State of the Union for the Mortgage Loan Process, Part 2

I am pleased to announce I have moved to Western Reliance Funding. Western has been operating for over twelve years in Orange County, and offers some new bells and whistles in terms of service, to include in-house underwriting, and both correspondent and brokering capabilities.

Western works with a number of investors as a correspondent including CitiMortgage, Chase, BofA, GMAC, US Bank, Flagstar, Wells Fargo and more! Most exciting for me is the ability to get back into the business of Reverse loan financing, which I couldn’t offer any longer through Clarion.

My new contact information is:

kcard@westernreliancefunding.com
24422 Avenida de la Carlota, Ste. 180 Laguna Hills, CA 92653
949-470-1333 x111


As a postscript regarding Clarion: I loved working there, and they had a great run. Unfortunately, times have changed and the mortgage industry has undergone dramatic metamorphosis, necessitating my move….in order to be more effective and responsive to my clientele.

State of the Union for the Mortgage Loan Process, Part 2

HVCC is the Home Valuation Code of Conduct. It went into effect May 1, 2009, and effectively cut off all communication between loan officer, or any “party of interest,” and the appraiser. New Appraisal Management Companies (AMCs) sprung up overnight, but there are a number of companies that provide appraisals on a national basis that have been in operation for many years with fairly good results.

Mortgage companies have created their own appraisal management companies, some more equal than others. Unfortunately some of these organizations pay appraisers so little, their quality is very poor. There are others who charge more and tend to have higher quality and success.

The biggest issue, other than appraisal quality, is non-portability. The problems arise when different lenders require appraisals to be performed by specific AMC’s. This means a mortgage banker must determine where a loan will be placed BEFORE ordering appraisal. Otherwise, the appraisal may not be accepted by the lender/bank of choice.

Correspondent lenders typically have two or three choices of AMC’s to use, and as a correspondent, the target lender will accept the appraisal. However, if a loan needs to be brokered to a specific bank due to loan program and parameters, the appraisal must be ordered through that bank’s AMC. This is very limiting to borrowers since it removes much of the flexibility of choice…without ordering a second appraisal. If for some reason a file is declined or does not meet the target investor’s guidelines, a new appraisal will be required in most cases! I have had to order second appraisals on a number of loans this last year, much to my dismay (and my clients’!)

Gone are the days of calling one of my regular appraisers, asking them to “comp” a property for me to give me an idea of value, before embarking on a refinance. We are all operating “blind” these days. HVCC has also caused many appraisers to go out of business (since they AMC’s take a percentage off the top the appraiser earns much less per report than in the past) which is very unfortunate.

Why did this happen? An official of New York State put pressure congress to act to prevent “value inflation,” and this is what they came up with. Initially HVCC only affected Fannie and Freddie loans (those under $729,000) but now it has also been adopted by HUD for FHA loans.

In my opinion this bad law has made it harder for clients to obtain competitive pricing for their loan. It is very limiting, in many ways.