Serious problems with Zillow’s ‘direct to sellers’ platform

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In Orlando and Las Vegas, Zillow has broken into the direct to sellers market, similar to those at OpenDoor and OfferPad. Zillow has placed an “Instant Offers” enabling sellers to receive and compare cash offers from investors as well as getting a comparable market analysis from a Zillow premier agent.  Lets keep in mind, Zillow is a data company that makes money on advertising and lead generation for Realtors.  “Instant offers” may be a way into a more direct consumer sales environment, eventually skipping the sales person.  But in a video, from ZIllow, Jay Thompson, director of industry outreach, discusses how the inaccurate zillow numbers allow the Realtor to gain better trust by helping the homeowner out. 

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Is Zillow and the others misleading homeowners trying to get a fast sale? When zillow calculates the “market value” as a Zestimate it leaving some critical analysis out of the valuation of the property.

  • Where there concessions or abnormal?
  • What is the condition?
  • What is the View? 
  • How is the building quality? 
  • What is the location or external obsolescence?

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row custom_padding=”13px|0px|26px|0px” _builder_version=”3.0.49″][et_pb_column type=”4_4″ _builder_version=”3.0.49″ parallax=”off” parallax_method=”on”][et_pb_text _builder_version=”3.0.49″]Furthermore, Zestimates are becoming acceptable valuations in the public eye which have no guidelines. Appraisers have USPAP (Uniform standards of professional appraisal practise) which promotes consumer trust. Specifically requiring confidentiality, and mandating the appraiser prove what they did and how they did it.[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version=”3.0.49″][et_pb_column type=”1_2″ _builder_version=”3.0.49″ parallax=”off” parallax_method=”on”][et_pb_text _builder_version=”3.0.49″ custom_margin=”|5px||” custom_padding=”|||”]

Why should you get an appraisal prior to accepting any offer? Let’s look at a recent class action lawsuite between a Glenview (Chicago) real estate lawyer, Barbara Anderson (Homeowners, Realtors and Appraisers have joined) V. Zillow. The class action is about deceptive trade practices, consumer fraud, citing several state tort laws and the CFR.  Basically, it started when Barbara, tried to sell her townhome with an asking price of $626,000 for a 3 bedroom townhome, but Zillow’s estimate is $555,000. Barbara had several appraisals from certified appraisers determine the value of $626,000 confirming her asking price. 

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Market participants would make offers based on the Zestimate, undercutting her prior purchase a year earlier. Barbara is claiming the Zestimate “gives the appearance to the public of being an appraisal”. She wants Zillow to remove the Zestimate from their database so she can get fair market value.  “Its my asset, my mortgage, why should a private company opine on the value, at my determint, without action to remove.   Other cases recently include a homeowner having his loan being called in by the lender because the Zestimate is showing low equity.  

 Why hire an appraiser with local knowledge to get the best offer?

  • We work in the market and know the community better than any website.
  • We understand which builder produces quality.
  • We analyze what skyline views are, and what effects powerlines have nearby.
  • We protect the lender, buyer and seller in developing a fair sale.
  • We are unbiased in our market value determination.

The participants who will make offers are investors and will seek knowledgeable homeowners. If you have a pressing need to sell fast, we can determine ask prices that will get you what you deserve. I strongly urge any homeowner not to go this route, please seek the advice of a knowledgeable realtor and have an appraisal completed prior to listing.

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Appraisal Report Descriptions in Las Vegas

Real Estate Appraisal Report Descriptions in Las Vegas

The appraiser has many options to communicate his or her appraisal to the client. Many times the client chooses the report they feel most comfortable with based on the scope of work that want performed.   Below are some of the report names, abbreviations, description, and what a report would typically contain in addition to the main form.

 

Property Inspection

If disaster struck the area with your assets, would you need to verify the condition of the properties under the current guidelines?  We have that covered.

PROPERTY INSPECTION REPORT FNMA-30

This Fannie Mae 30 property inspection report form is used to inspect homes every 45 days if a qualified contact has not been achieved, a full payment has not been received within the last 30 days, or the borrower is not performing under the applicable bankruptcy plan.  An exterior-only inspection of the subject is completed. No opinion of value is provided.  The report includes the property inspection report along with photos of the subject.

1-4 UNIT PROPERTY INSPECTION REPORT FHLMC-1013

Similar to the Fannie Mae 30 Property Inspection Report, this Freddie Mac 1013 is used for delinquent multi-family property inspection. An exterior-only inspection of the subject is completed. No opinion of value is provided.  The report includes the property inspection report along with exterior photos of the subject.

CATASTROPHIC DISASTER AREA PROPERTY INSPECTION REPORT CDAIR

This form is used for inspecting properties that are within areas that have been affected by natural disasters such as earthquake, fire, flood, hurricane, landslide, severe thunderstorm, tornado, volcano, or wildfire. With Clear Valuation’s extensive roster of appraisers in Florida, we can quickly assign a local appraiser to provide a disaster inspection report for all of our Clients within 48 hours of order placement. More in-depth than a Disaster Area Inspection Addendum, a Catastrophic Disaster Area Inspection report provides an assessment of the interior and exterior of the property as well as the surrounding neighborhood.  Report Includes: Catastrophic Disaster Area Inspection Report (CDAIR) provides an assessment of any impact to the Value and Marketability of the Subject’s neighborhood as a result of a natural disaster, as well as a complete set of exterior and interior photos of the subject including the street and address verification. Photos of any damage to the Subject will also be included along with comments on the severity of the damage. The appraiser does not provide an estimate on the effect on value of any damage nor an estimated “Cost to Cure” any damage.

2070 CONDITION AND MARKETABILITY, FREDDIE MAC LOAN PROSPECTOR

Freddie Mac Form 2070: Loan Prospector Condition and Marketability Report. This is a property inspection report that identifies if the subject conforms to the neighborhood, notes any physical inadequacies, reveals any adverse physical conditions, or if the subject property does not conform to the neighborhood. An exterior-only inspection of the subject is completed. No opinion of value is provided.  Report Includes: Complete 2070 appraisal report, exterior and street scene photos of the subject, and a location map with the subject plotted. If an interior inspection is included then interior photos and a sketch may also be provided with this report.

  • A Drive-by inspection report contains; A front photo, street scene photo, and location map.
  • An Interior Inspection report contains; Front, rear, and street scene photos, floor sketch, location map of the subject property.
2075 CONDITION AND MARKETABILITY REPORT (FANNIE MAE)

Similar to the 2070 condition and marketability report however, more abbreviated,  this property inspection report that identifies if the subject conforms to the neighborhood, notes any physical inadequacies, reveals any adverse physical conditions, or if the subject property does not conform to the neighborhood. An exterior-only inspection of the subject is completed. No opinion of value is provided.

