Let’s Talk Appraisals – Or Religion – Or Politics……

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Michael Nelson - Equity Prime, LLC
What You Need to Know About Home Appraisals – Geoff Williams – US News

We all have heard the age-old adage – never talk religion or politics with customers, the date you want to impress, or the in-laws.  Well, we might as well add appraisals into the forbidden discussion category.  As a mortgage lender, this is a tough topic.  Regulations are very clear on the interaction allowed between a loan officer and an appraiser.  Which is to say a loan officer and an appraiser can have no interaction at all.

 

 

Appraisals are a hot topic – lots of emotion and added stress!

Michael Nelson - Equity Prime
What You Should Know About the Appraisal Process – Michele Lerner – Realtor.com

I don’t take issue with the regulations for all the obvious reasons.  History has certainly taught us that relationships between loan officer and appraiser are ill-advised.  But, I do suggest regulation has taken the pendulum too far to the other side.  Scarcity of appraisers and the time required to get an appraisal have made the 30 day close very hard to hit.  Especially in a TRID environment and refinance transactions.  While, I understand that each state is different, I can tell you the appraisal situation in Colorado is especially troublesome.

Appraisal regulations protect the consumer and financial markets from over or under valued homes.  Accurate appraisals are vital to a stable mortgage industry – we learned this lesson in 2007.  The regulations implemented post 2007 have reduced the number of loan officers and appraisers.  Since the mortgage industry is not immune to the laws of supply and demand, the reduction of appraisers has increased costs associated with loan origination.  Consequently, locks extend due to late appraisals and 45 day locks are increasingly more common. The consumer pays these increased  costs.  Increased cost negatively impacts affordable housing and further limits access to financing.  The real estate industry, lenders, and the regulators need to find a tenable solution.

Order the appraisal as early as possible and communicate often with agents & seller & borrower

As a loan originator, I have the appraisal conversation early and often with my customers.  The conversation includes these important discussion points:

  • Set expectations about the cost and time required to get an appraisal
  • A mortgage is a collateralized  loan and without a proper valuation of the property there is no mortgage
  • What is an appraisal management company (AMC)
  • How do AMCs select the appraiser to value the borrowers property’s
  • When an appraisal is late, there is almost nothing I can do as a lender to speed up the process
Michael Nelson - Equity Prime, LLC
Home Appraisals: How do appraisals affect your mortgage – Zillow

Lastly, I explain the importance of promptly returning the the disclosure package, Loan Estimate, and Closing Disclosure.  Prompt return of disclosures is vital to ordering the appraisal as early as possible.  Losing a day or two in the beginning of the origination process, due to late paperwork, is usually costly.

 

Please feel free to continue the dialogue.  E-mail, text, or call me anytime.  As always Happy House Hunting!

Mike

Michael F Nelson
720.213.6260 (voice & text)
mnelson@equityprime.com
@michaelfnelson2
NMLS: 1314188
Licensed in:

Michael Nelson - Equity Prime
California
Michael Nelson - Equity Prime, LLC
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Michael Nelson - Equity Prime, LLC
Florida

 

 

 

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