Expert Appraiser: Trusts, Divorce, Property Tax

“25% of Home Escrows Fail due to Appraisers” “ Home Builders blame appraisers for sinking home sales” NAR reports 1/3 of all agents report losing sales due to low appraisals

Why are appraisals coming in low, and throwing sales out of escrow? Why doesn’t the appraiser understand this market? Can we fix it or just sit by and accept it?

THE GOOD NEWS: The top appraisers do see the market as you see it. They work hard to research the local market, then report their opinion of market value, which often supports the purchase price of the home. They are the ones working on the 65-75% of the sales that are closing.

THE BAD NEWS: The random system that the major national banks use, assigns appraisers based on their lowest fees, not on local expertise. Low-fee appraisers often drive extra miles to assignments scattered around the region. And with their low fees, they don’t research & prepare the professional report that you & your clients deserve.

This doesn’t show up until you get the bad news – After waiting 2 weeks, the appraisal is too low to support the sale of the property, that you and others have worked so hard on, for the past few months.

BACK TO GOOD NEWS: You can eliminate these "carpetbaggers" from your carefully developed sales process. Instead of being a last-minute victim, use these “tools” to improve your successful closing rate.

1. Real estate listing agents have a legal responsibility to share the best attributes of the property, as well as the best local sales comparables to out-of-area appraisers sent by those distant national lenders.

2. Real Estate Appraisers also have the legal responsibility to gather the best data, including research from the agents and homeowners. The best professional appraisers always take the time to research deeply. They use a wider market area, look at older sales, check historical data, and take careful notes and photos of the subject. They produce a trustworthy report that usually supports the sale price.

3. The bad appraisers don’t care, and cause a lot of needless suffering. They will continue to destroy the real estate process. But once you know how to identify them, they can be eliminated from your pending sales process. It is up to you, the agent and home owner, to invoke your legal requirement of protecting the sales process and the value of the home.

4. In today’s market, every sale is very important. Consider adding a few extra steps to your professional home selling or buying process: 1) Interview the appraiser when they first call, and then 2) Feed the good appraiser with nourishing, healthy, local market sales and data.

5. The Tell-tale signs are there, but you need to ask questions to find them. When the appraiser first calls for the inspection, act as a protective gate keeper to the home, and have the courage to be critical. If the appraiser does not pass your interview, tell them they are not qualified to do this appraisal, and you are going to demand that the lender send out a qualified local specialist.

1. Hello, Mr./Ms. Appraiser, can I get your phone number, in case we get disconnected? (Good appraisers understand and will be gracious and forthcoming, bad appraisers may be cautious and inhospitable)
2. I would like to give you the best directions to the property, where are you coming from? (Good appraisers will be from local or nearby communities, that you recognize, bad appraisers may be driving for an hour or more, and will not be qualified to work in your neighborhood. If they withhold that information, they most likely are from too far away.)
3. Are you a member of our local MLS? Do you need me to provide you with local MLS material and data? (If they are from farther away, they may have reciprocal access, but it may not be complete, and may not have the sales that you find are important. Again, a warning sign for you to note.)
4. Have you found any material about our subject? ( Most appraisers will have done a preliminary review of the subject and nearby comparables, before they even call you. If not, it may be an indication that they are rushing through a stack of orders, and not spending enough time to do an accurate analysis.)
5. Can I get your email address, so I can send you some material about the house and the local market? (The appraisers you want to be working on your project will welcome any material about the subject and local comparables. If not, they may not be trustworthy)
6. (If the appraiser does not appear to be qualified, or is from out of the area, and would not provide an accurate report) “Thank you for the call. Unfortunately, my professional responsibility to my client will not allow me to give you access to the property, as you are not “geographically competent”. We will be contacting the lender and having them send out a local expert instead.”
7. (If they pass your test) “I look forward to meeting you. I will send you my material later today, to help you start your research. Call me on my cell phone if you need anything, or are experiencing any delays on the inspection day.”

6. Immediately after the purchase contract is signed, run the local market data, and print out, as a .pdf, full page listings of the 3-5 most similar comps that you feel reflect the market of the subject. Then also, type up as a “word.doc:”, the subject and neighborhood features, so they can draft it directly into the report. Send these two documents to them that same day.

We work together in this big real estate market, and with the strength and creative drive from each of us, we can make it through the next several years. We work together to share our love of our profession, our communities, and our families. As we are finding out, it takes more time and creative thinking to make each sale. Hopefully, with these “tools”, you can help your clients and their families close those last 25% of escrows as well.

Please drop me a line and let me know if this process works for you, and any ideas you have to add, as well.

Reader Asks: I received a low appraisal, and the square footage is lower than an older appraisal. What can I do now?

Your situation is certainly frustrating, and is likely more common these days. A survey by the National Association of Realtors found that more than 25% of their agents had lost a sale, or had to re-negotiate, due to a low appraisal. It is quite possible you have the same situation. Are there any other readers who have had this happen to them? If you are going to have an appraisal on your home, check out the free useful tips on my website blog.

It may be helpful to go back to the older documents, and examine them closely. It is always important to get a copy of past appraisals done on your home. Dear readers, write a letter at once to your lenders or mortgage brokers, and get a copy for your files today. Even old appraisals.

Appraisers know that a truly measured home will seldom agree with the printed square footage. This is due to many elements: measuring wheels are historically inaccurate, digital measuring devices can be miscalibrated, etc, as well as differences in measuring technique. Often the legal SF is based on the plans, which would show the size of the original wood-framed structure, before the exterior stucco is applied.

Let’s review the current appraisal and make sure it is the best that it can be. Do you agree with the sales used for the report? Are any of the sales “fixers”, “bank-owned”, REO’s , or short sales? These may not be truly reflective of the market. Yes, they may be nearby, but the local market may have two tiers of sales. There may be a range of low-priced, highly motivated sales of REO’s, fixers, and short sales. And then a range of higher sales, what I call “full-value” sales. These are well-maintained homes with nice landscaping, away from busy streets and commercial areas, that are attractive to buyers who do not want to shell out for repairs and updating.

I think it is very cost-effective to hire a local appraisal expert to review the file, from their desk, for $100.00 or so. They can see if your bank appraisal has problems, and you can plan a strategy together from there. If it costs a few hundred dollars, but allows you to save four or five times that much in the first year, it is a good investment, don’t you think?

In today’s quiet market, I often seek out more accurate sales from slightly further away. I also widen my scope with the range of living area. This takes more time, but more accurately reflect the true market value of the home.

A bit of background on the current appraisal process may help explain things for you. Often the major banks use an Appraisal Management Company (AMC) to select their appraisers. This is supposed to remove the temptation by the bank officer to push value, to gain greater commissions. But many national AMC’s run their selection process incorrectly, choosing the lowest-priced appraiser, instead of a local expert, in order to make a greater profit from your appraisal fee.

The bank gets takes your appraisal fee, say, of $350.00, and takes a processing fee of $75.00 off the top. They give the balance to an AMC, which also takes a fee of $75.000. The $200.00 balance, in this case, is used to find an appraiser. If they can find a lower-fee appraiser for $150.00, even one from 40 miles away, they profit even more.

Often the bank is co-owner of the AMC, and they get part of that profit back. So the bank has made $100, without even writing up the loan. And if the appraisal value comes back low, they have little incentive to fix it. Many local lenders and credit unions do not use this kind of system, and you can often get a higher-quality appraiser.

If the older appraisal has a sketch that shows the exact same dimensions as the public record, it is possible that the appraiser either did not measure the house, or he modified his data to conform to the public record. Both of these are wrong, but that does not help you today. At this point, your main concern is trying to get a re-finance, and the costs and time involved in mounting an attack on the original lender and appraiser, is beyond the scope of my expertise.

I hope you find this helpful, and a cost-efficient method to get your loan. Please keep us posted on your process.

Appraised the Malibu architectural by Michael Kovac, in Serra Retreat. I n 2010, it was listed at $14,795,000 with Matt Rapf. Also listed by Kurt Rappaport and Chris Cortazzo. Michael Gardner took amazing photos, at http://www.californiamoves.com/property/details/1025972/MLS-11-501411/3270-Serra-Rd-Malibu-CA-90265.aspx

Why are you waiting for the low appraisal to kill the deal?

I am an appraiser, I know.

Before we call you to set a time to meet at the site, we have already looked at the MLS of the subject, and our software has automatically pulled nearby sales comps. If the home you are selling is in the mid level of the area prices, you might be okay. However, if it is better than average, more upgrades, better views, or other elements, my comps are not going to help your deal, and they may kill it.

My first batch of comps is strictly by price per square foot. Unless you share your research with me, I am intending to bring it in, right in the middle of your market values. Before I come to inspect, I have spent a few hours looking at sales and actives, and will likely not even look at the comps you hand to me. I have already made up my mind.