PROPERTY CONDITION REPORT PCR

The PCR property condition report report clearly and accurately supplies the property’s physical condition as required by the IAG Guidelines to determine the reliability of the AVM or desktop value.  It allows users to evaluate risk a make a credit or lending decision.  No opinion of value is provided.

  • Exterior Report includes: Front and street scene photos.
  • Interior Report includes; Front, rear, street scene and interior photos.
COMPLIANCE INSPECTION REPORT HUD9051

A HUD 9051 report is used to collect inspection for properties owned, insured, and or subsidized by the Housing and Urban Development.  No opinion of value is provided.  The report includes the form, exterior, interior, and street photos, and a location map.

CONSTRUCTION PROPERTY REPORT CSP2

A Fannie Mae construction property report CSP2 is a simple form which shows check boxes and “percentage completed” for several steps in the construction process. The bottom of the form has an area for comments, and a summary for items subject to escrow.  No opinion of value is provided. The report contains photos of the subject as of the date of the report.

 

Broker Price Opinion

BROKER PRICE OPINION – FANNIE MAE

A broker price opinion (BPO) is prepared by local real estate professional and is typically used for loan sale due diligence, loss mitigation, foreclosure bid Instructions, short sale, portfolio analysis, equity line application, early default valuation and REO secondary valuations.  This FBP3 form is specific to Fannie Mae.

The report includes the FBP3 completed form. The scope can be either desktop, drive-by, exterior, interior inspections or review.

  • Desktop report includes;  the completed form, with a location map.
  • Drive-by report includes; the desktop items along with subject front photo and street scene.
  • Exterior report includes; the drive-by items along with a photo of the rear with a reconciliation of condition
  • Interior report includes; all items above and interior photos of each room.
BROKER PRICE OPINION – FREDDIE MAC

A broker price opinion (BPO) is prepared by local real estate professional and is typically used for loan sale due diligence, loss mitigation, foreclosure bid Instructions, short sale, portfolio analysis, equity line application, early default valuation and REO secondary valuations.   This 1092 form is specific to Freddie Mac.

The report includes the 1092 completed form. The scope can be either desktop, drive-by, exterior, interior inspections, or review..

  • Desktop report includes;  the completed form, with a location map.
  • Drive-by report includes; the desktop items along with photos of the subject and street scene.
  • Exterior report includes; the drive-by items along with a photo of the rear with a reconciliation of condition
  • Interior report includes; all items above and interior photos of each room.

 

Desktop Appraisal

Due to recent regulation, the “Desktop Valuation” is replacing the (AVM) automated value methodology, and (BPO) Broker Price Opinion as the trusted valuation tool. It is prepared by certified or general appraisers.  NO property inspections are performed. This product is ideal for Loan Sale Due Diligence, Loss Mitigation, Foreclosure Bid Instructions, short sale, portfolio analysis, equity line application, early default valuation, QC/Audit, junior lien, and REO secondary valuations.  The product is a great option for the lender to receive an estimate of value for a subject property or a quick snapshot for a homeowner without the upfront cost of a full appraisal.  The report will contain the property type, market trend, comparable sales, and of course an opinion of value.

A restricted report is ONLY for the client as the intended user and may not be relied on by other parties. Research and development may only be stated, and does not require the appraiser to summarize the information analyzed, and the reasoning that supports the analysis, opinions, and conclusions.

DESKTOP VALUATION APPRAISAL DVL3

This DVL3 Desktop Valuation Appraisal Report is the simplest desktop report typically used for pre-loan application analysis. It has a basic market analysis, and a sales comparison grid with NO adjustments.  This desktop report contains the DVL3 along with a location map.

DESKTOP RESTRICTED USE REPORT DRA2

The Desktop Restricted Use Report DRA2 report is a restricted report which is only developed for one intended user who is familiar with the subject property. Its typically used for internal risk analysis. This form is similar to the DVL3 in its format and reporting.  This desktop report contains the DVL3 along with a location map.

REAL ESTATE VALUE ESTIMATE RVE

This Real Estate Value Estimate Report RVE is ideal for a determining a sales price.  A real estate value estimate is a one page report with subject, neighborhood, subject property characteristics, and comparable properties with adjustments.  The desktop report will contain; public photos of the subject, MLS photos of the comparables, Market Conditions (MC), and a location map.

GP RESTRICTED DESKTOP

The General purpose restricted desktop is a little more comprehensive desktop appraisal report.  When the other forms don’t contain enough information, this would be your choice.  It contains information about the subject, assignment, comparables, transfer history, market summary, improvements, reconciliation.  Also included are public photos of the subject, MLS photos of the comparables, active listings, location map, and a Market Conditions (MC) analysis.

CHASE RESTRICTED DESKTOP

The CHDESK Chase Restricted Desktop form was development by Chase and contains basic information about the subject.  It contains 3 closed sales comparables with no adjustments, transfer history, and summary comments.

BANKRUPTCY VALUATION

When handling a bankruptcy for a client, typically all you need for tract residential properties is a desktop appraisal.  This BKVAL form was designed specifically for bankruptcy. It contains property identification, neighborhood trends, and three sales comparables with no adjustments.  The contents will include this form along with a location map, one pubic photo, and comparable photos.

COLLATERAL VALUATION REPORT

The CVR was developed by Bradford Technologies.  The CVR is also unique in that it includes a sales comparison analysis, a listing comparison analysis and a regression analysis to arrive at a final, reconciled market value producing one of the most transparent, bullet-proof, 100% USPAP compliant appraisals ever developed for the lending community. The benefits of a CVR over other products is the appraisal is enhanced with market analytics and statistics, hundreds of sales listings are analyzed, includes regression analysis of the market, market characteristics trends and influence.  It can be used for home equity lines of credit, second mortgages, servicing evaluations, portfolio analysis, review, and legal.

 

Hybrid / Gap Evaluation Appraisal Report

DESKTOP VALUATION APPRAISAL REPORT; FNMA30 + RVE

For the best risk management, evaluations are designed to meet the inter-agency guidelines.  These reports are completed by local market real estate experts, a real estate appraiser, or a combination. Typically, a local real estate expert inspects the home, provides an inspection report to the appraiser with photographs.  The appraiser then completes his/her analysis reporting on a desktop RVE appraisal report.  The combination provides a complete analysis.

MVP

The MVP is a hybrid evaluation appraisal in collaboration between a salesperson who inspects the property and an appraiser who analyzes the market, data provided by the inspector/salesperson, chooses comparables, and reconciles the report to determine the final value.  This report has been used for retrospective values and current day values.  It is a comprehensive report with subject photos and inspection data, ideal for HELOCs and portfolio valuations.  Freddie Mac, Fannie Mae, USDA, are users of this report.

