July 2009

CLEARING UP CONFUSION OVER THE HVCC

ASK MARTITIA

QUESTION:  Which loans must follow HVCC guidelines?

MARTITIA: The HVCC applies to all mortgage loans, originated on or after May 1 of this year, that are being sold to Fannie Mae or Freddie Mac.

QUESTION: Is a mortgage broker allowed to supply a lender with a list of approved appraisers to use on loans involving that particular broker?

MARTITIA: No, not if the loans are being sold to Fannie Mae or Freddie Mac.

QUESTION: Is a lender that has its own list of approved appraisal management companies (AMCs) allowed to give a mortgage broker the opportunity to choose which AMC on the list to use on an appraisal for property offered for collateral on a loan in which the broker is involved?

MARTITIA: No. Giving the broker any power in the selection of the appraiser would violate the terms of the HVCC.

QUESTION: Under the HVCC, is a mortgage broker allowed to directly provide property and borrower information relating to a loan application to an AMC, which has been selected by the lender?

MARTITIA: Yes. As long as the lender has already assigned the specific appraisal to the AMC, the broker can, with permission from the lender, provide information to that AMC.

QUESTION: Does the HVCC allow the appraiser to collect the appraisal fee from the borrower?

MARTITIA: No. The HVCC requires the lender or the authorized third party of the lender to collect all fees and to provide for all compensation to the appraiser.

Martitia Mortimer, Elliott’s executive vice president, answers appraisal questions on a regular basis in Elliott Real Estate News.

ELLIOTT® IS NOW OFFERING BPOs

ELLIOTT® & Company Appraisers is now offering broker price opinions (BPOs) to its strong line of real estate evaluation products.

“In order to satisfy a growing number of clients, we have decided to add BPOs to our line of evaluations services,” said Charlie Elliott, president of ELLIOTT® & Company Appraisers. “Some of our lenders have been asking us to perform BPOs to assist them through the foreclosure process on some of their loans.”

As in the situation of appraisals or any other type of evaluation, ELLIOTT® can perform a BPO anywhere in the United States.

“I believe many lenders, who have a loan in pre-foreclosure, would like to get a BPO on properties serving as collateral," said Carlyle Holt, Elliott’s director of client services. “BPOs are often needed in the initial step of their foreclosure process.”

Anyone in need of a BPO is encouraged to call the client services department at (800) 854-5889.

FBI SAYS MORTGAGE FRAUD SIGNIFICANTLY INCREASED LAST YEAR

Despite stepped-up measures to control mortgage fraud, this type of crime is growing rapidly in the United States, according to figures provided by the FBI. The bureau reported a 36% increase in mortgage-fraud reports in 2008 over 2007. The report blamed such increased activity on the drop in stock prices, as well as the tightening of credit for mortgage loans.

“These combined factors uncovered and fueled a rampant mortgage fraud climate fraught with opportunistic participants desparate to maintain or increase their current standard of living,” the report stated. “Industry employees sought to maintain the high standard of living they enjoyed during the boom years of the real estate market and overextended mortgage holders were often desparate to reduce or eliminate their bloated mortgage payments.”

ECONOMY CONTINUES TO TAKE TOLL ON COMMERCIAL REAL ESTATE

The commercial real estate market remains in turmoil as fallout from last year’s financial meltdown continues to affect it.

According to Reis, Inc., a commercial real estate performance information firm, vacancy rates at strip malls in the United States rose to 10%, a 17-year high, in the second quarter of this year. Average asking rents in these locations dropped to $19.28 per square foot, down 0.7% from the first quarter and 1.7% lower than what they were a year ago. Average asking rents in regional malls dropped to $39.42 per square foot, 2.9% below last year’s levels.

Not only are commercial-property landlords lowering rents, they are also, in more cases, accepting tenants on short-term, rather than the traditional long-term leases.

“Until we see stabilization and recovery take root in both consumer spending and business spending and hiring, we do not foresee a recovery in the retail sector until late 2012 at the earliest,” said Victor Calanog, Reis’s director of research.

The office market is doing no better than its retail counterpart. Reis reported an almost 16% vacancy rate for the office market in the second quarter. The company predicted that rate to peak at 18.2% next year.

“It’s decaying and getting worse,” Dr. Canalog said of the office market. “Given the depth and magnitude of the recession, you can argue that we are facing a storm of epic proportions, and we’re only at the beginning.”

QUOTES

“The best executive is one who has sense enough to pick good people to do what he wants them to do and self-restraint enough to keep from meddling with them while they do it.” -- Theodore Roosevelt

“The cynic knows the price of everything and the value of nothing.” -- Oscar Wilde

“A little learning is a dangerous thing, but a lot of ignorance is just as bad.” -- Bob Edwards

“America is a country that doesn’t know where it’s going, but is determined to set a speed record getting there.” -- Laurence Peter

“We can lick gravity, but sometimes the paperwork is overwhelming.” -- Wernher von Braun

 

Newsletter Editor: kevin@elliottco.com
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