The banks have no interest in fighting to save the deal. They just want a safe conservative valuation, and have handed this responsibility off to the AMC, back in Minnesota. The average time it takes to challenge a low appraisal is about 6-8 weeks. Can you affords to wait that long?

In today’s market, one has to be pro-active, thinking ahead of the process. How can we get the right comparables into the appraiser’s hands before he pulls the easiest, closest ones, those weak sales that do not support your sale?

Check out five steps that you can do, to increase your closing rate that last 10-16% percentage.

1. Interview the appraiser on the phone. If he is from too far away, do not let him in the house. Would you let an unqualified plumber come in to do repairs?

2. As soon as the contract is signed, go back to your desk and develop two things:

a. A word doc list of 10 or more features of the property. Be specific

b. A pdf print out of the full listings of 4-6 best sales and 3-4 best active listings.

c. After you have qualified the appraiser, send him your two lists right away.

3. When you meet the appraiser at the site, (and you do want to meet him there, even if you are the buying broker) walk him through the home sand point out all the features on the list. In addition, describe for him, again, the comps and recent sales you used to develop the listing price.

4. As soon as the appraiser has left the site, start preparing for PLAN B. Work both sides for small contingency measures, in case the appraisal comes back low. Explain that the appraisal process is different now, used as more like an insurance policy, than an actual reflection of the true market value. Moreover, the AMC typically sends out the lowest price appraiser, even if he is new or from outside the area.

5. If the appraisal comes back low, then immediately implement PLAN B, which saves the deal, and allows the buyer to be happy with their new home, the seller to be happy with their new move, and the agents to be happy with their commissions. Not to mention Home Depot is happy to sell more paint, the neighbor kids are happy to have new playmates, and the daughter is happy to finally have a room of her own, freshly painted pink.

PROPERTY TAX REDUCTION TIME

It is July, and that is time to review your property tax bills.

Property Tax Bills are now posted. A quick value check will tell you if you agree with their value. If you bought your home after 2004, it is time to review the local sales, or comparables, as of January, 2011, in your neighborhood, to see what the property values are like.

The county uses a computerized system, and does not know your specific neighborhood. There are many on-line sites that give an approximation, but use those only as an initial reference. If there appears to be a difference from those site and your bill, then give us a call. We can figure out what degree of appeal you might consider.

Remember, the county has the “Dealers’ Advantage”. Trying to fight it yourself is an automatic financial drain, and a waste of your time. These are professionals and they run this system 24/7. Our initial reference value check is no charge, and no obligation. You have only about 60 days to file a response, so act quickly and call us today. 818 991 932 or 310 505 5916.

The latest word from the National Association of Realtors confirms what many hard working agents are also seeing. The present system by major banks of assigning appraisers is causing many solid home sales to fall apart, due to low appraisals. The 05 19 11 story by Walter Molony quotes NAR Chief Economist Lawrence Yun: “… a steady level of low appraisals that result in contract cancellations”. NAR April Market Summary click here

As much as appraisers are being forced to be strictly number-crunchers, & staying with only the hard data, it doesn’t really work in the real estate world. There truly is as much art as science, just like the buyers’ emotional response to the market supply. This is readily verified by the works of quality architects, who blend the worlds of science and artistry together (Neutra’s Kaufmann house in Palm Springs, Frank Gehry’s recent commissions, anything by Steven Kent or Doug Burdge in Malibu.) Also, any agent can tell you of the many times a client hated the house that looked good via the specifications, but then loved the home that, on paper, appeared to be all wrong for their family’s needs.

Appraisers are somewhat like piano players: At the extreme, there are some who cannot carry a tune in a bucket, and then there are those that blend  technique with artistry to produce the magic, those who can share the joy of good Count Basie swing, or bring tears to your eyes with Beethoven.

The major national banks' model for their Appraisal Management Companies, is a system based on offering orders to the lowest-priced appraisers first, for maximum company profit. The major banks own or co-own the AMC’s, and take a commission off each appraisal fee. And who gets these orders first? Not the skilled craftsman with 20 years of local experience and extensive relocation work. No it is the newer appraisers, from 40 miles away, who doesn’t know the local market, yet will cram two appraisals into the day. He will take every short cut he can, and will just grab the first 3-4 sales nearby. He doesn’t care about the purchase price, even with three similar back-up offers.

But there is a proven method to “work-around” the shortcomings of this system. It takes a bit more commitment by both of the realtors handling the sale. Remember, after the appraisal is delivered, it is too late to try to change it.

Five steps to “side step” a low appraisal:

1. Be Pro-Active: When the appraiser first calls for the appointment, verify where the appraiser is coming from, and if they know enough about the local market. If not, this is the best time to have the bank send out a better appraiser. Just politely share that you need a local expert. Then notify the bank to send someone qualified.
2. Be sure to email the appraiser a complete list of all the features, upgrades, and location amenities that you found when you first researched the home. Send this right away, as a word doc, so it can be a good reference.
3. Share which comps you used to set the pricing on this home. Make a pdf copy of the full print out with the legal record, of those 3-4 sales and similar actives, and email them when the appraiser first calls. Include the very best supporting sales within 90 days, a new requirement by almost all lenders.
4. Develop your contingency plan. After the appraisal inspection, start to work immediately on “PLAN B”. This is the most important part. If the appraisal comes back low, what will you do? You cannot fight it, that takes two months, and is not effective. Talk to your buyer NOW. Be sure they have an extra 3-5% or more, that they can add to the down payment, to “buy it down” and allow the deal to happen. Do the same with the seller. Can they offer a slight discount, or maybe a non recurring credit, that would “seal the deal”?
5. Remember to share with the buyers, that the way the appraisal process is used these days, is different than it was a few years ago. Now, it is really more like an insurance policy by the bank, and not necessarily the real market value. Share that when unqualified appraisers accept these orders, values often come back low, yet the real market value was determined between the buyer and seller. Confirm with the buyer that this is really the right home for their family. Confirm with the seller that this is the right time to sell the home, and to be able to move on. Get slight accommodations from each side, and be ready. When the appraisal comes back slightly low, inform everyone, and then confirm it is time to implement “PLAN B”. Buy it down, implement the concessions, and close the sale.

For more good tips, be sure to check out our website at www.eas2.org. Let me know if these ideas are helpful.

We have long been working with international buyers in the Luxury markets of Southern California. There are new stories about the Canadians, Chinese, Russians, and Brazilians buying luxury homes and condos in the United States. This past week there was another article from the Wall Street Journal verifying this, in local and international markets, including London, Paris, and New York. Wall Street Journal: Luxury Markets  

While it doesn’t mention Los Angeles, we have been working with several international clients over the past 18 months, and interest is growing. The attractive rate of exchange makes US properties a bargain, yet they seek out our services as well, to benchmark the market value of the purchase, as the market is still in flux. While many luxury markets were quiet in early 2011, since then, prime listings in all markets have been getting multiple offers, which questions the true market value.

As local experts, our research can pinpoint that value, with recent sales and other listings, and in addition, we often find other good alternate opportunities for buyers caught in a feeding frenzy. We are not constrained by neighborhood boundaries or local relationships, which can sometimes limit local realtors.

Our experience in these markets gives us current working data for our work with relocation clients as well. Folks moving into the market find that an independent appraiser can fill in the gaps that some local Realtors may have about alternate communities and other options. Like a photographer using a tripod for their best photos, the combination of the relocation company, local Realtor, and appraiser, gives a solid & thorough perspective on the market, saving time and money all around. Several local relocation Realtors refer me often, to both their incoming and outgoing home owners, as they understand this is a win-win-win situation for all.

Feel free to check out my other timely tips and material at www.eas2.org. We have assisted folks from all over Southern California, as well as assisted families from Canada, Europe, South America, China, and other regions.

As a seasoned courtroom expert appraiser, I have assisted hundreds of clients over the years. Our firm in West Los Angeles gets many calls from folks needing appraisals for estate planning, divorce, trusts, IRS, property tax reductions, and gifting to children. (Click Here for current resume) But the most difficult by far, is divorce. It often is occurring at the same time as other traumatic situations, like job loss, major illness or injury, or other family incidences. This makes it exponentially more challenging to each side, and that is why it is so important to invest in top quality legal support.

Often overlooked is one of the most effective keys to success, the concept of “Pre-emption” in the courtroom. With your legal expert, think ahead to which issues the opposing side might bring up, or what aspects may be most difficult or embarrassing to your case.  

This issue and many other good ideas are presented in a new book by Joseph Cordell, called “ The 10 Stupidest Mistakes Men Make When Facing Divorce”( Three Rivers Press, $15).    (La Times: Divorce attorney wants men to smarten up) In an article with the Los Angeles, Mr. Cordell starts with the financial issue, and then as number 4, lists “Concealing Information”, which reviews this aspect.

Develop a plan on how you can present these issues first, early in the proceedings, before the opposing side has a chance to drill you with it. Think of the financial picture, the social aspects, the memberships and associations, and how they may be mischaracterized by the adversary.

