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ELLIOTT® PARTNERS WITH REALEC
 ELLIOTT®
& Company Appraisers has entered an agreement with RealEC
Technologies, which will enable ELLIOTT® to integrate its
product-delivery system with the most sophisticated technology
currently in use by its mortgage-banking clients.
The RealEC
Exchange is one of the leading electronic partner networks (EPNs) in
the mortgage industry. In addition to partner connectivity, this EPN
provides automatic vendor management, advanced data capture and
document management services that enhance ELLIOTT’s ability to
communicate and deliver services to its clients.
“Our new
technology interface with RealEC allows us to be able to offer
clients state-of-the-art delivery of appraisal products that
interface with the most sophisticated software programs in the
banking industry,” said Charlie Elliott, president of ELLIOTT® &
Company Appraisers.
ANALYSTS PREDICT
MORE HOME-PRICE DECLINES
In the
wake of a gloomy Fannie Mae report on the current economic situation
for housing, a leading housing strategist has predicted three or
more years of falling home prices.
“Whether
it’s the sidelined, shadow or current inventory, the issue is
there’s more supply than demand,” said Oliver Chang, a housing
strategist in the San Francisco office of Morgan Stanley. “Once you
reach a bottom, it will take three or four years for prices to begin
to rise 1 or 2 percent a year.”
This
pessimistic prediction came after the Fannie Mae forecast of a 7%
decline in home sales this year from 2009 and said the drop in
demand following the expiration of the homebuyers’ tax credit
“suggests weakening home prices in the third quarter.” Shadow
inventory, the supply of homes on the market under distressed
financial conditions, is also creating a downward effect on home
prices.
The
National Association of Realtors reported the median price of a
previously owned home in July to be $182,600, about what it had been
in 2003. Brokers had 4 million homes listed throughout the country
that month, about a 12.5-month supply, based on the current sales
pace.
“The best
thing that could happen is for prices to get to a level that clears
the market,“ said Joshua Shapiro, chief U.S. economist at Maria
Fiorini Ramirez, an economic forecasting company in New York. “Right
now, buyers know it hasn’t hit bottom, so they’re sitting on the
sidelines.”
ELLIOTT® ENJOYS
ANOTHER BBB COMPLAINT-FREE YEAR
 ELLIOTT®
& Company Appraisers recently received another certificate from the
Better Business Bureau reporting that it had completed another
complaint-free year (2009). The company retains an A+ rating with
the BBB, which grades companies from A+ to F.
“ELLIOTT®
& Company Appraisers has been a member in good standing with us for
many years,” said Kevin Hinterberger, president of the Better
Business Bureau of Central North Carolina. “Since ELLIOTT® joined us
in 1998, we have never received a complaint about this company.”
STRICTER
REGULATIONS FAIL TO PREVENT
INCREASE IN MORTGAGE FRAUD
An
investigation by The Wall Street Journal, using the research
firm, CoreLogic, indicates that mortgage fraud is, once again, on
the rise. Such criminal activity is not as rampant as it had been in
2006, before tighter regulations took effect, but the WSJ
investigation concludes that mortgage fraud is on the upswing for
the first time since the mortgage meltdown.
CoreLogic
examined about 7 million home loans and reported that mortgage-fraud
losses increased 17% in 2009. Such illegal activity had previously
dropped by 57% since its zenith in 2006. The CoreLogic report said
that $14 billion in home loans were affected by fraudulent
information in their applications. This accounted for 0.7% of the
2009 mortgage loans.
Like
insects that develop immunity from pesticides, these fraudsters are
adapting to stricter regulations. The WSJ article reporting this
investigation suggested that mortgage fraud is now more likely to
take place in the form of false documents, recruited loan officers
and stolen identities.
“Even
though we have certain compliance measures in place, people will
adapt to whatever scheme,” said Sharon Ormsby, an FBI financial
crimes section chief. “It doesn’t matter if the market is going up
or down.”
FRANK LLOYD WRIGHT
HOMES LOSE VALUE IN CURRENT MARKET
 Homes,
considered to be “architectural gems,” are suffering along with the
rest of the Southern California real estate market when it comes to
the prices they command.
“Those
days of easy money and money-is-no-object artwork kinds of prices
are gone,” said Brian Linder, a real estate agent and architect on
Southern California.