GEAR

The GEAR (Geoscored Evaluation Appraisal Report) A ZAIO product, is an evaluation report based on a scored database of home’s salient features within the United States.  Seven attributes are scored from 1-10 based on the market and regression is run to provide an unbiased opinion of value.  There are four options, a desktop, RE professional drive-by inspection, RE Professional Interior Inspection, and an AP Appraiser drive-by inspection.

 

Non-Lender / General Purpose

A General Purpose (GP) form is specifically for non lending assignments which are easy to read and understand.

GP GENERAL PURPOSE RESIDENTIAL DRIVE-BY

This general purpose form uses the standard GPRES2 but limits the scope to only a drive-by inspection. The report contains the GPRES2 form, a front and street view photo, a location map, a Market Conditions report and three sales comparisons.

GP GENERAL PURPOSE RESIDENTIAL INTERIOR USDA

A General Purpose uses the standard GPRES2 form which includes an interior photo.  The report contains a  front, street, and rear photo, a property sketch, interior photos, location map, three comparables with photos and a market conditions report.

GP GENERAL PURPOSE VACANT LAND

This general purpose appraisal report GPLND is designed to report an appraisal of a vacant land or property only. Market value is attributed to the land against corresponding comparable properties.  Report Includes: Complete Vacant Land Appraisal Report, exterior and street scene photos of the subject, front view photos of each comparable property, location map with the subject and comparables plotted, and a Statement of Limiting Conditions.

GP GENERAL PURPOSE 2-4 MULTIFAMILY

A general purpose, non lending form GP2-4 is designed to report the value of income property of 1-4 units.  The report contains a  front, street, and rear photo, a property sketch, interior photos, location map, three sales comparables with photos, three rental comparables with photos, rent schedule, income approach, and a market conditions report.

GP GENERAL PURPOSE CONDOMINIUM

A general purpose, non lending form GPCONDO designed to report condominium value.  The report contains a  front, street scene, and rear photo, a property sketch, interior photos, location map, three comparables with photos and a market conditions report.

GP GENERAL PURPOSE DESKTOP RESTRICTED

This is a restricted (specific client only) desktop report GPRTD2 is used for tract homes and condos which do not require an onsite inspection or condition. The condition is considered to be in average condition for the purpose of this report. The report contains public front and street scene photos, location map, three comparables with photos and a market conditions report.

GP – GENERAL PURPOSE DRIVE-BY RESTRICTED

This general purpose restricted (specific client only) desktop appraisal report GPRTD2 is designed for less complex assignments which require verification of exterior condition.  The report contains a  front and street scene photo, location map, three comparables with photos and a market conditions report.

GP GENERAL PURPOSE INTERIOR RESTRICTED

This general purpose restricted (specific client only) desktop appraisal report GPRTD2 is designed for more complex properties or assignments and includes an interior inspection.  The report contains a  front, street scene, and rear photo, a property sketch, interior photos, location map, three comparables with photos and a market conditions report.

 

Lending Appraisal Reports

Please note, lending appraisal reports are ONLY for the financial markets and cannot be transferred for non-lending purposes, nor can the client be changed for convenience.  Each client has their own criteria and no two appraisals are the same.

1004 SINGLE FAMILY URAR

Fannie Mae Form 1004: Uniform Residential Appraisal Report. This report is used for appraising single family residences. An interior and exterior inspection of the subject is completed. The appraiser provides an opinion of value based upon one of the three valuation methods; Sales Comparison Approach, Cost Approach, or Income Approach. Report Includes: Complete 1004 appraisal report, floor sketch based upon an exterior measurement, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted.

1004 SINGLE FAMILY FHA

Fannie Mae Form 1004: Uniform Residential Appraisal for a FHA Loan. This report is used for appraising single family residences when FHA financing is involved. It includes a detailed interior and exterior FHA Appraisal inspection. The appraiser an opinion of value based upon one of the three valuation methods; Sales Comparison Approach, Cost Approach, or Income Approach.  Report Includes:  Complete 1004 appraisal report including a list of required FHA repairs, floor sketch based upon exterior measurements, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted.

1004 SINGLE FAMILY – REAL ESTATE OWNED (REO)

This report form is designed to report an appraisal of any type of property from one-unit, one-unit with an accessory unit; Two-to Four-Unit; planned unit development (PUD), manufactured home; a condominium unit, or a cooperative project based on an interior and exterior inspection of the subject property.  Report Includes:  Complete 1004(C)/1073/1025 appraisal report, floor sketch based upon an exterior measurement, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted. The REO Addendum may or may not also be included which provides an itemized cost of repairs as well as an “as-is” and “as-repaired” value. A list of MPR repairs items would be substituted for the REO Addendum if the report is for HUD/FHA.

1004C MANUFACTURED HOME

Fannie Mae Form 1004C: Manufactured Home Appraisal Report. This report is used for appraising manufactured homes. An interior and exterior inspection of the subject is completed. The appraiser provides an opinion of value based upon one of the three valuation methods; Sales Comparison Approach, Cost Approach, or Income Approach. Report Includes: Complete 1004C appraisal report, floor sketch based upon an exterior measurement, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted.

1004D: APPRAISAL UPDATE AND/OR FINAL INSPECTION REPORT

Fannie Mae Form 1004D: Appraisal Update and/or Completion Report.  This report is used to complete an Appraisal Update, a Final Inspection, or both. The Appraisal Update is used to update the effective date of an existing appraisal report. This report is considered a new appraisal assignment and the appraiser will indicate if any changes have occurred to the subject’s market value since the time of the original report. The Final Inspection Report is used for appraisals that were completed “Subject To.” This report will verify that the conditions of the original report have been meet. The necessary portions of the subject property will be inspected.  The report Includes:  The Appraisal Update includes the complete appraisal report, exterior and interior photos of the subject as necessary. The Final Inspection includes the completed appraisal report and new photos of the subject, particularly of the area that specifically needed inspection.

1025 ONE TO FOUR UNIT, MULTI-FAMILY

Fannie Mae Form 1025: Small Residential Income Appraisal Report. This report is used for appraising of 2-4 unit residential income properties. It includes an interior and exterior inspection of the subject property. The appraiser provides an opinion of value based upon one of the three valuation methods; Sales Comparison Approach, Cost Approach, or Income Approach. This report Includes:Complete 1025 appraisal report, floor sketch based upon an exterior measurement, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted.

1073 CONDOMINIUM

Fannie Mae Form 1073: Individual Condominium Unit Appraisal Report. This report is used for appraising Individual Condominium Units. An interior and exterior inspection of the subject is completed. The appraiser provides the Sales Comparison Approach to determine an opinion of value. This report Includes:  Complete 1073 appraisal report, floor sketch based upon interior and exterior measurements, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted.