For more information, contact our office at (310) 505-5916, or click on www.eas2.org. Click Here for Expert Appraiser Website

The Wall Street Journal for Saturday, 02/26/11

Is It Time to Buy?  

Wall Street Journal "Time To Buy?"

Some of the items mentioned:

"Is housing headed for a dreaded double-dip? Or are signs finally pointing to a long-awaited rally? Despite the glum statistics recently, well-heeled buyers in many markets should feel comfortable betting on the latter. ... many markets are safer now than they have been in years....

"David Blitzer, chairman of the index committee at S&P Indices, says the breakdown in correlations "is a positive sign we are moving out of the boom-bust cycle."...

"There's good reason to be skeptical of the national statistics. The NAR's quarterly price data are based on median sale prices and can be skewed by sales of higher- or lower-priced homes when there are few transactions, experts say. The Case-Shiller index is based on repeat sales of specific homes, which some argue is a more accurate measure—but it is limited to only the 20 biggest markets. ...

"California, meanwhile, is a hodgepodge. In some cities, prices are recovering faster than in many other parts of the U.S., largely because of population growth. In San Diego, prices increased by 0.1% in 2010; in Los Angeles, prices were flat. The San Jose-Sunnyvale-Santa Clara area, near Silicon Valley, saw a 2.2% rise....

"Dianne Hartnett, a Re/Max real-estate agent in downtown San Diego, says sales have been "surprisingly" brisk for condominiums, which typically start at about $575,000. "There hasn't been a lot of new construction and there won't be for a while, and that is healthy for the downtown market," she says.

"The situation is quite different in Central California. Fresno, for instance, (is) "frankly dangerous," with prices having fallen 5.5% in 2010. Rental vacancy rates there surged to 11% in the fourth quarter, thanks to a spike in foreclosed homes now available for rental. In Los Angeles, by contrast, vacancy rates fell to 6.2% in the fourth quarter from 8.4% in the first quarter. "

Of course, each community has been affected in different ways at different times.  Feel free to contact me and we can look at your situation, whether it is to buy or sell, or even for leasing information in the greater Los Angeles Metro Area.

In working on property tax appeals, for clients in Ventura County & Los Angeles County, I have gained valuable insight into the process. I will try to share the most important items in this and following posts.

1. Visit the Assesor websites, print out everything you can, & study it.

Los Angeles County Assessor:LA County Assessor

Ventura County Assessor: Ventura County Assessor

There is a lot of material there, and it can be confusing. Call us if you need help.

2. Be sure you know what the date of assessment, or valuation is. It is typically January 1st of the year. But I have seen many homeowners walk in to the hearing, & have all their comparables thrown out, as they were for the wrong year, or too recent.

I have many more ideas, but will include them at the next posting.

Property Tax Reductions

Following is a brief supplement to what your local county assessor provides on their website.

1. Make sure you are aware of what date the tax is based on. Is it January 1, 2010, or January 1, 2009? Going in with a list of recent sales from your trusted Realtor, means you will be tossed out in a New York Minute. Sometimes the cut-off date may be up to 90 days after the date of value. For example, the tax is based on January 1, 2010, then you can use sales from all of 2009, PLUS sales that closed Jan-Feb Mar 2010. But not one day later.  Check with your office.
2. Get them to send you a copy of their report, showing how they developed the values they used. Since it may have been done automatically each year, this then requires them to manufacture a specific report for you. You are entitled to it, before you go to any hearings. And not just the night before, but 10-15 days before.
3. Make sure you understand all the steps in the process, as it varies from county to county. You can send in their paper form, with your data on it. And they will most often say "NO!". Then you can schedule a hearing with one person, really the most effective step. Do not go in without a strong advocate. They take great pride in their ability to pull out unusual rules, right under your nose. Often therre is a third step, appearing before the three person Assessment Appeals Board. This is  the most intimidating. You are actually presenting your appeal before the board, maybe their attorney, several members of the county assessor’s office and the general public as well. Better have your data and research ready!
4. They often say that you can just fill out their form and submit it yourself, and that you do not need professional help. This is like the Los Angeles Lakers challenging you and your high school team to a high stakes, $10,000 basketball game. They have the firepower, the intimidation, the data, AND the home court advantage. Do not believe this for a minute.
5. Call around to find a strongly assertive senior appraiser to help assemble your case. In my most recent project, I re-wrote our report for them three times, but it was well worth it. We won 75% of what we were shooting for, saving $6,500 each year.
6. Contact me for any further questions: 310 505 5916.

I have been assisting clients with property tax reduction requests, as the county has based their taxes on valuations as of January 1, 2010 (or in some cases 2009). Sometimes the assessed value is much higher than the market for that time, as the number crunching is typically done by computers, and not by an individual appraiser. 

We have assembled some effective packages for the assessor staff to review. In one case, we were able to get the value adjusted downward by $600,000, for the tax year 2008. This means that most likely, the owners will be avoiding overpaying taxes of about $30,000 in a 5-6 year period. That truly makes it worthwhile!

In another case, the county had over-valued some vacant land by a wide margin, and we developed several documents, appeared at the office for a hearing, and were subjected to a several month's delay. It can wear you down, and make you think about giving up.

In any and all cases, you need to have a professional appraiser at your side. At these hearings, I have seen dozens of cases being evaluated. The homeowner trying to do it himself is no match for the county assessor staff, who have access to much more information that you can get from Trulia or Google or Zillow.  Think about that $30,000 figure above.  Do you want to just hand that amount of money over, without a fair hearing, and with extensive documentation to support your claim? Call our office at (310) 505 5916 for more details.    

Palmer & Krisel, Gregory Ain, Garrett Eckbo, Eichler

From the world of Southern California Architecture: I have just been assisting a family with an updated appraisal of their original Palmer & Krisel home in Northridge. This small tract was developed by Stanford Adler in the mid 1950's and has some amazing elements: river rock trim, clerestory windows, oversized garages, and quite unusual, to fit the budget of the times, pegboard kitchen cabinet slider doors. I had previously done another model, around the corner on Reseda Blvd.  

In other news, it is good to see the attention to the works of Garrett Eckbo, landscape architect for so many A Quincy Jones projects, including a new $39,000,000 listing in Holmby Hills. He was a partner with Gregeory Ain, in the Modernique development of Mar Vista.

Since last we wrote, we have assisted another family with an Eichler home appraisal, as well as another Gregory Ain home, this time in Alta Dena. In addition to assisting with five Ain homes in Mar Vista, I have now also assisted Gregory Ain owners in Alta Dena, Van Nuys (one of his earliest), and in Silverlake, with a condo there, the Avenel development. 

Possible new Eichler client in Balboa Highlands. Will have to update you later.

In the New Forbes Magazine for November 30th, 2009, Francesca Levy desribes the attraction and unusual passion that folks have for the Joseph Eichler homes, in Northern & Southern California. Out in the Conejo Valley is a tract of about 50 homes, and there are others in Balboa Highlands, and many in Orange County as well.

Remarkably, recent statistics show that the typical Eichler home in Thousand Oaks, is selling for up to 15% more than equal-sized nearby traditional homes. In fact, even in this tough market, the better-selling Eichlers are actually slightly smaller in living area.  I have included some photos I have taken, so you can being to see what the interest is all about. It is important to remember, the design of the house was purposely focused on the interior, wrapped around a little open atrium, and of course, the back yard, often with pool. The rather plain, non-descript street facing side was by design!

Let me know what you think!

James Ebert james@eas2.com

As of May 1, 2009, all Freddie/Fannie/conforming loan appraisals are required to be administered through a third party company (called an Appraisal Management Company, or AMC), to avoid contact from lender to appraiser. This is the result of a settlement between a bank & an Attorney General, as the bank was threatening appraisers to push value higher, for more commissions for the bank. Click here for Fannie Mae link

Most big banks (B of A, Chase, Wells Fargo & others) have adopted this program. They can no longer hire local expert appraisers for a conforming mortgage loan, and must go through an AMC.  Appraisers are not allowed to talk to the lender at all. They can talk to the listing/selling agent.

This was to apply to conforming/Freddie Mac/Fannie Mae loans, those up to $729,750, but the lenders are applying it to all loans, including jumbo, super jumbo, & FHA, tho not required. Be aware that now you will have out-of-area appraisers calling you to schedule your appraisals, and they will not know the area.

Following are some tips to consider:

1. Write your loan contingencies and escrows for a much longer period of time, to allow for these extra intermediary steps from this system, including conditions, low appraisals, and value re-considerations.

2. Take the time to prepare an appraiser package of comparables. I appreciate it when the agent emails or faxes their selections to me ahead of time. Personal notes are invaluable: “Was tenant occupied, needs updating”, or “ Bad floor plan, lots of stairs” really help.

Currently, most lenders are requiring:

    - 2 closed sales within 90 days, plus a required 3rd sale within 6 months.

