Attention Realtors in Arizona: We are in a market identified by Fannie Mae to be a declining market. Tom Burris wrote a great post a couple of months back warning all about this: Attention Realtors in Declining Markets!!!
Well this is real and let me elaborate more upon what Tom stated in his post. I have 6 loan files that are closing this month, and already I have had 2 of them require an appraisal review. An appraisal review is when the appraisal completed is reviewed by the underwriter and they decide to get a 2nd opinion on value. Yes, this usually requires an internal review of that appraisal and requires a 2nd opinion to be given on that appraisers findings. Luckily both of mine came back fine.
Here are some files that I have noticed that are being targeted. I deal with a lot of first time home-buyers, so if your client is borrowing either 97-100% of the sales price, and the homes zip code falls within a declining market value, then this home might need an appraisal review.
The underwriter can also make a decision to NOT borrow to that client at 100% value if they are worried about the value declining further. This has not happened to me yet, but my company has already set some rules in place for these very unique situations.
If your client is putting 10% or more down, then this should not really be an issue.
Right now is not the time to being working with amateurs who do not understand your local market. Please make sure you are working with a Mortgage Lender who understands these real issues.
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I provide full service mortgage planning and guidance for the Tempe Arizona community. I specialize in helping first-time homebuyers obtain homeownership through FHA, VA and conventional mortgages.
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You're up late, Miljour! Good to see you. I hope you made some money today; I didn't.
Mike in Tucson
Mike, I had the luxury of finishing a loan application today that I could not get approved. I love working with 1st time homebuyers, but some really need credit repair badly.
Hi Gary, May I add, now is not the time to be working with an inexperienced appraiser either. Many loan officers, or at least the smart ones, have a nestegg, whereas, most appraisers' are living on borrowed time; many of whom won't need much, if any, lender pressuring to inflate values. Congradulations on the loan closings, six is a pretty impressive number in this market.
Gary,
Nice post! Which zipcodes are affected in AZ? Is it limited towards those directly in the metro Phoenix area or further out of town? By the way, congrats on the 6 loan files!
Dave
Gary, that notation has hit our market, probably about 6 months ago. I inform buyers of this and tell them to expect a review of the appraisal and a possible "downturn" in the appraised value because of it. Frankly, I can't blame the lenders for doing this.
Gary - I agree with what Gregg said. Mortgage professionals need to work with appraisers who know and understand the market conditions for the areas they service. There are a lot who will set regulations and ethics aside to get work, which can ruin a deal when it goes for review.
Hi Guys,
It would be intersting to see comments from Tucson lenders as well as Phoenix.
I met with an appraiser last week that indicated that our market according to his data and not the data from MLs had actually gone up 2.2%
McKchnie - What time frame is the 2.2% increase for? If it has gone up 2.2% from this time last year, that's great. If it has gone up 2.2% from last month, that might be a good sign. It would be interesting to see where his data came from. I do not service Pima County, but as in others areas, there could be pockets of specific neighborhoods or market areas that may show an increase at a specific time. But the trend over the past 3, 6, 12, 18 months would have a better indication of the market conditions.
PT,
The answer is Yes. probably the best program is FHA used in conjunction with a Down Payment Assistance Program like Ameridream. Ameridream gifts you the 3% down payment. Also, you might still be able to qualify for 100% financing, and just need to buy in an area that is not declining. Please call me, if I can answer more questions for you. I am still helping first time home-buyers even in this challenging market.