1075 EXTERIOR CONDOMINIUM

Fannie Mae Form 1075: Exterior-Only Individual Condominium Unit Appraisal Report. This report is used for appraising Individual condominium units. An exterior-only inspection of the subject is completed. The appraiser provides the Sales Comparison Approach to determine an opinion of value. Report Includes: Complete 1075 appraisal report, exterior and street scene photos of the subject, front view photos of each comparable, and a location map with the subject and comparables plotted.

2055 EXTERIOR SINGLE FAMILY (DRIVE-BY APPRAISAL)

Fannie Mae Form 2055: Exterior-Only Inspection Residential Appraisal Report  This is used for appraising single family residences. An exterior-only inspection of the subject is completed. The appraiser provides an opinion of value based upon either the Sales Comparison Approach, or the Cost Approach.  Report Includes: Complete 2055 appraisal report, exterior and street scene photos of the subject, front view photos of each comparable property, and a location map with the subject and comparables plotted.

2075 PROPERTY INSPECTION REPORT

Fannie Mae Form 2075: Desktop Underwriter Property Inspection Report. Property inspections require an exterior-only inspection and the analysis and reporting of current market conditions within the neighborhood. This is a property inspection report that identifies if the subject conforms to the neighborhood, notes any physical inadequacies, reveals any adverse physical conditions, or if the subject property does not conform to the neighborhood. An exterior-only inspection of the subject is completed. No opinion of value is provided. The report Includes: Complete 2075 appraisal report, exterior and street scene photos of the subject, and a location map with the subject plotted.

2090 COOPERATIVE INTEREST

Fannie Mae Form 2090: Individual Cooperative Interest Appraisal Report. This report is used for appraising Cooperative Interest properties. An interior and exterior inspection of the subject is completed. The appraiser provides the Sales Comparison Approach to determine an opinion of value. Report Includes: Complete 2090 appraisal report, floor sketch based upon interior and exterior measurements, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted.

2095 EXTERIOR COOPERATIVE INTEREST

Fannie Mae Form 2095: Exterior-Only Individual Cooperative Interest Appraisal Report. This report is used for appraising Cooperative Interest properties. An exterior-only inspection of the subject is completed. The appraiser provides the Sales Comparison Approach to determine an opinion of value. Report Includes:  Complete 2095 appraisal report, exterior and street scene photos of the subject, front view photos of each comparable property, and a location map with the subject and comparables plotted.

INCOME STATEMENT AND RENT SCHEDULE

Fannie Mae Form 1007: Single Family Rent Schedule and Fannie Mae Form 216 Operating Income Statement. Fannie Mae Form 1007 is used to provide an estimated market rent for the subject. Fannie Mae Form 216 is used to estimate the operating income associated with income producing property. Report Includes: Complete 1007 and 216 reports, and front view photos of each comparable property.

DRAW INSPECTION

Appraiser will use lender supplied forms to estimate the amount of work that has being completed on properties that are currently under construction. The report will include items requested by the lender. No opinion of value is provided.

ERC EMPLOYEE RELOCATION

This form is used for relocation appraisals and was created by the Employee Relocation Council. This form is used to report the appraiser’s estimate of the anticipated selling price of a property. If someone is being transferred by an employer and the employer has a relocation program then this is the type of report that they would order.

Report Includes: Complete 1004 appraisal report, floor sketch based upon an exterior measurement, exterior and interior photos of the subject including the street, front view photos of each comparable property, and a location map with the subject and comparables plotted.

LIMITED APPRAISAL ANALYSIS – SECOND MORTGAGE DRIVE-BY

The limited appraisal analysis report 704 is designed as a drive-by scope of work.

 

Appraisal Quality Control & Review

AQM APPRAISAL QUALITY MANAGEMENT

AQM Appraisal Quality Management  provides quality control in the review process of our GSE products dramatically reducing the risk of repurchase. It analyzes over 600 rules, provides intelligent underwriting recommendations, deploys a powerful revision request, and packages associated due diligence documents with the loan file .  Essential results are returned along with an overall AQI score (Appraisal Quality Index) which analysis from 5 intelligently weighted risk categories; Property Risk, Market Issues, Completeness, Accuracy, and risk associated with the collateral value.  AQM meets Fannie Mae, Freddie Mac, and the CFPB appraisal quality control requirements.

2000 SINGLE FAMILY FIELD REVIEW (STANDARD)

Fannie Mae Form 2000: One-Unit Residential Appraisal Field Review Report. This report is designed to analyze an appraisal report completed on a single unit property by a different appraiser. The review appraiser analyzes all information and conclusions from the original report, and completes an exterior-only inspection of the subject and comparable properties. A statement indicating if the value on the original report is supported will be provided.

Report Includes: Complete 2000 Field Review report, exterior and street scene photos of the subject and comparables, and a location map with the subject and comparables plotted.

2000 SINGLE FAMILY FIELD REVIEW (ENHANCED)

Fannie Mae Form 2000: One-Unit Residential Appraisal Field Review Report. This report is designed to analyze an appraisal report completed on a single unit property by a different appraiser. The review appraiser analyzes all information and conclusions from the original report, completes an exterior-only inspection of the subject and comparable properties, and provides two additional comparables. A statement indicating if the value on the original report is supported will be provided. Report Includes:  Complete 2000 Field Review report, Sale Comparison Grid, exterior and street scene photos of the subject and all comparables, and a location map with the subject and all comparables plotted.

2000A MULTI-FAMILY FIELD REVIEW (STANDARD)

Fannie Mae Form 2000A: Two-to Four-Unit Residential Appraisal Field Review Report. This report is designed to analyze an appraisal report completed on a Two-to Four-Unit property by a different appraiser. The review appraiser analyzes all information and conclusions from the original report and completes an exterior-only inspection of the subject and comparable properties. A statement indicating if the value on the original report is supported will be provided. Report Includes:  Complete 2000A Field Review report, exterior and street scene photos of the subject and comparables, and a location map with the subject and comparables plotted.

2000A MULTI-FAMILY FIELD REVIEW (ENHANCED)

Fannie Mae Form 2000A: Two-to Four-Unit Residential Appraisal Field Review Report. This report is designed to analyze an appraisal report completed on a Two-to Four-Unit property by a different appraiser. The review appraiser analyzes all information and conclusions from the original report, completes an exterior-only inspection of the subject and comparable properties, and provides two additional comparables. A statement indicating if the value on the original report is supported will be provided.  Report Includes: Complete 2000A Field Review report, Sale Comparison Grid, exterior and street scene photos of the subject and all comparables, and a location map with the subject and comparables plotted.

DRA 1004/URAR DESK REVIEW

Residential Appraisal Review Short Form DRA 1004  is designed to analyze an appraisal report completed by a different appraiser. The review appraiser analyzes all information and conclusions from the original report. No inspection of the subject or comparable properties is completed. A statement indicating if the value on the original report is supported will be provided.  Report Includes:  Complete Desk Review appraisal report.

