PAY ATTENTION, SOME THINGS HAVE CHANGED.
Effective July 1, 2009 House Bill 1091 goes into effect. This bill mandates the installation of carbon monoxide detectors in residential properties. The bill applies to all properties - single family, multi-family, mobile homes, owner-occupied, rental, and homes for sale. In other words if someone lives in it, there needs to be a carbon monoxide detector.
Besides things changing minute by minute in the mortgage industry, things are also changing among appraisers. In the "olden days", your lender had a list of appraisers that they found to be efficient, trust-worthy, and accurate. Appraisals for conventional loans could be done very quickly and you could have your results in about a week depending on the time of the order. Unfortunately, there were some individuals who just didn't play by the rules. That resulted in over-inflated values on some properties. We Americans seem to have difficulty in trying to reach a median point, we are either all the way to the left or to the extreme right. That pendulum has swung again and here are the new rules.
We now have a new compliance code called the Home Valuation Code of Conduct. This code prohibits mortgage brokers and bankers from having any direct contact with an appraiser. Appraisals for properties using conventional financing must now be ordered through an Appraisal Management Company (gee, we just created a new business giving someone else a job!). Sometimes an appraisal needs clarification on an item but the lenders cannot have any contact with the appraiser even if the underwriter of the loan needs something changed or has a question about a comp that was used, or correcting a legal description, etc. Let's see how this scenario plays out.
1. The lender orders the appraisal from an AMC.
2. The AMC orders the appraisal from one of the appraisers on its approved list.
3. The AMC waits to hear back from the appraiser to see if they want to do the appraisal (hours, days, etc.).
4. The appraiser is busy or cannot do the appraisal so they notify the AMC.
5. The AMC orders the appraisal from someone else on their list.
6. They do this process until someone accepts the job.
7. The appraiser completes the job.
8. The final report is sent to the AMC.
9. The AMC sends the report to the lender.
10. The lender sends the appraisal to the underwriter.
11. Questions? They go from the underwriter to the lender, to the AMC, to the appraiser.
12. The appraiser makes an required correction and sends the updated appraisal to the AMC.
13. The AMC forwards the updated appraisal to the lender.
14. The lender sends it on to the underwriter.
All communication is accomplished on-line, no phone conversations are conducted. Be prepared to see a rise in the cost of appraisals as we have added another entity to the pot. The AMC will also have to be paid for their work. Realtors® takes note: this is going to slow the process down. Be aware and make the proper adjustments when preparing those contracts. By the way, these new rules do not apply to FHA, VA or Rural Housing Loans.
Just when you thought you had everything figured out, here's another new item. "Walls-In" insurance. You must have insurance to cover everything (cabinets, appliances, personal items, etc.). Check with your favorite lenders to keep up to date with changes in occupancy requirements for condo buyers.
Two of my favorites are Chris Thomas, cthomas@mtgsupportservices.com, 303-345-3683 and Elsa Wohlford, ewohlford@pmglending.com, 303-302-3916. They both contributed information for this blog. They always keep me "in the loop".