    - 2 pendings or actives, that can support value even with a 10% discount.

    - I often use an older 4th closed sale, that supports value, with a 7 -10% time adjustment.

    - On more complex assignments, it’s helpful to consider 7, 8 & even 9 comparables.

3. Now appraisers are additionally required to do four separate batches of research, fill out additional forms, yet, with the 40% AMC fee commissions, they are only getting 50% of previous pay. This means they are working twice as hard, to try to survive. Typically, they will be pulling up only the most obvious local comparables, those nearby, and missing those few full-value sales you used to develop your pricing.

The only way to make sure the appraiser can see your comps, is to be sure to email them to him, follow up with hard copy, & discussing them at inspection.

4. Many of these are less experienced, & they will come in low, which ruins the deal. Don't even think about getting a reconsideration of value, as it can take weeks. You have only one shot at this.

Some banks, those under $250 million, and credit unions, can set up their own in-house system to order appraisals, without using the AMC’s. Check with them. It is also possible that an out-of-town lender can use a local recommended appraiser.

Your favored local appraiser can still help you with VA, FHA, Relocations, as well as trusts, estates, divorces, tax rebuttals, restoring HELOCs, and other valuation needs.

Another option is to use your local appraiser as a consultant, to prepare material to give to that random appraiser. A local appraiser could be hired to review the local sales and listings, to determine a listing price, or to interpret how difficult it might be for the random appraiser to support the sale.

Check out these website connections: Click for great video summary

Try this as well

Here is a Realtor taking action on her own

And remember, our office is here to answer any and all questions, at any time. We are ready to preview market conditions for you today. Give us a call with your concerns.

James Ebert 310.505.5916 / 818.991.9322

james@eas2.com

RECENT 2009 RECOMMENDATIONS FOR EBERT APPRAISALS

Realtor thanks to us, about an Historical Architectural Home Purchase: “Well it took 30 days – but the bank approved your appraisal – we had appraisal review, then a desk top appraisal, then appraisal review of the desk top appraisal, then a field appraisal, and then finally an approval – set to close this week – Thanks again” Andrew J

“As president of First Capital Mortgage, a company providing over $2 Billion in mortgage loans annually, I know many appraisers, and Mr. Ebert has continued to be on my first call list. For over fifteen years, he has assisted many of my fellow colleagues as well. He continually receives high praise from my clients.” - Jay Robertson President, First Capital Mortgage

“Your experience in understanding the market, including the specialty market, has been invaluable. Most appraisers do not have the depth of knowledge that you have. I thank you for your diligence.” David Jaffe JPMorgan /Chase Home Mortgage

“I want to thank you for your assistance in the appraisal audit. The Internal Revenue Service had challenged the values of their property and, before an appeals officer, because of your expertise and professional representation, I won the case. The Internal Revenue service accepted your valuation, with no changes.” - Certified Public Accountant

May 1, 2009: Immediate Changes Coming to the Mortgage and Lending Industry

Compiled by James Ebert, Appraiser (310)505-5916

I. Overview

II. Fannie Mae Freddie Mac & Mortgage Brokers

III. Small Bank Exemptions

IV. Two Articles

V. FAQ and Updates from Fannie, Freddie

VI. Mortgage Brokers File Suit to Block HVCC

I. Starting May 1, 2009, much of the conforming loan and mortgage process will be changing. Many mortgage brokers may be limited from this loan production. When implemented, to show they are not in collusion with appraisers, lenders will be required to send their appraisal requests to an intermediary, one of several Appraisal Management Companies. These companies, then, will assign the orders randomly to a wide field of appraisers, who may not be qualified to know the market. is process. See article below, stating “the HVCC bars appraisers from interacting at all with agents, mortgage brokers, loan officers, and others”

Many national lenders are actually implementing this process earlier, some are already using this process. There are exceptions, including small local banks, credit unions, and some other sources. But control of the mortgage industry will be consolidated and driven by the few big lenders left standing.

II. Fannie addresses Mortgage Brokers

Fannie addresses several questions regarding brokers and the appraisals under the HVCC:

When a lender uses an appraisal management company, the appraisal management company is responsible for retaining and paying the appraiser. Is it likewise permissible for a mortgage broker to use an appraisal management company, since the mortgage broker does not technically retain or pay the appraiser?
No. The Code prohibits lenders from relying on an appraisal where the broker had a role in selecting, retaining, or compensating the appraiser.

May a mortgage broker provide the lender with an approved appraiser list for the lender to use when ordering appraisals for that particular broker?
No.

May a mortgage broker order an appraisal directly from an appraisal management company that was specifically authorized by the lender?
No. The Code prohibits brokers from ordering appraisal services

III. The HVCC Exemptions to the Code

1. My institution is already required to comply with federal regulations regarding appraisals. Does this exempt my institution from the Code?
No. All Freddie Mac Sellers must comply with the Code, which has been added as an Exhibit to the Guide.

2. How do I know if my organization will be exempt from Section IV (a) of the Code as a “small bank?”
In general, to be exempt from Section IV (a) of the Code, according to Section IV (e) of the Code, a Seller must (1) meet the definition of a “small bank” as set forth in 12 U.S.C. Section 2908 (which currently provides, among other factors, that the institution’s aggregate assets are no more than $250,000,000) and (2) Freddie Mac determines that the Seller would suffer hardship due to the provisions. We will provide additional information on this topic in the future.

IV. Samples of articles about the process.

1. (HVCC) Home Valuation Code of Conduct and the End of the Independent Real Estate Appraiser
By Brian Quigley

Brian Quigley
Level: Basic PLUS

Working in finance since 2001, Brian got his start working for Investec Ernst and Company in Long Island, New York as a registered representative selling ... ...

The Home Valuation Code Of Conduct is based on the belief that real estate appraisers have universally been intimidated, coerced, bribed, etc, into coming up with a property valuation. Fannie Mae and Freddie Mac have agreed with the Attorney General of New York, to form an agreement that will not go to the Senate or House Committees. It states that the future of the appraisal business will be regulated by Fannie Mae and Freddie Mac when sponsoring the financing of the mortgage. There are many factors put into place that make this bill very unpopular with mortgage brokers, real estate agents, appraisers, and most of all, the end consumer.

Problems: It requires all appraisers to join Appraisal Management Companies, to which they are forced to pay 40% of their income, ending the existence of their lender relationships they have spend years fostering and preserving.

As mortgage brokers, we will be disabled from choosing the appraiser we want, and will not be allowed any contact with the appraiser, only the lender will be allowed to do that. If I wanted to use my appraiser because of his accuracy, research tools, professionalism,and speed, I would not be able to provide that value added service to my client. So if your lender chooses an appraiser with that is slow or backed up, you are stuck.

Since the appraisal will not be in the mortgage brokers name, you cannot have it reassigned. If your client needs to change a lender, or if the client does not fit into the guidelines at any time during the process, you will need to get a completely new appraisal, thus increasing your clients costs, delaying the loan closing, and making all parties involved extremely frustrated.

Fannie Mae and Freddie Mac have lost billions of dollars in the last few years, so it is no wonder they are enjoining this bill, since it will only help them manipulate the market, and have more control.

2. From Appraisal Scoop:

HVCC: The Cure Is Worse Than The Disease

by Dave Biggers

Dave Biggers is founder and Chairman of a la mode, an appraisal software company. An engineering and economics major, Dave started a la mode while still in school in 1985.

By now, you've heard a lot about the Home Valuation Code of Conduct (HVCC), which sprang out of a March 3, 2008 agreement reached between the Attorney General of New York (Andrew Cuomo), the OFHEO, and Fannie Mae and Freddie Mac. In the settlement, the parties resolved issues of appraisal coercion and independence in exchange for the Attorney General's office terminating its investigation. The agreement stated that the HVCC would be the standard of conduct followed by all parties, complemented and overseen by a newly formed Independent Valuation Protection Institute, or IVPI. The IVPI is to be funded jointly by Fannie and Freddie for a period of 28 months.

The HVCC and the agreement that spawned it, lead off with concern for sound appraisals produced free of any influence or coercion from lenders or other parties. But the devil is in the details. We believe the details create a misleading and dangerous environment for both borrowers and for appraisers.

Where it hands off responsibility to the IVPI and HVCC, things get muddy. The IVPI is poorly defined, and, considering its importance in the changes to the bedrock of the national real estate industry, there should be far more transparency in its makeup and mission. There's not much concrete information regarding the IVPI, the industry deserves detailed information immediately.

The HVCC is clear, but it strays from its stated intent. There are major aspects of the HVCC which cause concern. These issues are not the result of the last-minute agreement, but rather stem directly from intentional structuring. The HVCC was drafted by an as-yet-undisclosed group of industry participants, and the fingerprints indicate substantial AMC and lender influence in its language.