DRA 1004/URAR DESK REVIEW ENHANCED

The URAR Desk review DRA 1004 enhanced report form is designed to report on an appraisal report completed by a different appraisal firm. The appraiser reviews all information and conclusions from the original report and provides two additional comparable sales. No inspection of the subject or comparable properties is completed. A statement indicating if the value on the original report is supported will be provided.  Report Includes: Complete Desk Review appraisal report, Sale Comparison Grid, and a location map with the subject and comparables plotted.

DESK REVIEW

Residential Appraisal Review Short Form DRA2  is designed to analyze an appraisal report completed by a different appraiser. The review appraiser analyzes all information and conclusions from the original report. No inspection of the subject or comparable properties is completed. A statement indicating if the value on the original report is supported will be provided.  Report Includes:  Complete Desk Review appraisal report.

RESIDENTIAL REVIEW SHORT FORM

The residential review short form, Fannie Mae 2006,  is a desk review appraisal used for quality control.  No drive by is required. If the appraiser does not agree with the original value, he must provide 2 additional comparables and a new value. Enhanced, the appraiser must provide two additional comparables, whether or not he or she agrees with the original value.

Additional Products

Rent Range –  the nation’s leading provider of residential Rental Market Intelligence™ to the financial services and real estate industries, delivering a wide assortment address and market level rental data, analytics and AVM based rent valuation solutions.

Build Fax – a background check for the home, it shows how the home was maintained, remodeled with permits. Essential to any sale, loss mitigation, or loan review.

How is home value reported?

Appraisal Reporting

As government regulations increase from Dodd-Frank, ECOA, Inter-agency Guidelines, and GSE Reform from Fannie and Freddie Mac, more and more scrutiny is placed on the lender to provide a credible value on their collateral. Knowing which product can be challenging for most compliance officers. Not all valuation reports are considered appraisals.  Appraisals reports follow strict guidelines promulgated by USPAP.  Lets look at the several categories of real estate valuations that require a different scope of work depending on the level information required for underwriting.  Among them; AVM (Automated Valuation Methodologies), BPO (Broker Price Opinions), Reconciliations, Evaluations, and Appraisals.  Lets look into each category to see how each is used in determining a value. Continue reading “How is home value reported?”

8 Reasons a broker needs an appraisal

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Are you a Realtor? or Broker?  We can provide disinterested third party valuations and services to help your clients.  We can help with:

  • Pre-listing / Post Listing – We provide an unbiased value of the subject with market data support LP/SP
  • Contract Dispute – Trouble between parties could potentially ruin a real estate sales transaction. Hire us to provide an unbiased value on the home.
  • Review an appraisal – Your sale is about to fall through because of a low appraisal.  The appraiser has a tough job complying with so many regulations and maybe is not seeing the entire picture. You could order a separate appraisal with a different perspective. Or maybe, you could have the appraisal reviewed by another appraiser for accuracy.  We offer several review products depending on your due diligence requirements. Desktop review – reviewed by an appraiser for accuracy. Field Review – we run an automation rules test, review the facts, and verify in the field, the subject, comparables, and attributes.
  • Relocation – As a RELO agent, the relocation company may be asking you to find relocation appraisers.  The appraiser’s job is to determine a sales price in a predetermined amount of time or the RELO company will purchase the home.  We have qualified RELO appraisers on our panel.  Order one today.
  • Short Sales – We analyze the short sale market and compare against the arm’s length and REO sales to provide you with a realistic value on your short sale.
  • Real Estate Owned (REO) – Your asset manager has asked you to find an REO Appraiser.  We have appraisers through Florida with extensive REO Experience.
  • Will it appraise? When making an offer on a home, negotiating with your due diligence intelligence is strength.  With an appraisal, you know what the property is really worth.
  • Property Sketch – A property sketch is a great marketing tool which verifies the gross living area as per ANSI measurement guidelines.   Did you know that the incorrect size of a home is the number one reason a home is assessed higher than it should be and your client is paying to much taxes?

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20 Reasons for a Real Estate Appraisal in Henderson NV

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Homeowners, buyers, sellers, investors, and consumers, real estate is/or will probably be your largest investment, you should protect it with a certified appraisal.  Relying on websites for market value can be detrimental, these sites (Zillow, Trulia, etc) are lead generation sites and are not interested in your financial health.  Here are 20 ideas for an appraisal to protect your wealth.

Property Taxes

My property taxes are too high – A property assessment is a value of your home for tax purposes. Assessments are only used to determine the “Assessed Value” for property taxes by a public/county appraiser, while an independent appraiser would typically provide a “Market Value”appraisal.   In each case the methodology to produce the appraisal is different. The assessed value uses a mass appraisal approach and is typically valued less than the market value to avoid a large number of appeals, while the independent appraiser analyzes each property characteristic and provides a detailed analysis.   Often public records are incorrect and your home can be over-assessed which results in paying higher property taxes. An appeal with the County Value Adjustment Board (VAB) is necessary.  by providing a defensible real estate appraisal that irrefutably shows the assessed value higher than market value,  YOU ARE ENTITLED TO A REFUND.   If your assessment higher than the market value, we can help lower your taxes. We recommend a full interior appraisal, to include a property sketch.

Legal

I need a real estate appraisal for a legal reason – Legal, Arbitration, Mediation, Dispute resolutions. If you own real estate, there are many reasons you may need to determine the value of the property other than for sales purposes.  Some examples may be partnership dissolution, gifting, portfolio, disputes (encroachment, views, easements). Expert witness testimony may be required for a specific case. Depending on your specific situation, we may be able to help.  Your attorney will help you in this process. Please contact us with specific requirements.

Investment Buy-Sell Decision

When purchasing a home with cash, it should always be part of your due diligence to obtain an independent appraisal much like the banks obtain for a mortgage.   We can provide a report to help you decide if the time is right to buy or sell your asset.

Market Timing

The real estate has an economic cycle similar to the stock market driven by economic conditions in the market place, however is less liquid and slower to react.  As we say in 2006-2008, the real estate market quickly fell apart and many were left underwater, facing foreclosure and short sales.  Through carefully analyzed market indicators, we can predict with great certainty when the market is getting weak.  Remember, real estate is local in nature, and each neighborhood has different economic data.  Hire an appraiser to best determine if its the right time to buy or sell.

Home Equity

You were approved for a HELOC a few years ago, and were provided a line of credit Home values have appreciated and you would like to increase your line of credit.  Call your lender and “recommend us” for the valuation.  Chances are we have already done business with them, but if not, we can quickly become business partners.

