DECEMBER 2011

                MERRY CHRISTMAS FROM
          ELLIOTT® & COMPANY APPRAISERS


We at ELLIOTT® & Company Appraisers wish you a Merry Christmas and a Happy New Year. We are thankful for the expansion of our business that allowed us to experience significant growth in the size of our staff in 2011 and look forward to continued success in 2012, which will be the 34th calendar year that our company has been in operation. As we celebrate the holidays, we would like to express our appreciation for the business we have received from our long-time clients, as well as the ones who have started doing business with us this year.

Our office will be closed on Monday, December 26, and Monday, January 2, for the holidays. We will be open all other weekdays during the holiday season, including Friday, December 23, and Friday, December 30, offering appraisal service in all 50 states.
 

MORE THAN THREE OF FOUR HOME SELLERS
OVERVALUE THEIR PROPERTY IN ASKING PRICE

According to a recent study by HomeGain, 76% of home sellers want to list their homes at a higher asking price than their real estate agents recommend. At the same time, buyers thought they paid too much for the homes they purchased. The Realtor-oriented website noted that the difference between what sellers expect for their homes and the price their agents recommend grew in 2011, despite the downturn in housing prices during the year.

“Home owners and real estate professionals appear to be in sync regarding the direction of home prices,” said Louis Cammarosano, general manager of HomeGain. “Home buyers and sellers, however, continue to remain apart as to home valuations with the vast majority of home owners thinking their homes are worth more than their agents and the market are telling them.”


FANNIE, FREDDIE SUSPENDING HOLIDAY EVICTIONS

 

Fannie Mae and Freddie Mac announced that from December 19 through January 2, there would be foreclosure moratoriums on all single-family homes, as well as two-to-four unit properties.

“The holidays are meant for families to spend time together, especially if they have gone through the stress of financial challenges and foreclosure,” said Terry Edwards, executive vice president of credit portfolio management at Fannie. “No family should have to give up their home during this holiday season.”

These moratoriums will not halt pre-foreclosure and post-foreclosure activities, the GSEs noted.

“If the property is occupied, our foreclosure attorneys will suspend the eviction to provide families a greater measure of certainty during the holidays,” said Tracy Mooney, senior vice president of servicing and REO at Freddie Mac.

 

FED REPORT BLAMES HOUSE FLIPPING FOR MELTDOWN

 
A report from the Federal Reserve Bank of New York concluded that real estate investors who bought a large amount of homes on credit, for the purpose of selling them at higher prices, played a major role in the housing meltdown that stuck in 2008 and still has a damper effect on home prices and sales.

“We conclude that investors were much more important in the housing boom and bust during the 2000s than previously thought,” researchers at the New York Fed wrote. “Longstanding tradition in the mortgage business and the predictions of economic models hold that investors will quickly default if prices begin a persistent fall. This is what happened starting in 2006.”

The report indicated that profit-seeking investors played a major role in elevating home prices during 2004-06, but defaulted in large numbers when the housing market took a downturn, as it concluded, “In the end, even the value of the 20% down-payments made by responsible, prime borrowers was wiped out, leaving the housing market, and the economy, in the vulnerable state we find them in today.”

 
FHA FINANCIAL DIFFICULTIES DISCUSSED
AT MORTGAGE CONVENTION
An alarming audit report on the falling cash reserves at the Federal Housing Administration (FHA) was a subject of discussion at the 2011 MPact Mortgage Banking Conference held earlier this month in Dallas. One participant, Joseph Gyourko, professor of real estate finance at the University of Pennsylvania, noted the FHA may need as much as $100 million from the U.S. Treasury over the next several years. Such a prediction is being disputed by Acting FHA Commissioner Carol Galante.

“If the FHA got restricted to where it couldn’t reach out to the market it covers, I don’t know when we would recover,” said National Capital Funding President Roger McKnight. “Housing has always driven the economy and we have to have those programs in order to put housing in perspective of the economy.”

McKnight said any government action to bail out the FHA would be “political suicide.” Meanwhile, Roseanna McGill, chairman of PrimeLending, said the FHA’s finances are “better than they have ever been,” and added, “FHA is such an important piece of the housing market for first-time homebuyers.”
 

LAS VEGAS OUTLAWS IMPROPER PROPERTY MAINTENANCE

The Las Vegas City Council unanimously enacted an ordinance that holds lenders liable for the upkeep of homes they own, including those in default or foreclosure. The wording of this new law stated that its purpose is to “establish a program to reduce the amount of deteriorating real property located in the City.”

The new ordinance in Vegas, which has a foreclosure rate that is six times the national average, requires lenders to designate a property manager to inspect the property every month and maintain and secure the property throughout the default and foreclosure cycle until it once again becomes occupied.

“Neither the law nor a lender’s loan authorize a lender to take control of real property before some form of foreclosure mechanism has taken place,” a Nevada State Bank executive said to the council. “We therefore urge that the language of the ordinance, and the mechanism for implementation, be cognizant of those limitations on a private lender.”

 

 
NOTES OF VALUE
The Federal Reserve Bank of New York reported that 2.5% of current mortgage balances in the third quarter were delinquent, allowing for the first increase in that figure this year.

Lender Processing Services (LPS) reported that foreclosure inventories made up 4.29% of all active mortgages, an all-time high, at the end of October.

The Case-Shiller index registered a 3.9% drop in home prices in the third quarter, compared to home prices from the third quarter of last year.

The LPS home price index reported the national average price for homes in September was $202,000, 1.9% below the average in September of 2010.
 

ASK MARTITIA

QUESTION: An appraiser completes an appraisal that does not support the pending sale price on a house. The sale falls through, but a few days later another price is agreed upon by the same parties. The appraiser is asked by the same client to provide a revised report that contains an analysis of the latest agreed-upon price. Does USPAP require the appraiser to consider the revision request to be a new assignment?
 
MARTITIA: The Uniform Standards of Professional Appraisal Practice would not require the appraiser to treat the revision request as a new assignment as long as the client does not ask for a more current effective date on the revised appraisal. If the client does indeed require a different effective date, then USPAP would mandate treating the revision request as a new assignment.

Martitia Mortimer, Elliott's executive vice president, answers appraisal questions on a regular basis in Elliott Evaluation News.


 
QUOTES

“He who has not Christmas in his heart will never find it under a tree.” – Roy L. Smith

“I hate a man who always says yes to me. When I say no I like a man who also says no.”
                                                                                                                  – Samuel Goldwin

“It is wise to direct your anger towards problems, not people; to focus your energies on answers, not excuses.” – William Arthur Ward

“Elected leaders who forget how they got there won’t the next time.” – Malcolm Forbes

“Civilization and profits go hand in hand.” – Calvin Coolidge

 


 
Newsletter Editor: kevin@elliottco.com   
   
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