The aspects which harm the consumer and appraisal industry, are summarized as follows:

Under the HVCC, any lender using an appraiser incurs regulatory risks and additional costs, whereas AVMs, BPOs, and other valuation alternatives are exempted from the same regulations and liabilities. By singling out appraisers while exempting alternative valuation types, the HVCC creates a two-tier system of valuation with numerous loopholes, encouraging a lender to not use appraisers. A lender can pressure a BPO provider to "hit the number," or run multiple AVMs until a desired result is achieved. The last independent watchdog on the borrower's behalf in the real estate transaction - the appraiser - will be rendered irrelevant.

The language in the HVCC's sections VIII and XI in particular make it clear that the authors purposely marked distinctions between appraisals and other valuation products, and lenders are thereby encouraged to utilize the unregulated and unrestricted alternative valuation methods. This runs contrary to the clearly stated goals of the parent document, the settlement agreement establishing the HVCC.

The HVCC restricts the appraiser from operating in the same manner as the other parties in the transaction. First, the HVCC mandates that all appraisal orders must be placed through AMCs, which deprives independent fee appraisers of nearly half of their normal fees, and which will not result in greater independence from coercion. (This massive push toward AMCs is all the more surprising given that the original lawsuit by the Attorney General was filed against eAppraiseIT, an AMC, accused of inflating WaMu’s appraisal demands.) The HVCC reduces competition to a handful of national appraisal management companies, acting in complete contravention to existing federal and state laws regarding anti-competitive behavior in consumer transactions.

Additionally the HVCC bars appraisers from interacting at all with agents, mortgage brokers, loan officers, and others. Preventing appraisers from interacting with clients as part of the normal course of business is a "death sentence" restriction not imposed on any other provider under RESPA. RESPA encourages competition between and interaction of the many parties involved in a real estate transaction, so long as disclosures are made and influence is eliminated.

The anti-coercion measures alone - if properly applied to all valuations - will protect the public from the influence of pressure, whether from lenders, management companies, mortgage brokers, real estate agents, or others. If all parties in the transaction were licensed/governed, including mortgage brokers, then the problem of influence is handled and the appraisal market can operate in a competitive, free market manner, protected from coercion, collusion, and abuse.

If left unchanged in the HVCC, instead of strengthening the appraisals as collateral valuation, the opposite will ensue as experienced appraisers leave the profession. Their business relationships gleaned over decades will be made worthless, and they will see 40% or more of their fees handed over to AMCs. No other RESPA entity is forced to suffer such an egregious restriction, especially the originators who engaged in the coercion in the first place.

Appraisers suggest that lenders must be prohibited from owning or controlling any valuation entity or mechanism used in the origination of a loan. Under the HVCC lenders can own up to 20% of a management company, and they can own 100% of an AVM, BPO, or other valuation provider. Lenders are expressly allowed to "develop, deploy, and use internal automated valuation models," with no restrictions on control of the ordering process.

Valuations reports of a property are not required to be released to the borrower, unless it is an appraisal. Under this format, a lender could first order a BPO or AVM (possibly under their control), and if unhappy with the value, continue to order additional valuations (along with specific instructions as to the value needed), until the desired value is reached.

The reporting, investigation, and enforcement mechanisms in the current HVCC are solely managed by the lender, which makes the lender responsible for its own regulatory oversight and places the lender in control of the regulation of the appraiser. It's the classic "fox guarding the henhouse" scenario.

The HVCC further mandates in section IX that any lender with a "reasonable basis" to believe an appraiser has engaged in wrongdoing must report such to the IVPI and to the state appraisal regulatory bodies, without providing in reverse an independent mechanism for the appraiser to report coercion. Appraisers and anyone else in the transaction must have a similar mandate and reciprocal method to report lenders who influence the valuation process. Again, the IVPI is the appropriate manager of the process.

The original intent of the agreement which spawned the HVCC was to strengthen the independence and reliability of the valuations backing what is the single largest source of their net worth. However, a regulation which damages and circumvents the very industry it seeks to protect - and which in turn harms consumers and investors - will not get us as a nation any closer to that goal.

V. Freddie, Fannie issue HVCC FAQ documents

VI.

February 25, 2009 NAMB Files Lawsuit Over Controversial Home Valuation Code of Conduct (HVCC)

McLean, VA – The National Association of Mortgage Brokers (NAMB), with the support of Baker & Hostetler LLP, filed a lawsuit today with the United States District Court for the District of Columbia against the Federal Housing Finance Agency (FHFA) Director James B. Lockhart over the controversial Home Valuation Code of Conduct (HVCC) included in the appraisal agreements between the FHFA, Fannie Mae and Freddie Mac (GSEs), and New York Attorney General Andrew Cuomo.

“The HVCC does nothing but drive up costs for consumers and push small businesses out of the market,” said NAMB President, Marc Savitt. “The HVCC will drastically reduce the ability of mortgage brokers to provide consumers with an efficient and cost-effective means of obtaining a mortgage.”

NAMB strongly supports policy initiatives that seek to ban coercion of appraisers. However, NAMB believes it is critical for mortgage and real estate professionals to maintain an appropriate level of contact with appraisers to ensure appraisal quality and independence. NAMB argues the HVCC is a “de facto” regulation and holds the FHFA in violation of the Administrative Procedures Act of 1992. The HVCC is arbitrary and capricious, contrary to the intent of Congress and in direct conflict with regulations, policies and guidelines regarding appraisal standards already issued.

“Despite strong opposition by numerous industry representatives, the FHFA, GSEs and New York Attorney General fail to consider the unavoidable increase in costs to consumers should the agreements take effect,” said Savitt. “The lawsuit is the only remaining option to protect small businesses mortgage professionals from the severe competitive disadvantages caused by the agreement. The agreements will also have significant negative consequences for consumers.”

For a copy of the lawsuit, please click here.

The National Association of Mortgage Brokers is the voice of the mortgage broker industry, representing the interests of mortgage brokers and homebuyers since 1973. The Association is committed to promoting the highest degree of professionalism and ethical standards for its members. In addition to mandating members adhere to a professional code of ethics, NAMB provides mortgage brokers with professional education opportunities, and offers rigorous certification programs to recognize members with the highest levels of professional knowledge and education.

VII. Actual HVCC as of December 23, 2008

Home Valuation Code of Conduct

I. Appraiser Independence Safeguards

A. An “appraiser” must be, at a minimum, licensed or certified by the state in which the property to be appraised is located.

B. No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal company, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner including but not limited to:

(1) withholding or threatening to withhold timely payment or partial payment for an appraisal report;

(2) withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser;

(3) expressly or impliedly promising future business, promotions, or increased compensation for an appraiser;

(4) conditioning the ordering of an appraisal report or the payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation to be reached, or on a preliminary value estimate requested from an appraiser;

(5) requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report prior to the completion of the appraisal report, or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report;

(6) providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided;

(7) providing to an appraiser, appraisal company, appraisal management company, or any entity or person related to the appraiser, appraisal company, or appraisal management company, stock or other financial or non-financial benefits;

(8) allowing the removal of an appraiser from a list of qualified appraisers, or the addition of an appraiser to an exclusionary list of disapproved appraisers, used by any entity, without prompt written notice to such appraiser, which notice shall include written evidence of the appraiser’s illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice (USPAP) or state licensing standards, substandard performance, improper or unprofessional behavior or other substantive reason for removal (except that this prohibition will not preclude the management of appraiser lists for bona fide administrative reasons based on written, management-approved policies);

(9) ordering, obtaining, using, or paying for a second or subsequent appraisal or automated valuation model (AVM) in connection with a mortgage financing transaction unless: (i) there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such basis is clearly and appropriately noted in the loan file, or (ii) unless such appraisal or automated valuation model is done pursuant to written, pre-established bona fide pre- or post-funding appraisal review or quality control process or underwriting guidelines, and so long as the lender adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value; or

(10) any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity, or impartiality or violates law or regulation, including, but not limited to, the Truth in Lending Act (TILA) and Regulation Z, or the USPAP.

C. Nothing in this section shall be construed as prohibiting the lender (or any third party acting on behalf of the lender) from requesting that an appraiser (i) provide additional information or explanation about the basis for a valuation, or (ii) correct objective factual errors in an appraisal report.

II. Borrower Receipt of Appraisal

The lender shall ensure that the borrower is provided a copy of any appraisal report concerning the borrower’s subject property promptly upon completion at no additional cost to the borrower, and in any event no less than three days prior to the closing of the loan. The borrower may waive this three-day requirement. The lender may require the borrower to reimburse the lender for the cost of the appraisal.

III. Appraiser Engagement

A. The lender or any third party specifically authorized by the lender (including, but not limited to, appraisal companies, appraisal management companies, and correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents). The lender may accept an appraisal prepared by an appraiser for a different lender, including where a mortgage broker has facilitated the mortgage application (but not ordered the appraisal), provided the lender: (1) obtains written assurances that such other lender follows this Code of Conduct in connection with the loan being originated; and (2) determines that such appraisal conforms to its requirements for appraisals and is otherwise acceptable.