I need a review on my last appraisal

You  don’t agree with the last appraisal on your home. You would like another appraiser to double check its accuracy and completeness and to provide a second opinion without ordering another appraisal.  We can help.  Desk Review – you just want to double check the facts,  make sure the data from public records are correct, and the best comparables were considered.   Field Review – we go over the steps of the first appraisal, verifying the data. If we do not agree with the original value, we will provide additional comparables and a second opinion of value. If we can help, please order either a desk review or field review.

I’m getting divorced

I need a real estate divorce appraisal – You’re going through matrimonial difficulty, separation, dissolution of marriage,  divorce – friendly or hostile. One of you has probably moved out, and you’re both wondering what your share of the real estate will amount be, usually the family residence or investment property.  You’ll need a professional real estate appraisal.as you go through the divorce process. A mediator or judge cannot determine how much your property is worth without a professionally prepared appraisal. Your attorney may know a reputable appraisal firm that will give an unbiased, arms-length, and stand-alone valuation of your property or he may leave it up to you.  I always like to know whom I am hiring. We provide real estate valuations for your dissolution of marriage. Provide us with the name of the attorney, and we will gladly communicate with him/her on your request.  Leave the process to us, order your appraisal today.

For Sale By Owner

I am selling “For Sale by Owner” (FSBO) in Henderson NV – Getting an appraisal is an essential step in selling your home on your own.  You may have a rough idea of what it will sell for, but do you know what the banks thinks it worth?   Chances are the buyer will need a mortgage and a market value appraisal is required to fund the loan.  Yes, there are other alternative valuation methods available, but they do not follow the strict federal rules and Fannie Mae guidelines, so a value given by a realtor may not conform.  Don’t chance it.  Use the appraisal as a solid negotiating tool. Know exactly where you stand. Furthermore, you can use your appraisal as a marketing tool.  We can provide detailed information to show what the trends are, show you ratios (List Price v Sales Price), and provide a detailed measurement of your home measured to ANSI Standards.  Remember, you cannot transfer the appraisal to another party or use it for a mortgage, but you can be assured the value is correct.  We strongly suggest ordering an interior appraisal to get the most accurate value. The investment to have an appraisal is a smart choice.

List Price

What can I sell my home for?  Maybe you have already completed some research and know roughly what your home is worth. (Caution: Zillow, Trulia, etc are marketing sites, not valuation providers) or maybe you have had a realtor provide you with a comparative market analysis (CMA).  So you have done some due diligence. Chances are, the buyer you are selling to needs a mortgage backed by Fannie Mae or Freddie Mac. Besides layers of specific appraisal standards, government rules, these entities also have their guidelines for acceptable appraisals. To go even deeper, they have a database called Collateral Underwriter which measures the quality of the appraisal, comparable selection and criteria. As an appraiser, we have adapted to learn not only how to value your property, but in a way that conforms to the Federal Government.

Deal Fell Through

You here many times, “the deal fell through” sometimes, “it didn’t appraise” to the agreed sales contract price and the buyer is not willing to put additional cash towards the transaction. No one wants to hear that.  With an interior appraisal, we also provide a property sketch. Many times the county has incorrect measurements of your home.  Using the county measurements gross living area can skew the appraisal results.  We measure to ANSI standards.  Furthermore, you can use the sketch as a marketing tool. Go into the sale with confidence with a certified appraisal. Know for sure your home will sell for a pre-listing appraised value.  Order yours before you list your home for sale. We recommend a full interior appraisal for this service.

Seller Financing

I am financing my home through the seller – Buyers, so you have contracted to purchase the perfect home and the owner is willing to provide owner financing with a 20% down payment. Have you done your due diligence on the property?   Are you sure what the value of the property you are contracting with is worth what you are paying?  Many times in seller financing, you agree to prepayment penalties and balloon payments.  Ensure you know exactly the value of your investment and where the market is going. Order an appraisal before you commit.  You’re the owner and are offering financing to your buyer and have set the terms. Your real estate collateral is a large investment and you should know exactly what it is worth. Lenders order appraisals for many reasons, not just for the initial funding. They continuously update their balance sheet with a portfolio valuation.  This can be through AVMs on a yearly basis or if your investments are located in different areas, a drive-by exterior appraisal provides condition. Don’t chance it, order an appraisal.

PMI

I am paying Private Mortgage Insurance (PMI) – The homeowner protection act gives you the right to request the lender to cancel PMI when you have reached the date when the principal balance of your mortgage falls below 80% of the original value of your home.   This date should have been given to you on a PMI disclosure. If there has been appreciation in the local market, you may reach this value prior to your disclosed date.  If you feel you have less than 78% LTV, you must: Request the PMI cancellation in writing. Good payment history may be required that there are no junior liens. Lender may ask you to provide an appraisal.

Condemnation

The government is planning to take my home through Condemnation – The government is planning to take your property. They likely have their own idea of just compensation they are willing to pay you.  You need a professional appraisal that is powerful, useful, and evidence of what you are entitled to. Eminent domain is a complex procedure and should only be completed by an experienced appraiser who has experience.  Don’t throw up your hands and give in, hire an appraiser.  Call us for recommendations on someone experienced in your area.

Estate

Estate Planning, Settlement & Probate – Settling an estate can be a difficult process.  If it includes real estate, chances are you need an independent appraisal to determine market value.  We provide appraisal reports that are easily understood, supported which meets state, federal, and  IRS treasury regulations.  Estate Appraisals are typically used for: benchmarking, probate, trust inventory, estate planning, equitable distribution, and estate taxes.

Death in the Family

Appraisers determine the historical (retrospective) market value as of the date of death of the property, and not the date of the order.  An estate appraisal is completed by a Real Estate Appraiser with several years of experience.  Retrospective appraisals can be challenging in that the appraiser needs to decipher the trends and perceptions of market participants in a previous time period instead of whatever is happening right now (which could be substantially different).  The IRS has also made allowance for Alternative Valuation Date. If the market has declined 6 months after the date of death, you may order another appraisal (6 months from date of death) to show the difference and save on estate taxes. Taxes can be a substantial expense when settling an estate, we provide a defensible report to help through your process.  An interior appraisal is recommended.

Insurance

Insurance Replacement Costs – Your insurance company is interested in what it would cost to replace your “home” (less the land value)  in a catastrophic loss and not its market value.  Sometimes rebuilding is not an option for a variety of reasons, in which case Actual Cash Value might be the better way to address the valuation. Actual Cash Value is normally defined as Replacement Cost minus depreciation.  If you disagree with the replacement costs being used, one option is to order a replacement cost appraisal.  Most homeowners typically order this every 5 years and use factors for the years in between.

