Susan Templeton

This week, the House Financial Services Committee passed H.R. 3126, the "Consumer Financial Protection Agency Act of 2009" including an amendment to repeal HVCC, the Home Valuation Code of Conduct, or as we call it, the "Havoc Rule". The bill still has to clear both houses and be ratified into law. Any chance of that before Christmas to save the sale market running up to the new year?

This bill also contains the First Time Buyer Tax Credit extension and provisions to assist repeat home buyers and small businesses with tax breaks. All great ideas. But as measures, resolutions and bills go, it will be very crucial what of any substance survives. We have a Congress and an Administration that seems intent on self regulation by the biggest offenders while penalizing the solo entrepreneurs.

Thanks to all the realtors, mortgage brokers, appraisers, investors and home buyers for supporting this legislation. Read the recent NAMB release on how this affects our national housing industry.

Will FHA fall prey to HVCC? We are particularly concerned that FHA is supposed to adopt HVCC in January 2010. Currently, FHA certified appraisers may be hired directly. Since the adoption of the HVCC, we have witnessed delays while extra paperwork and reviews fly back and forth via a third party mechanism; the loss of fees to middlemen of Appraisal Management Companies, and appraisers from outside our area delivering low-ball valuations. Many senior appraisers are retiring rather than contend with the impacts to their businesses. Who is being served? AMC's and the banks that own them!

I know this sounds like sour grapes. But the effects speak for themselves:

"In a recent Internet poll, real estate industry professionals were asked to indicate the value that was generated by their last HVCC appraisal relative to the sales contract price that the seller and buyer had agreed upon. With 57.7% of the sales values being lowered by more than 3% the results below highlight how dramatically HVCC is artificially deflating the value and equity of every home in America." www.ThinkBigWorkSmall.com

This rule has forced brokers and mortgage banks like ourselves to hire AMC's in order to define an appraiser group. So now, appraisers must sign up with multiple AMC's to cover a multitude of lender preferences (i.e., their own particular criteria)-- which means higher costs to them and fee cuts, while raising the cost to consumers. Brutal!

Mortgage professionals, appraisers and realtors and our local politicians support a vibrant real estate recovery and rely on fair and professional valuations to help achieve this. Please call, email or write your Congress Persons and ask them to support this legislation.

And hey--be careful out there!

Military boot size that is. Congress is dithering whether to extend the FTHB Tax Credit at all...and so they are suggesting the extension will only go to Veterans who have served overseas during the last year. Those service members who have served overseas for 90 days in 2009 will have an additional for six months to take advantage of your First Time Tax Credit. Major political ploy to win hearts with military families. Hint hint...your average Joe the plumber is unlikely to qualify for this extension.

Have you written, called, emailed and bothered your Representatives and Senators about this yet?

Loan bottleneck: Meanwhile, first time buyers are piling on at underwriting like locusts and we have seen quite a few lenders start to put the brakes on by hiking rates this week...just in time eh? Those who need(and deserve) assistance are more confused than ever by Realtors and sellers suggesting the credit will be extended and the buyers will receive the funds to close (!). No kidding, I hear this every day. Do yourself a favor and refer folks to the IRA or their CPA and back off.

Short Sales and their particularly annoying dance between lenders and asset managers have created quite a backlog in our area with the very people who need these homes. The time it takes to negotiate a sale on these often lower priced properties has been a real deterrent. Obama has proposed Universal Short Sale Guidelines to manage short sales and move them along, according to the Think Big Work Small dynamic duo, Brian and Frank: http://www.thinkbigworksmall.com/mypage/archive/1/23076

House Bill HR2483 supported by National Association of Realtors, calls to extend the FHA higher Loan limits as permanent--support this! In addition, this bill supports removing the non-owner occupied ratio limits on condomimiums to help more condo buyers qualify for FHA loans...which translates into putting more OWNERS into condos. More user friendly aspects to this bill would allow owners to buy condos and help ease the market supply of condos again. What a great idea! Woo woo NAR!