B. All members of the lender’s loan production staff, as well as any person (i) who is compensated on a commission basis upon the successful completion of a loan or (ii) who reports, ultimately, to any officer of the lender not independent of the loan production staff and process, shall be forbidden from (1) selecting, retaining, recommending, or influencing the selection of any appraiser for a particular appraisal assignment or for inclusion on a list or panel of appraisers approved to perform appraisals for the lender or forbidden from performing such work; and (2) having any substantive communications with an appraiser or appraisal management company relating to or having an impact on valuation, including ordering or managing an appraisal assignment. If absolute lines of independence cannot be achieved as a result of the lender’s small size and limited staff, the lender must be able to clearly demonstrate that it has prudent safeguards to isolate its collateral evaluation process from influence or interference from its loan production process.

C. Any employee of the lender (or if the lender retains an appraisal company or appraisal management company, any employee of that company) tasked with selecting appraisers for an approved panel or substantive appraisal review must be (1) appropriately trained and qualified in the area of real estate appraisals, and (2) in the case of an employee of the lender, wholly independent of the loan production staff and process.

IV. Prevention of Improper Influences on Appraisers

A. In underwriting a loan, the lender shall not utilize any appraisal report:

(1) prepared by an appraiser employed by:

(a) the lender;

(b) an affiliate of the lender;

(c) an entity that is owned, in whole or in part, by the lender; or

(d) an entity that owns, in whole or in part, the lender.

(2) prepared by an appraiser

(a) employed,

(b) engaged as an independent contractor, or

(c) otherwise retained by

any appraisal company or any appraisal management company affiliated with, or that owns or is owned, in whole or in part by, the lender or an affiliate of the lender.

B. Section IV.A. shall apply unless:

(1) the appraiser or, if an affiliate, the company for which the appraiser works, reports to a function of the lender independent of sales or loan production;

(2) employees in the sales or loan production functions of the lender have no involvement in the operations of the appraisal functions and play no role in selecting, retaining, recommending, or influencing the selection of any appraiser for any particular appraisal assignment or for inclusion on a list or panel of appraisers approved to perform appraisals for the lender or forbidden from performing such work;

(3) employees in the sales or loan production functions of the lender are not allowed to have any substantive communications with an appraiser, appraisal company, or appraisal management company relating to or having an impact on valuation or to be provided information about which appraiser has been given a particular appraisal assignment before completion of that assignment;

(4) the lender, or its agents, and any appraisal company or appraisal management company providing the appraisal to the lender do not provide the appraiser any estimated or target value of the property or the loan amount applied for (except that a copy of the sales contract for purchase transactions may be provided);

(5) the appraiser's compensation does not depend in any way on the value arrived at in any appraisal or upon the closing of the loan for which the appraisal was completed;

(6) the lender and any appraisal company or any appraisal management company providing the appraisal to the lender has adopted written policies and procedures implementing this Code of Conduct, including, but not limited to, adequate training and disciplinary rules on appraiser independence (including the principles detailed in Part I of this Code of Conduct) and has mechanisms in place to report and discipline anyone who violates these policies and procedures;

(7) the lender’s appraisal functions are either annually audited by an external auditor or are subject to federal or state regulatory examination, and, unless prohibited by law, the lender promptly provides to Fannie Mae or Freddie Mac the results of any adverse, negative, or irregular findings of such audits and examinations indicating non-compliance with any provision of this Code of Conduct, whether or not the examination was conducted for the purpose of determining compliance with this Code of Conduct; and

(8) the lender and any entity described in section IV.A. providing the appraisal to the lender recognize that, once the Independent Valuation Protection Institute is established, the Institute will receive complaints for review and referral regarding non-compliance with the Code of Conduct. Referrals and reports shall be made to Fannie Mae and/or Freddie Mac regarding such complaints and the Institute will provide information on the results of complaint reviews to Fannie Mae and/or Freddie Mac and make them available to the other parties to the Home Value Protection Program and Cooperation Agreement.

C. In underwriting a loan, the lender shall not use an appraisal report prepared by an entity that is affiliated with, or that owns or is owned, in whole or in part by, another entity that is engaged by the lender to provide other settlement services, as that term is defined in the Real Estate Settlement Procedures Act, 12 U.S.C.§ 2601 et seq., for the same transaction, unless the entity that provides the appraisal:

(1) has adopted written policies and procedures implementing this Code of Conduct, including, but not limited to, adequate training and disciplinary rules on appraiser independence (including the principles detailed in this Code of Conduct) and has mechanisms in place to report and discipline anyone who violates these policies and procedures;

(2) recognizes that, once the Independent Valuation Protection Institute is established, the Institute will receive complaints for review and referral regarding non-compliance with the Code of Conduct. Referrals and reports shall be made to Fannie Mae and/or Freddie Mac regarding such complaints and the Institute will provide information on the results of its review of such complaints to Fannie Mae and/or Freddie Mac and make them available to the other parties to the Home Value Protection Program and Cooperation Agreement.

D. Notwithstanding the requirements herein, the lender also may use in-house staff appraisers to (i) order appraisals, (ii) conduct appraisal reviews or other quality control, whether pre-funding or post-funding, (iii) develop, deploy, or use internal automated valuation models, or (iv) prepare appraisals in connection with transactions other than mortgage origination transactions (e.g. loan workouts), if it complies with the terms of this Code of Conduct.

E. The provisions of this section do not apply to institutions (including non-banking institutions) that meet the definition of a “small bank” as set forth in 12 U.S.C. § 2908, and which Freddie Mae or Fannie Mae determines would suffer hardship due to the provisions, and which otherwise adhere to this Code of Conduct.

V. The Independent Valuation Protection Institute

An Independent Valuation Protection Institute (Institute) shall be created as approved by the parties. Subject to section IX, when the Institute is established, the lender will provide information to appraisers and borrowers regarding the availability of the Institute's services, which are expected to include: (1) a telephone hotline and email address to receive any complaints of Code of Conduct non-compliance, including complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, which the Institute will review and report as provided in IV.B(8) and IV.C(2) of this Code of Conduct; and (2) the publication and promotion of best practices for independent valuation. The lender shall not retaliate, in any manner or method, against the person or entity that makes a complaint to the Institute.

VI. Appraisal Quality Control Testing

The lender agrees that it shall quality control test, by use of retroactive or additional appraisal reports or other appropriate method, a randomly selected 10 percent (or other bona fide statistically significant percentage) of the appraisals or valuations that are used by the lender, including the results of automated valuation models, broker’s price opinions, or “desktop” evaluations. The lender shall provide to Fannie Mae or Freddie Mac a report of any adverse, negative, or irregular findings of such quality control testing, and any findings indicating non-compliance with any provision of this Code of Conduct, with respect to loans sold to Fannie Mae and Freddie Mac respectively, and the Enterprise may enforce all applicable rights and remedies, including requiring the lender to repurchase mortgages or the Enterprise’s participation interest in mortgages.

VII. Referrals of Appraisal Misconduct Reports

Any lender that has a reasonable basis to believe an appraiser or appraisal management company is violating applicable laws, or is otherwise engaging in unethical conduct, shall promptly refer the matter to the applicable State appraiser certifying and licensing agency or other relevant regulatory bodies.

VIII. Representations and Warranties

A lender shall certify, warrant, and represent that the appraisal report was obtained in a manner in compliance with this Code of Conduct. If the Enterprise determines, on its own or from a referral made by the Institute, that a lender is in breach of a material aspect of this Code of Conduct or in violation of a provision of the Code by a complaint referred from the Institute, the Enterprise will enforce all applicable rights and remedies, including suspension or termination of the lender’s eligibility to sell loans to the Enterprise, if the lender fails to remediate.

IX. Scope of Code

Nothing in this Code of Conduct shall be construed to establish new requirements or obligations that: (1) require a lender to obtain a property valuation, or to use any particular method for property valuation (such as an appraisal or automated valuation model) in connection with any mortgage loan or mortgage financing transaction; (2) affect the acceptable scope of work for an appraiser in connection with a particular assignment; or (3) require the lender or any third party acting on behalf of the lender to take any action prohibited by federal or state law or regulation.

3 Steps For a Better Divorce Appraisal

By James Ebert, Ebert Appraisal Service, Los Angeles

www.eas2.org james@eas2.com

Folks facing a divorce need to decide between them, what to do with the home. Typically there are three options: Let the wife buy out the husband, let the husband buy out the wife, or sell it, and split whatever proceeds. With any of these three options, an approximate value of the home will need to be determined, even if you have a realtor ready to sell it for you.

Often one of the greatest heartbreaks is to find out there is no equity or money left, after the sale of the house. For over a year, sometimes, each side has spent thousands of dollars, fighting over, what ends up being next to nothing. The better way, is the have the house appraised immediately, before it goes on the market. Do this before it is listed for six to nine months, before each new family has been living off the dreams of a significant payout. Better to know now, that, even when it sells, there will only be a small amount to split up when split four ways between the attorneys and the spouses.

