’t know that they would be unable to get another appraisal due to HUD guidelines.

Doing an FHA loan regardless if it’s a Reverse loan or a traditional “Forward” one; the procedures are the same.   Few people in the general public would be aware of the need for a case number on an FHA loan and what that would mean to them if they wish to change lenders.

The borrower certainly wouldn’t have any control on how much an appraiser may value their home but it’s important to point out any improvements and possibly have some comparables of other properties in the area for the appraiser’s review.   This might prevent a poor appraisal being done but isn’t a guarantee, either.

It pays to know.

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