Short Sale

Short Sale Analysis – If you are upside down in your mortgage, you need to understand what your -Loan-to-Value- is on your home to make a smart decision.  To determine this accurately, you need a real estate appraisal. We can complete an appraisal to determine the best value that best suites your current needs. Market value is non-distressed value. Disposition value is when the owner is under compulsion to sell during a predetermined exposure time to the market. Liquidation value is the most probable price within a short period of time and very little marketing. Be smart, your due diligence can pay off.  Hire us today.

How big is my Las Vegas Home?

I need a property sketch – You have your home for sale, you have all the great staged photos, but do you have a floor plan?  Show off your home with a property sketch and sell your home faster. Your property taxes are calculated from the county assessment.  The assessment uses the gross living area (GLA) as an important factor in determining the value.  Sometimes they use factors in the measurement, skewing results. Most counties have the property sketch on the county website where you can verify the measurements.   Some of the sketches are incorrect.  If your home is smaller than what the county is indicating, you could be paying to much in property taxes. We use ANSI standards in measuring your home, condo, or cooperative. Order a property sketch now.

How much Rent do I charge?

Rental Survey – You own investment rental property and need to know if you are getting the best rent from your unit(s),.  When analyzing the market, we look at several factors including; the condition, location, the hypothetical tenant, duration of tenancy, and current market conditions.  Sometimes a rental survey is required to obtain a mortgage. We offer two services. Rent Range – a commercial services which aggregates local rents in the area and produces an easy to read report. Single Family Rent Schedule 1007 – an appraisal form commonly associated with an operating income statement 216.

What is the building condition?

Building Condition – Before you make an offer, know the history and avoid any surprises. Order a build-fax buyer’s report as a standalone, or include it with an appraisal report.

Although not extensive, we have listed above are 20 reasons to order an appraisal service from a qualified appraiser. Please let us know if we can help with your appraisal needs.

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How can I get a separation and divorce?

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kaboompics.com_Girl at the water 2How can I get a separation and divorce?

Separation and divorce needs to be taken into consideration as a last resort to take care of a partnership problem. This sort of procedure is extremely severe and it has to be a choice that is well thought out before trying to begin the procedure. You need to ensure that you are ready for this kind of radical action in order to assist your relationship.

Before you make a decision to apply for divorce, you will want to select the appropriate state and also county to submit your documents. In order to start your separation process, you will intend to ensure that you are going to the appropriate location first. You should ensure that the dissolution of marriage is taking place in the region where you or your partner lives.  You will file an application with the court in your county. Ultimately it is then in the courts hands, you will certainly need to wait to hear when the real hearing will be to establish the next step.

When you are filing for divorce, you will need to notify the court that you are going to proceed with the dissolution of your marital relationship. This is something that suggests you are unable to function the marriage out more and you want to put it to an end.  Each state’s laws are different in how they handle a dissolution of marriage.  Some have at-fault laws, and others are no-fault.

You have to make sure that you are ready for the long haul in the divorce. You will certainly understand that the proceedings will go on till a conclusion is reached about every one of the concerns that are raised. This could take a short time or a longer period of time depending upon the concerns and exactly what each party is ready to execute. You will certainly wish to make sure that you are open minded and going in to the procedure with excellent objectives at the same time.

You may have to hire an attorney to figure out what is ideal for you and your family members. Many divorces end in mediation or arbitration, while some go to court. You might have to speak with an judge as well as let them decide for you if you are unable to come to a resolution together. The judge will take into consideration the history so that he can make the very best choice for everyone that is involved in the procedures. You may want to make certain that you are ready for this kind of end result to happen.

You will find it necessary to work with a lawyer to deal with the proceedings in your divorce. You will want to also ensure that you are represented well to ensure you are not coming up short in the end. You want have your message sent out to the courts loud and clear to guarantee that you are able to ensure that your side of the tale is heard. There are numerous factors that need to be decided in a divorce hearing as well as how to proceed in court to have the decree ruled in your favor.

 

Each state has different laws on alimony and child support. Some states leave it to the discretion of the judge, while others use calculations.  Child custody is also handled on a one to one basis.  These issues should not be taken lightly, they are difficult to change once the decree is issued.

 

Your home and assets will typically need to be split up.  For most people, your home is the most important asset and establishing a value for the attorneys and or court is important.

The last thing that you want to do is make the divorce a dirty one. You must not intend to make it hard for the other person just for spite. This is not a smart idea because all it will do is include more anxiety on you and also might even hurt your instance. You want to make sure that you are doing what you can making this treatment go as quickly and also relatively painless as you can. That would certainly be best for every person involved including you as well as the family around you.

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The History of Fannie Mae

Fannie Mae

 

 

 

 

The History of Fannie Mae

From a historical standpoint of Fannie Mae as a Government-Sponsored Enterprise (GSE), we need to reflect back to the Great Depression and the U.S. government’s initial responses to the housing and mortgage crisis of the 1930s.  Although the Federal Reserve was created in 1913 as the lender of last resort for the federal government, it was limited in what it could do to restructure and restitute the entire American economy.  So, during President Herbert Hoover’s administration the Reconstruction Finance Corporation (RFC) was established in 1932.  This government corporation that operated until 1957 was set up to provide financial support to state and local governments and made loans to banks, railroads, mortgage associations, and other firms; a sort of prelude to the Marshall Plan that was implemented in Europe after World War II.  The aim of the RFC was to boost the country’s confidence and help financial institutions to perform adequately following the Great Depression.

In the summer of 1932, Congress passed the Federal Home Loan Bank Act, creating the Federal Home Loan Bank Board and a set of 12 regional federal home loan banks, whose purpose was to make secured loans to help existing mortgage lenders, with the proceeds of bonds sold to the public.

The following year Franklin Delano Roosevelt became President and his administration worked to fine-tune a mortgage finance system. The National Housing Act of 1934, a key piece of legislation in this regard, created the Federal Housing Administration (FHA).  A related feature of the FHA was a program that offered insurance against default on 30-year fully amortized fixed-rate mortgages with low down payments, providing they were made by qualified lenders and met the FHA’s under-writing standards.

In addition to the FHA authorization in the National Housing Act of 1934, the Act included a provision called Title III, authorizing the creation of a system of privately owned, federally chartered national mortgage associations.  But three years later none were established so to demonstrate the validity of the concept, the FHA authorized the Reconstruction Finance Corporation to organize the National Mortgage Association of Washington in February 1938.  Three months later it was renamed the Federal National Mortgage Association and its initials FNMA resulted

in the nickname, Fannie Mae (that resulted in a formal name change in 1997).  In essence the RFC created its own mortgage company, Fannie Mae, which was funded by the parent organization. Thus, the GSE regulatory and capital legislation laid the foundation for Fannie Mae. This entity was the only national mortgage association ever created, and it was government-owned, not private.