Even before you get the valuation done, meet with all attorneys and spouses, to decide what your eventual agreement will be. The following steps will help ease the transition and avoid much pain and frustration.

1. Decide, and put it in writing, that you will both abide by the results of an unknown but highly recommended appraiser, chosen from a short list provided by real estate professionals in your neighborhood. Agree that the results will not be pleasing to either of you, but that fighting over it, later, will waste the resulting resources of the estate. As a contingency, find a second well regarded appraiser to also do an evaluation. While this may seem like a lot of money, possibly as high as $1,000, it’s a small amount, compared to the stress and frustration you are likely to encounter.
2. Agree with each other and your attorneys, what the valuation time frame should be. If you are planning on selling it soon, tell the appraiser to focus on what the present market is like, what the other actives and pendings are, evaluate short sales and bank-owned/REO competition for your home.
3. If one of you is planning on keeping the home, you might agree to a longer time table that includes reference sales from back in mid-2007, that might suggest what its market value might eventually return to. While this will be a greater amount, it is important to have this figure at hand, to prevent further bad blood between future ex-spouses and families, when the market returns and the home’s value is back up 20-30% or more. It is much easier to incorporate this stronger value now, even if you agree on some figure half way between the high and low point.
4. Remember that your mental well being and the stability and health of your children’s future is based on making logical, not emotional, agreements and decisions now, before the results are in. Too often, the kids end up suffering with poor grades, bad attendance, ill health, and other problems, as a direct result of the poor planning on their parent’s part.

While unusual, I find that following the guidelines of the Relocation Appraisal form (ERC form), can bring up a lot of these points and provide a useful framework to work with. Additionally, the best of the local appraisers are those who are familiar with this form and have experience with it. They most likely will be the most impartial to one side or another. The relocation ERC form includes such measures as projecting a possible sale within 4-6 months, as well as including not just sales, but also competing active listings, that will be completing with your home’s listing. When interviewing appraisers, ask if they do relocation appraisals and if they use the ERC form. If they do not, ask them to refer you to someone who does.

James Ebert has 20 years of architectural, historical, relocation, and FHA appraisal service to Southern California, with additional clients from Denver to Puerto Rico. He is from a family of five appraisers, and for fun, he plays in a jazz trio at the beach in Malibu.

Divorce Appraisals & Divorce Appraisers

The time of divorce is an emotional difficult time for everyone who knows the couple. At Ebert Appraisals, we are accustomed to assisting folks in Southern California, at this difficult time. Our background working in the film and television industry, with such notables as Merv Griffith, Joan Rivers, Steve Edwards, ALF, Beverly Sasson, Paramount Pictures, Fox Television, KTLA, Studio Management, and with dozens of actors such as Bette Midler, Clint Eastwood, Harvey Korman, Tim Conway, and on productions by such musical acts as rock group Heart, jazz legend Tony Bennett, studio star drummer Vinnie Colaiuta, and others, allow us to work quickly and confidentially with grace and efficiency.

James Ebert and his staff work overtime and into the wee morning hours to prepare divorce appraisals that can be easily understood, and allow the process to quickly move forward. Often when preparing a valuation for the wife, she hopes to keep the home, as a security measure with the children. She will necessarily want the values to be lower. When we are hired by the husband, and his attorney, in this same scenario, they want the values to be as high as possible, to gain maximum payout. Recently, we have seen many folks state that they just want what is fair and they want to settle quickly, and move on with their lives.

Recently, this issue was brought up in a column by Chicago based syndicator, Ilyce Glink, regarding the valuation of the family home. Here is the web page: http://www.thinkglink.com/Appraising_Home_Before_Divorce.htm. She does a terrific job of explaining part of the process. Additionally, she tackles a typical legal problem with the divorce in this other column: http://www.thinkglink.com/Divorce_Leads_To_Property_Dispute.htm

We have many more resources, as well as a long list of Southern California family law attorneys. Feel free to contact us, any day, from 9AM to 9PM, at 310.505.5916 or at 818.991.9322. There is no cost for initial consultation.

Los Angeles Times top Architectural Homes

The Los Angeles Times has just published a wonderful piece on “The Top 10 Los Angeles Houses” Certainly a good starting point. I hope they continue this with more in depth interviews with the members of their voting panel.

Here is the web link, and there are pictures as well:

http://www.latimes.com/features/home/la-hm-besthouse27-pg,0,746372.photogallery

They included Ron Radziner! I have just finished a valuation for Leo Marmol, his partner, of their new Prefab in Venice.

http://www.marmol-radziner.com/

But don’t let that get you frustrated, rejoice that there is room to even enjoy that subject, and more importantly, that there is a Los Angeles Times newspaper at all. With all that we are experiencing, I hope that you are spending a little extra time with family and friends, and remembering the wonderful blessings that we do have.

Best in the new year to all of you. Keep in touch. Call anytime 310.505.5916

Divorce Appraisals - Three main Reasons, Three main Problems

Ebert Appraisal Services does a lot of litigation appraisal work, including trusts, estate valuations, partial interests, and divorces. Trust me, you need an expert appraiser in your corner, regardless of your goals and how friendly the settlement is going. I have seen too many people, in the heat of the emotional situation, get totally stripped of all their rights and their investment, in time and finances. Because they wanted to save $1,500, they instead lost $250,000. Don’t let it happen to you, too.

Following are the three ways that you can lose everything:

1. Trying to determine the value of the home, based on a friend in the business. Don’t hire your friends. They have a bias, and the courts may throw out their values. Ebert Appraisals has no bias.
2. Allowing your spouse to pick a guy from an associate at the office. You might as well just hand him the keys to the house and walk away. Think “wolf in sheep’s clothing.” This is your life, and your children’s lives, and you need to protect every dollar you can. Each side should have their own valuation done, and let the mediator/judge/whomever, compare and prepare a settlement.
3. Represent yourself in court. A surefire way for them to put you out on the street. Even if you have no money, the courts will make sure you have counsel, and a team to fight for your needs. And your kids needs. At Ebert Appraisal Service, we often go “off the clock” to prepare extra well for court.

Following are the three ways that we work with you to help you win your case:

1. From our experience at Ebert Appraisals, we have seen all kinds of strategies and “dirty tricks”. In the same way that you have only a qualified mechanic fix your car, you need a 1, or 2, or 3 legal experts, to be able to work the system that they are know and are licensed to work in. A good saying is” They make their fees on top of your settlement, not by reducing your settlement. “
2. Always get a copy of the opposing appraisal, for your appraiser to critically review. He can get inside this document and tear it apart. I have had over 50% of all opposing appraisals discounted and discredited. That means that the Ebert Appraisal Service document and values are left standing.
3. Make sure your appraiser is ready and qualified to take the stand and testify. A good appraiser prepares the documents from the beginning, to be able to face the judge. At Ebert Appraisal Service, we write every report for the judge, whether for the bank, a trust, etc. We can truthfully “Tell it to the Judge” every time.

Listen carefully to your attorney and your team members. Ask questions; make sure you know what your strategy is. Quiz your appraiser, he is another sounding board, trust his judgment as well. He has nothing to gain, or lose, but he has been there, and seen a lot, that you have not.

And be sure to give us a call: 310.505.5916. 9AM to 9PM, even on Week-ends, especially on Week-ends.

Giving Thanks at This Holiday Season

At Ebert Appraisals, we have been very fortunate to have been able to work with some of the greatest clients in the region. We have been very busy with litigation and expert witness services for several high quality firms, such as Pocrass, Heimanson, & Wolf, (http://www.phwlaw.com), Silberberg & Ross (http://www.fspclaw.com/), and Robert Borsky, Esq. (http://www.ronslaw.com), with the office of Ronald Supancic, Esq. Of special merit is our good friend Brian Lepak, a senior associate at Trope & Trope, LLC (http://tropeandtrope.com), who has been very knowledgeable and effective.

We are now listed with the top litigation - expert witness referral programs, including the Los Angeles Bar Association (http://www.expert4law.org), Expert Pages.com (http://expertpages.com), Juris Pro (http:www.jurispro.com) and Forensic Expert Witness Association (http://www.forensic.org). Take a look and tell us what you think.

We are very thankful, indeed. Call us anytime at 310.505.5916, for free consulation, or more information.

Kaufmann Desert House, Meiselman, Palm Springs

I frequently accept assignments from out of town clients, and, in this case, asked to develop a valuation for his fully restored and updated Meiselman home in Palm Springs.

The owner has done a terrific job, and although the market in that area is very weak, at this time, the value, long term, should hold up well. We don’t expect the banks to believe that, with all the fraudulent loans out there by the lending industry, so we tried to put together a valuation of the property, that accounts for some of the better remodels in the area, while keeping the numbers low enough to pass muster with the underwriters.