The Ennis
House, designed by legendary architect Frank Lloyd Wright and
featured in Hollywood movies, has had its listing price cut in half,
from $15 million to $7.5 million, and, at this writing, has yet to
be sold. Another Wright classic, the Millard House, remains on the
market in Pasadena after two years, even though its price has been
cut from $8 million to $5 million. Houses designed by other revered
architects are currently going through a similar embarrassment.
“When the
economy was in better shape, people were willing to spend a little
extra for a work of art,” said James Ebert, a real estate appraiser
in the Golden State. “In the recession we’re in now, that
architectural, creative edge tends to dissipate and buyers become
more concerned for basic shelter.”
INDUSTRY,
GOVERNMENT LEADERS DISAGREE
ON FURTHER FEDERAL AID
While
leaders in the housing industry appreciate government efforts to
revive sagging sales by offering lucrative tax credits, many are now
saying that such credits are no longer of true long-term benefit to
their success.
“Almost
regardless of how future demand plays out, we still believe that the
tax credit had to end,” said PulteGroup CEO Richard Lugas. “We need
to know the true level of demand without government stimulus
distorting the market so that we can continue to properly position
our business for ongoing improvement.”
Even as
executives of companies that could benefit from financial aid from
the government for their industry are discouraging such a move,
prominent governmental leaders say their help is still needed, but
perhaps in a different form
“My own
view is that too little focus has been on community problems because
the focus has been more targeted to housing and foreclosures,” said
Eric Rosengren, president of the Federal Reserve Bank of Boston.
“Rather than treating the symptom, the high REO problem, we need to
better understand how to resolve the more general problems in
communities that lead to higher concentrations of REOs and
exacerbate the effects of high REOs.”
Another
high-ranking Fed official, Sandra Pianalto, president of the Federal
Reserve Bank of Cleveland, expressed concern to help the industry,
as she said, “A healthy housing sector is critical both to the
overall economy and to a sustainable economic recovery.”
BUILDERS PULL BACK
REINS ON LAND RUSH
 In the
June issue of this newsletter, we reported that builders were
engaging in a land rush, as they snapped up unfinished lots and raw
acres of land at bargain prices with the intent of building on them
when the demand for housing returned. Now it appears that the
builders are crying, “Whoa”, to the horses that were carrying them
into the rush.
An article
that appeared earlier this month in The Wall Street Journal
said that builders are now asking for lower prices on their pending
deals and, in some cases, walking away from them. The article,
written by Dawn Wotapka, said some big-name builder even forfeited
on their deposits rather than go through with the land purchases
they had agreed upon.
“The
market is definitely doing worse now than at the beginning of the
year,” said Ken Campbell, CEO of Standard Pacific, a company that
backed off its letter of intent to buy 451 finished lots in Southern
California. “It’s a weaker home-sale environment than people had
expected, which means land is less valuable.”
Zelman &
Associates, a housing-research firm reported that 94% of the
builders were looking to buy land in January, but only about 75%
were doing so in July.
“The
builders are looking at sales in the last three months and they’re
saying. ‘Holy cow; our sales are down,’” said Richard Gollis,
co-founder of the Concord Group, a real-estate consulting company.
“They’re slowing down on their lot buys coming into the fall
season.”
 ASK MARTITIA
QUESTION:
Are
appraisers required by USPAP to have E&O insurance?
MARTITIA:
No, the
Uniform Standards of Professional Appraisal Practice does not
require appraisers to carry errors and omissions insurance, per se.
In cases, however, where taking out such insurance is mandated by
law, the Competency Rule of USPAP would make it necessary for an
appraiser to be E&O-insured.
Martitia Mortimer, Elliott’s executive vice president, answers
appraisal questions on a regular basis in Elliott Real Estate
News.
QUOTES
“The act
of putting into your mouth what the earth has grown is perhaps your
most direct interaction with the earth.” – Frances Moore Lappe
“Fortune
knocks at every man’s door once in a life, but, in a good many
cases, the man is in a neighboring saloon and does not hear her.”
– Mark Twain
“A
politician’s words reveal less about what he thinks about his
subject than what he thinks about his audience.” – George
Will
“The first
day, a guest; the second, a burden; the third, a pest.” – Edouard
Laboulaye
“Dignity
is a mask we wear to hide our ignorance.” – Elbert Hubbard
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| Newsletter Editor:
kevin@elliottco.com
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