Congress tied Fannie Mae’s required capital to the amount of interest rate and credit risk it took.  Provided it kept those risks low, the organization would be allowed to hold relatively low amounts of minimum capital, enabling it to price its mortgage purchases below that of private lenders. During the first decade of operation Fannie Mae did only a moderate amount of business due to the many years of the country being engaged in warfare.  In post-World War II, however, the agency received authorization to purchase loans insured by the Veterans Administration (VA).  With VA loans extremely popular with veterans, Fannie Mae acquired over 130,000 loans in 1950, doubling all the years of business prior to this date.

Sometimes success breeds contempt and in this particular scenario, opposition grew to this government agency and legislation was afoot to make Fannie Mae a mixed ownership corporation.  The Federal National Mortgage Association Charter Act in 1954 granted to the U.S. Treasury nonvoting preferred stock in Fannie Mae, and nonvoting common stock was made available to lenders, who were required to own it in order to sell loans to the company.  The Charter Act included a provision for the gradual retirement of Treasury’s preferred stock and once repaid, legislation would be submitted to Congress to transform Fannie Mae into an organization fully owned by its private shareholders.

Interestingly enough, by 1968 that time had come to privatize the organization that compiled $2.5 billion in borrowings that weighed against the $100 billion federal threshold that President Johnson didn’t want to exceed (it is now over $16 trillion).  The Housing and Urban Development (HUD) Act of 1968 split Fannie Mae into two entities.  The first was a stockholder-owned company and the second creating a new agency, Government National Mortgage Association (GNMA, or Ginnie Mae.  The former maintained its role and the latter took on the role of securitization of FHA and VA mortgages. Ginnie Mae was kept within the government and made part of HUD, and HUD became the new regulator of Fannie Mae.

In the Home Finance Act of 1970, Congress created the Federal Home Loan Mortgage Corporation (FHCMC), or Freddie Mac. According to its Web-page, its purpose is to provide liquidity, stability and affordability to the U.S. housing market.

Fannie Mae’s 1954 charter, as amended in 1968, gave it benefits that (1) created the perception of a special relationship with the U.S. government, and (2) those that lowered the cost or increased the marketability of the company’s securities.  From the time it became a shareholder-owned company, Fannie Mae faced criticism and pressures from: free-market advocates, actual and potential competitors, and the two principle bank regulators, the Federal Reserve and the Treasury.

In 1999, four large lenders and two major mortgage insurers formed a Washington trade group called FM Watch, whose purpose was to lobby Congress to level the playing field by removing many of Fannie Mae’s charter benefits.  Fannie Mae fought to maintain the status quo, and the mortgage wars began. In the late 1990s, Fannie Mae was providing record amounts of low-cost, fixed-rate financing to home buyers at minimal risk to taxpayers.  FM Watch could not overcome this fact.  However, the Federal Reserve and the Treasury were powerful allies of FM Watch.  Subprime mortgages were the private-market alternatives to loans financed by the GSEs and what were called “private-label” mortgage-backed securities (MBS).

In 2004, the issuance of private-label mortgage-backed securities exceeded the issuance of GSE mortgage-backed securities for the first time, causing the GSEs to lose the role of prime mortgage standard-setter they had held since their inception.  That same year, the Office of Federal Housing Enterprises Oversight (OFHEO), the GSEs primary regulator, used claims of accounting fraud (subsequently proved to have no basis in fact) to oust Fannie Mae’s top management and to force an overhaul of its risk management.

In September 2008, the GSEs’ implicit government backing became explicit when in the throes of financial crisis and facing possible bankruptcy; both were placed in conservatorship by their regulator, the FHFA.  The cost to taxpayers of their bailout has been estimated at $317 billion.

Private-label MBS issuers put no practical limit of the riskiness of the mortgages they financed, and financial regulators refused to.  In the absence of external credit discipline, lenders who were not retaining the risk of the loans they made engaged in a race for market share and profits.  Because the lowest-quality mortgages were the most profitable to finance through private-label securitization, the credit quality of prime home mortgages fell precipitously.  Fannie Mae, under new management, switched from resisting the lending frenzy to joining it, making the ultimate boom and busts that much worse.

Home sales peaked in the summer of 2005, and home prices peaked a year later.  it took longer for the lending bubble to burst, but by the end of 2007, defaults on private-label securities has risen so high that the private-label mortgage-backed securities market shutdown entirely.  The GSEs were the only major sources of financing left.

Treasury, the Fed, and the Bush administration needed GSE financing to keep the housing market from complete collapse, but they opposed the GSEs having an expanded role as shareholder-owned companies.  In September 2008 the GSEs were put into conservatorship in spite of the fact that both companies met their statutory capital requirements at the time.15

According to Fannie Mae’s Web-page, the company is: “a leading source of residential mortgage credit in the U.S. secondary market, Fannie Mae is supporting today’s economic recovery and helping to build a sustainable housing finance system.  We exist to provide reliable. Large-scale access to affordable mortgage credit in all communities across the country at all times so people can buy, refinance, or rent homes”.

“We are working to establish and implement industry standards, develop better tools to price and manage credit risk, build new infrastructures to ensure a liquid and efficient market, and facilitate the collection and reporting of data for accurate financial reporting and improved risk management”.

“We are committed to being our customers’ most valued business partner and delivering the products, services, and tools our customers need to serve the entire market confidently, efficiently, and profitably. Ultimately, we measure our progress not only by paying taxpayers and improving the housing finance system, but also by the difference we make in people’s lives”.

In 2011, over 75% of all mortgages that were originated in the U.S. – over $1 trillion worth – passed through the hands of Fannie Mae or Freddie Mac.  These institutions have traditionally been private corporations operating with the implicit backing of the U.S. government.  Their mission, as defined in their charters, is to provide stability, liquidity, and affordability in the U.S. mortgage market.   The GSEs are meant to accomplish these goals by purchasing mortgage loans on the secondary market, which they then package into securities or hold in portfolio.

The magnitude of the housing collapse mirrored the intensity of the bubble that preceded it.  Housing starts and new home sales fell by a staggering 75% between 2005 and 2011.  Home prices fell by more than 30% nationwide, and in some regions they fell by over 60%.  The total value of American homes dropped by $5.6 trillion before it finally hit bottom.  Millions lost their homes to foreclosure, and nearly one-quarter of home owners owed more on their homes than those homes were worth.  Sharp cutbacks in spending by families affected by the crisis triggered the worst recession since the Great Depression, with the real GDP falling by 5.1 percent in months.  Between February 2008 and February 2010, nearly nine million people lost their jobs, and the unemployment rate more than doubled, hitting 10% at its peak. The recession officially ended in June 2009, but the vast amount of household wealth lost during the meltdown made the ensuing recovery the weakest in modern history.  The aftereffects of the mortgage wars pervade both the U.S. economy and the financial markets to this day.

Next: Fannie Mae data collection and the UCDP

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