But the big news is, I was allowed to tour the world famous 1946 Richard Neutra-designed Kaufmann Desert House. Some consider it to be one of the top five architectural residences in the United States.

It was held in auction at Christie’s New York, for $15-25,000,000 this past spring. (http://www.greatbuildings.com/buildings/Kaufmann_Desert_House.html) Totally restored by the highly respected Marmol & Radziner & Associates ( http://www.marmol-radziner.com ), in the 1990’s, it took five years, and a good bit of finances to do so. And it shows like a movie set from the 40’s, lush colors in the grass and cactus gardens, the rocks and buildings look like a David Hockney painting, they are so vivid. I truly thank the Harris’ and Leo Marmol and Ron Radziner for all their diligence. Seek out some of the on line photos, and if you like, you can still get a copy of the Christie’s Auction book that was published, for under $30.00 (http://www.christies.com)

As you know the word is “Prefab”, and this area is a strong part of the future. Check out Marmol Radziner’s Prefab site (http://www.marmolradzinerprefab.com/), and check out their works (http://www.youtube.com/watch?v=bfRjjSPfGt4) installed

in Venice on YouTube (http://www.marmolradzinerprefab.com/videos.html).

Our jazz group, Fine Arts Jazz Group (www.fineartsjazz.com), playing “Mid-Century Modern Jazz” continues this month in Malibu at Bob Morris’ Paradise Cove Beach Café, Thursdays, 6 -10 PM. Come on out and enjoy the beach with us.

Coming next: I assist folks with their Mar Vista Modernique Gregory Ain original. Also, New Construction in Bell Canyon.

Consultations, advise, information, e-mail to james@eas2.com,

website eas2.org, or call 310.505.5916

James Ebert

The dust is still settling on the Christie's auction of the Neutra designed Kaufmann house in Palm Springs Christies' Auction site/Kaufmann . Here is a website, from Great Buildings.com. This has brought the modern architectural home back into the spotlight, and we have the experience to help you with your "Mid-Century Modern" Home here at Ebert Architectural Appraisals.

There are many new architectural projects coming on board, and we have  been pleased to do appraisals for many wonderful designs from Los Angeles based firms:

Jonathan Davis Studio & Design Watch for updates on this Pre-manufactured.

Lee & Mundwiler, Santa Monica Wonderful use of lighting and space.

Marmol, Radziner & Associates  Responsible for the stellar work at the Kaufmann restoration project, check out their prefab site, and their newest installation in Venice:LA.Curbed 2007 blog Venice prefab.

We are pleased to share an excellent contact for new construction loans, through Chase Bank. Click here and they can help with values up to $7,000,000  Chase Home Mortgage, Los Angeles.

Additionally, we see a lot of FHA mortgages, and our experience and expertise can help you prepare for these extensive, sometimes exhaustive appraisal inspections. They are almost like having a physical inspection at the same time. Did you know they have to test all the electric, plumbing, and even flush toilets? Additionally be preepared to have them check out your attic and crawl space, and most of all, chipped and peeling paint. Contact us immediately, if you are thinking of using these programs, and we can assist you in getting prepared, to prevent delays or outright rejection of the property. Ebert FHA Appraisals .

Don't forget, Malibu at Paradise Cove on Thursdays, "Mid-Century Modern Jazz, by yours truly and the "Fine Arts Jazz Group"

James

We have just learned that our office is able to once again do FHA HUD insured loans ( No we were not kicked off, we let it lapse in 2000);>}  Now this may be helpful for those homeowners who have more modest homes, unique or otherwise, that can now have our excellent skills available for their slightly smaller, but just as important, loans.  I'm thinking about those wonderful Eichlers, in Califonia.

 Please call us for more details. 310.505.5916 

LA Curbed Blog, Eichler & Eichler Networks, Buff & Hensman

I have been retained to appraise a classic restored Joseph Eichler home, in Thousand Oaks, CA. These homes were Mr Eichler's legacy, bringing rich architectural elements to a tract home budget. As a younger man, Mr. Eichler has the opportunity to stay in an original  Frank Lloyd Wright  home, and was so impressed, that, later as a developer of huge tracts in the Bay area and, several locations in Southern California ( Thousand Oaks, Granada Hills, Orange County), he hired famous architects to design low cost modest homes so that the young family could afford to live in a creatively designed home.

There are extensive on-line networks of fans, owners and resources, as well as wonderful chat rooms and other data. Check it out Eichler Homes Network .

 Buff & Hensman

Worked with some folks purchasing a classic by Buff & Hensman, located up in the Hollywood Hills area of West Los Angeles, above the famous Sunset Strip.

This group, in its various organized forms, produced a great number of strong, bold designs, that reflected their era in the West Coast. Check out this great description from the Blogger LA.Curbed.com .

Gotta run, keep in touch: james@eas2.com,

Here is the site's main home page www.eas2.org.

Max Weinberg, formerly Bruce Springsteen’s Drummer, is profiled in a nice article in the Wall Street Journal, last Friday.   He has built a 9,000 SF house back East, and has a huge piece of land. Here is a possible link to the article: Max Weinberg, Springsteen's drummer . I find it fascinating that he followed his passion for music, but has studied and wisely supported it with a strong desire for architecture. "Way to Go, MAX!"  As a fellow Drummer, I send him all the best.

Max Weinberg, formerly with Bruce Springsteen, Now With Conan OBrian 

RELOCATION BLUES

Our shop has been buzzing away with several relocation appraisals. Boy, talk about complex. And that was even before this year. Now with so many different financial considerations, it is like trying to hit a target going in the opposite direction, while traveling on a wildly rocking boxcar. Truly impossible, but for each home owner, we try to do the best that the market will allow. Go to the  Employee Relocation Council website for more about these processes.  And feel free to send me any tips you might have, to james@eas2.com .

I am very impressed with the work Steven Kent AIA does in Malibu and nearby communities. His use of moden materials and creative ideas just makes you smile and go, "Well, of course!" In fact, a rare chance to buy one of his most recent creations, is on the market now.Steven Kent's Malibu Hume House  Here is a link to that listing.

Additionally, it may be time to swoop in and grab another of the classic Malibu architecturals. Check out these:

Vitus Matare Rambla Pacifico Casa

And then there is:Steve Kent's Malibu Rambla Vista $3.3M 

Feel free to browse the rest of my sites: www.eas2.org, or www.ebertappraisals.com. Also, the jazz group is at www.fineartsjazz.com.

Call anytime 818.991.9322

NEWS: Ebert Appraisals is hired to value a historic/architectural Gregory Ain, FAIA home in Mar Vista area, Los Angeles. This will be the sixth Ain home we have appraised, although we have visited many more. Architectural & Historical Homes Appraised By Ebert Appraisals

NEWS: James Ebert working with new client of Patrick Tighe, AIA, on a home in Silverlake, home of many Schindler, Neutra and Lautner homes. Tighe Architecture

The excitement and creative spirit of architectural homes is speading across the country. Here in Southern California  I have been getting many more calls from folks just checking in to see what is going on, or trying to find an architect, or financing, or a location, to build their artistic statement, as a legacy for their family and children or heirs.

I always have them contact Mr. Brian Linder at The Value of Architecture, Los Angeles . Brian is a true genius of architecture, who also teaches UCLA students and others, all about architecture.  He can connect folks with other experts, whether it is to list their home for sale, or find the right architect, or an appraiser, like me, to help them determine a value for financing, trusts, splitting the estate, or partial valuations. 

Brian Linder is at Deasy Penner & Linder
150 S. Rodeo Drive, Suite 230 Beverly Hills, CA 90212 800-684-8862-toll-free 310-592-5417-direct   310-861-8953-fax   blinder@tvoa.net He has joined his old colleagues and my newer friends George Penner & Mike Deasy at Deasy, Penner, & Associates Beverly Hills

He now has a blog on DWELL magazine, about a presentation and sales compaign for a Gregory Ain, FAIA home in Mar Vista. He did a masterful job helping the folks sell their home, with over 300 in attendance at the open house! Brian Linder's Architectural Blog .  

A similar expert and terrific resource for San Diego, La Jolla, Del Mar, and Coronado is Ms Elizabeth Courtier's site, as she is an expert about historic and architectural properties in the San Diego area.   Office: (619) 813-6686   Mobile: (619) 813-6686  1131 Wall Street, La Jolla, CA 92037 Email her at courtier@WILLISALLEN.com

Also, in that area, check out  Mr. Boris Buecker, AIA  , who operates as The Value of Architecture, San Diego. Do not fail to check out his site.  Boris Buecker with The Value of Architecture.bbuecker@tvoa.net

Another bit of news: My excellent jazz buddies and I, with our band called Fine Arts Jazz Group, playing "Mid-Century Modern Jazz", continue on Thursdays in Malibu, at Bob Morris' Paradise Cove Beach Cafe (310.457.2503). Swing on down and see us!!