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lukyk22
1700 Posts |
 Posted - 01/15/2008 : 05:46:28 AM
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| Hi, are most of your A money lenders implementing LTV reductions for declining markets across the board (for those counties) regardless of what the appraisal says? We just got a memo saying if a property is in a declining market (list provided by fnmae) then it is reduced. I have seen posts that say if the appraisal says it is not in a declining market then the ltv cut does not apply. What is the majority doing right now? DO lenders go off the appraisal or the county, and what lenders are just going off the appraisal. |
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FLAmortgage
435 Posts |
Posted - 01/15/2008 : 06:19:22 AM
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| US BANK |
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lukyk22
1700 Posts |
Posted - 01/15/2008 : 07:21:11 AM
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| thanks anyone else have any input on this? |
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Mandyvilla
7736 Posts |
Posted - 01/15/2008 : 07:36:07 AM
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This is a huge issue in the DC area. We got the word that the DU underwriting engines will be updated as of Jan 21st w/ the declining market warnings. The catch is, when asked for by Ken Harney for the list of declining markets, Fannie did not have a list available. This has created a gossip machine that the list is broken out by counties and may be the equivalent of red lining. I am betting it is fear of criticism that holding up the "list." My bet is if they don't collapse from indecision, we should see most of the A paper lenders marking down LTVs in any county listed as declining no later than the end of this month.
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RDwyer
3308 Posts |
Posted - 01/15/2008 : 07:39:06 AM
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If anyone is going off the word of an appraiser without serious market analysis provided in the report, they are crazy, especially in those markets.
There are just as many shady appraisers as there are shady brokers. |
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lucky1s
4071 Posts |
Posted - 01/15/2008 : 07:42:00 AM
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| I understand WFB may still do a declining market dependning upon the circumstances. |
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mganovsky
2123 Posts |
Posted - 01/15/2008 : 07:48:44 AM
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| In a memo from Fannie Mae in mid Dec it stated that for fannie to purchase the loan; if a property is located in a declining market the lender must either reduce the max product LTV by 5% or show proof that the subject property market area has stabilized or had an increase in value for a 6 to 12 month period. |
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mwfan55
720 Posts |
Posted - 01/15/2008 : 07:54:41 AM
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| If the subjects neighborhood is stable , why should it be cut ? We have some huge counties in CA. |
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mudshark
3923 Posts |
Posted - 01/15/2008 : 07:56:26 AM
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| I do keep updated copies of that list and can e-mail them out. This list is being used by most lenders on Agency and alt-a/non-conforming jumbo products. It was not FNMA generated but compiled by one of themajors from DU warnings and cannabalized by others. |
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kajo13
88 Posts |
Posted - 01/15/2008 : 07:56:51 AM
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| Does anyone have a access to a declining market list. I've searched to no avail? |
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Coffee Is 4 Clos
1750 Posts |
Posted - 01/15/2008 : 08:01:55 AM
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| me too- i was just searching FNMA and there are only announcements and info remarking on the FINDINGS stating a declining market... I'm sure that if there is a list available, it will be updated a lot. |
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Hopland
4580 Posts |
Posted - 01/15/2008 : 08:16:42 AM
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There are markets within markets and there are differences between property types in the same market. This is why the issue is so complicated and is compounded when the appraiser is not diligent and the funder is relying on idiotic AVM's and general area market studies.
Take for example a metro area with many different types of neighborhoods and property types. Unsophisticate investors and speculators as well as marginally qualified buyers drove up the pricing on ticky-tack houses in older neighborhoods. These were the first to be adversely affected by the downturn in the sub-prime market because after the ARMs started resetting the under qualified buyers could no longer afford the payments and investors who had hoped for market appreciation are now bleeding money because they can't unload them and the rent covers less than have of the debt service. This cause short sales, forceclosures and excessive inventory and prices and values dropped. That market segment is in decline.
But in these same neighborhoods there might be more upscale homes which were out of reach of lower income buyers and not attractive as investment properties. They tend to be purchased by better qualified buyers who occupy the property as their primary residence. They did not experience a high run up in pricing based on the false economy of teaser interest rates and easy loan qualifications. The market (pool of buyers who would purchase that property type) may not have changed during this real estate cycle and that segment could be described as stable.
The problem comes in when a funder runs an AVM and it is picking up ALL of the properties within a certain distance, or zip code, or MSA. Everything gets lumped together. The median price may be going down because there is more activity at the lower end then the mid and upper end. So they stamp "declining" on everything in that defined area without regard to more specific criteria. Some appraiser's may be doing the same thing using multiple listing service statistics without sufficiently analyzing the data. Or they may have done a good analysis (showing stable conditions for the market type versus declining for the general market area) but did not explain it well in the appraisal report.
These are tough times brokers and appraisrs. From an appraisers perspective I have to say that it is a very difficult time for us. There is less work and the level of analysis and reporting needed to properly do an appraisal is signficiantly higher. Lenders have become very demanding for more in depth report and providing support and documentation. At the same time we are under pressure to reduce fees and increase turn times. The pressure is coming from appraisal management companies who control so much of the appraisal work that they put extreme pressure on fee/turntime reductions and there is an oversupply of appraisers - mostly newbies willing to work for unprofessional fees or "appraisal mills" that send out trainees and pay them little or nothing in return for signing off on experience hours needed to qualifiy for licensing. It's disgusting and harmful. |
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lucky1s
4071 Posts |
Posted - 01/15/2008 : 08:20:46 AM
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I know of several lenders that use this site-
www.dqnews.com
It is Data Quick.
Problem is, it is currently comparing Nov 07 to Nov 06 so it appears to be a huge decline.
As time goes by, it will not look as bad.
For example when they compare feb 08 to feb 07.
But they are always a couple of months behind since January data wont be available until the end of Feb. |
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