Home Affordable Modification Program (HAMP) Update

Freddie Mac has been reduced to going door to door to attempt stopping foreclosures. Well...wonder how they are being received by their beleaguered mortgagees? Anybody seen Freddie on your street yet?

$4.7 Billion headed to the usual suspects: To date, our modification partner's experience with the primary originating banks of so many distressed homeowners has been pretty hard going. Oddly, the HAMP program has not been all that popular with some of the biggest banks with the highest foreclosure rate. Namely Countrywide, GMAC, Citi, National City Bank. So to encourage these big banks to actually USE the government foreclosure assistance or modification/refi programs our Federal Govement is giving them an additional $4.7 Billion to get them on board. Which means if you have had a lame response to your request for loan modification at first request, then try try again.

One point: Many servicers of FHA and VA loans are also servicers of Fannie and Freddie Loans. They approach their responsibility of modification according to how much the servicer, i.e., investor is willing to work with a given borrower. USDA and VA have higher percentage of guarantees than FHA which is insured against default-- but when the lender, i.e., the servicer is left holding the bag once the government funds run out they are not in a very helpful mood.

Originally, HAMP, part of the U.S. Treasury's Home Affordability & Stability Plan is also working in tandem with the Neighborhood Stabilization Act. These programs are designed to help at-risk homeowners by providing fair and consistent modifications. Neighborhoods with a high level of foreclosures are being given extra consideration to help prevent the loss of values such a rash of high foreclosures sets in motion. The fact is: many wily investors are swooping in and BUYING distressed homes at short sale prices and moving folks on quicker than these programs are arriving to help. There goes the 'hood?

Here are a few relevant information links:

Delegation for GSE and non-GSE-insured loans

Read the Waterfall criteria set by the U.S. Treasury for Fannie Mae, Freddie Mac and non-GSE servicers.

For more information on the U.S. Treasury's program or GSEs' requirements, please visit:

U.S. Treasury's HAMP

Fannie Mae's HAMP

Freddie Mac's HAMP

Help me out here. I have a 20 year veteran Real Estate Developer telling me the HVCC is a good thing! Really!! That onerous Home Valuation Code of Conduct that has sent many brokers and borrowers running to FHA in order to get a decent valuation. I'd really like to hear your experience. Any pointers welcome!

His arguing points are:

1. Mortgage Brokers (and Realtors) are jealous we no longer 'control values'.

2. We are just eager to create higher % loans for the most money and screw the borrower.

3. Appraisers won't travel outside their areas due to travel costs.

4. Appraisal Reviewers work the same region as the appraiser and know the turf.

OK: These 4 points are pretty off base. How can you sputter an answer to someone with these kind of blinders on to what is really going on? Most of us in the residential lending side are so in knots over having no contact with our appraisers, especially to SAVE the borrower if their deal is not doable. What if something needs to be corrected, however minor?

Mortgate Brokers never controlled value. Anyone who tried is out of business (including Countrywide and Washington Mutual). Point 2 is always a greed factor that most borrowers get wind of. If you try to talk get borrowers into loans they can't afford you are out of business by now.

The appraisers willing to travel distances in my area are quite prevalent! I had one guy tell me he covers Oregon to the BC border and feels informed about anything on the west of the state. Guess he likes to drive?

Unfortunately, owners and buyers feel their values are being unfairly downgraded by this system. We can't comment now. If the value is not there, we now face multiple appraisals and reviews, which takes time and money out of everyone's pocket. Often the borrower's credit is dinged beyond repair in the process to review and resubmit to a new lender when their AMC trashed their value. We have had underwriters three time zones away knock our values and pull their own comparables. Asking for a review costs on avearage $400 and the risk is it will be reviewed by yet another faceless person at a computer in another state who is looking at sales data with no idea what the neighborhood factors are. So much for local reviewers?

