Is Your Market Stable, Mate?

It was my turn: My lender downgraded a perfect appraisal based on their computerized valuation system that declared the property to be in a 'declining market'. I hit the ceiling. What does that mean, exactly? Are underwriters just looking for excuses to say no? Maybe.

Co-inki-dink!? The very same day I got this news a certain humongous national bank emailed me their National Declining Market Data List -- posting for all the world to see-- each state by state, county by county list of declining market data. All Washington state counties showed "NO" under the Declining Value column. Now the interesting part was that on that very morning I was sitting in a meeting wherein a lender pronounced the entire state of Washington as a 'basically a declining market'. HUH? My national bank's model (much bigger than this lender) posted not ONE of our counties in decline. So what gives? The busy body I am called my most senior statesman lender who shed some light on their perspective and then I called my most senior statesman appraiser for theirs.

The facts are clear as mud: Lenders want to control the appraisal process so they can limit loan sizes (lend less) control the Loan to Value of a loan (allowing them to charge higher rates for the higher LTVs) and --oh yes, make borrowers pay more and higher Mortgage Insurance Rates for longer. Is this fair? Of course not. Business is not fair. Banks are in business to make money from you. They are not in the fairness business.

STABLE, MATE: Many Washington State communities are deemed to be just fine. That bit of news came from the very chart I received from my national bank. And with exceptions for certain price points and neighborhoods with low sales-- the Pacific NW is doing above average. It only takes one corporate to fire a few hundred folks to see values in certain neighborhoods screech to a halt as too many houses go on the market at the same time. And while some urban regions may not be selling their condos (with so few lenders funding them) we do have sales.

Motive to Downgrade? To suggest that an entire state is a "Declining Market" could be a way for lenders to protect their investors by keeping their money safe inside the vault. If that is the goal perhaps they should stop advertising their mortgage services?

FYI: The appraisal valuation model is being challenged by new guidelines proposed by Freddie/Fannie to cut out the human appraiser from interacting with mortgage professionals. OK so some crooks helped value a passel of overpriced houses to retirees who didn't exist. Enough already. Such incidents happened in areas where the crooks clearly outnumbered the honest folks! If your brokers are no longer able to interact with appraisers then the value of your property will be in the hands of lenders themselves. Is this a good thing? We think not. If you lender is the only one allowed to brief you appraiser or use AVM's and you disagree with the result, you will possibly have to pay for a new appraisal with lender two and so on. In many cases today if the value is 'not there' we must decline the application based on the tighter Fannie/Freddie guidelines. How long do you think borrowers would put up with double or triple appraisal costs if they have to go from bank to bank paying for a new appraisal each time? Right now one appraisal with your broker can get your application in front of several lenders simultaneously. Think about it: $450 x 3 banks = $1,350 and you could still get a NO? The new code takes effect May 1, 2009 ready or not!

PSSSST!! Support your local Residential Real Estate Appraiser. Pass it on!

We are still locking rates at 5.125 - to 5.25% range today! Don't dally if you are in the market.

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susan templeton www.loannetter.com

washington loan officer license 510-LO-31434 branch license: 510-MB-24707-50145