Did this person's banker friends just put him up to annoying me? Oh yea, probably! HUH! I fell for it. That's right. This person's banker pals aren't lending him any money right now for HIS developements so he's really annoyed a loan officer can scurry over to FHA and get money for home buyers. Ya THINK?

If you'd like to urge congress revisit the Home Valuation Code of Conduct, please consider adding your name to the petition: http://www.hvccpetition.com

This news is not going away fast. In the wake of FHA and VA lenders closing the window for funding Manufactured Home Loans (August 09) I am canvassing our network for solutions, conventional, portfolio, you name it. Here's the skinny:

The FEW lenders still funding Manufactured home purchases require:

1. Higher credit standards for both borrowers

2. Higher down payments than stick built homes

3. Higher interest rates and closing points

4. Newer age limitations on the home (which creeps up every year, 1994 is typical)

My August post on this: http://activerain.com/blogsview/1202931/manufactured-homes-take-a-hit-

What's the Big Deal? Manufactured homes represent significant risk to the investor because defaults in this housing sector are extremely high. My portfolio lenders won't fund anything older than 1994 . The list of no gos gets longer by the day.

What's a Seller to Do? While this is not my area or expertise, it appears the loss of good lending terms will seriously affect resale value of all manufactured housing. Higher insurance fees (and fewer insurers) are an ongoing factor.

MFD Specialist Lenders: A Manufactured Home Lender I spoke with today offers 12% interest rates on higher LTV's. They cherry pick the properties and rates depend on age of home, credit factors, etc. They are extremely busy picking up the pieces even at those interest rates (!) Since August, the government mortgage lenders who were selling their FHA Manufactured Home Loans to Taylor Bean now have no place to sell them...so the question lingers: who will buy and service them in these loans in this market? Portfolio specialists charging high enough interest rates to cover their behinds, that's who.

Foreclosures high in Manufactured Home category. I was told today that banks are so overloaded with defaults in this category they are reselling them for pennies on the dollar. Just look at any FHA or VA repossession site. 99% are Manufactured Homes.

MFD Industry Implications I understand Warren Buffet owns a Manufactured Home Company. Wonder if he's taking his lumps on that? A community dependent on a Manufactured Home plant, the suppliers to that plant, the distribution chain, and everyone who cuts hair or feeds the workers of that plant will be in for an unpleasant surprise unless they can quick retool and up-skill to the next level.

Enter Modular:The Modular Housing Industry (factory built in sections on timber sub-floors) will likely benefit from this news. Modular homes are classified 'stick built' construction and are more affordable than most conventional homes due to economies and efficiencies of scale and under-cover building. This category is worth watching!

Here's my blog on that: http://buildnet.blogspot.com/2007/12/gliding-toward-green.html

RECAP: Because Fannie and Freddie will only fund 80% loan to value on newer homes with perfect credit, this defeats the purpose of entry level housing since very few borrowers have 20% to put down. VA lenders are scarce as hen's teeth.

I know Realtors are reluctant to give this news to their clients for whom they may be listing or negotiating a Manufactured Home transaction. I've heard Realtors trying to steer borrowers to 'their lender' who 'just funded' a manufactured home a few weeks ago. Sure, that lender funded a home they had locked a loan 30-45 days ago. They can no longer originate that same loan unless they are willing to hold it. Most smaller banks are so distressed by local conditions that underwriters are being told to flatly deny a manufactured home purchase or refinance.

REQUEST: I am seeking a VA lender for a Manufactured Home Purchase for a well qualified borrower. I have 14 "no's" in my inbox today. My poor borrower even called the Veteran's Adminstration and was told it's not the VA. This confuses everyone. Lenders are simply not happy about funding manufactured homes. Their investors, you and me, their depositors are not happy about it. We need better answers for our buyers! (yes would be nice?)

IF YOU KNOW ANYONE FUNDING VA MFD HOME 100% PURCHASES TODAY PLEASE TELL THEM TO CALL ME NOW!!! ....and --hey hey hey...be careful out there!