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I thought that the artical below would interesting news for all my clients. This artical was writted by Ann O'Rourke, MAI, SRA, MBA from  Appraiser and Publisher of Appraisal Today newsletter.

So please, Until we hear different, Keep those FHA Appraisal Orders Coming.

Important FHA notice for all mortgagees:

Sent by email from FHA. I am on their email list.

Delayed Implementation Date for New Requirements in ML 2009-28

Enactment of ML 2009-28, Appraiser Independence, will be delayed until February 15, 2010. ML09-28 (originally planned for a January 1, 2010 implementation) has two parts: a) prohibition of mortgage brokers and commission-based lender staff from the appraisal process, and b) appraiser selection in FHA Connection. The effective date for both sections of this guidance will now take effect for all case numbers assigned on or after February 15, 2010. This extension will provide FHA and lenders additional time to adjust systems to accommodate the changes.

Detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter. However, lenders should be aware that the requirement for inputting the appraiser ID and the appraisal assignment date in the FHA Connection case number assignment screen will be removed. Instead, lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Update Screen once the completed appraisal is received by the lender and prior to closing the loan.

Delayed Implementation Date for ML 2009-51

ML 2009-51, Adoption of the Appraisal Update and/or Completion Report, states an effective date of January 1, 2010. The effective date is being extended and will now apply to all case numbers assigned on or after February 15, 2010. This extension will provide additional time needed by FHA and lenders to adjust their systems to accommodate use of the form.

All FHA Mortgagee Letters can be read online at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/

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What is the purpose of the HVCC?
Enacted May 1, 2009, the Home Valuation Code of Conduct (HVCC) is a set of rules for the mortgage lending and real estate appraisal industries. The intended purpose of the HVCC is to protect appraiser independence and prevent pressure from being applied to appraisers to produce a desired property value. Ultimately, these safeguards are intended to protect consumers. Even though there has been considerable debate about the unintended consequences of the HVCC, compliance is required for all loans backed by Fannie Mae or Freddie Mac.

What can I expect to change because of the HVCC?
Nothing will change in the actual appraisal reports we produce. We've always focused on ensuring accurate, independent valuations in our appraisal reports. It's the core value of our business. We'll continue to do that going forward and we're ready and qualified to make sure everything we do complies with the HVCC.

The process of ordering appraisals has changed, however. If you're a homeowner in need of an appraisal of your home, an attorney needing a property appraisal, or even if you work for a small community bank or credit union and will continue to communicate directly with appraisers, click here to order an appraisal now.

If you're a mortgage loan officer or a mortgage broker who isn't allowed to order appraisals directly from an individual appraiser and are seeking an HVCC-compliant appraisal ordering system or service, I recommend using the Mercury Network for ordering HVCC-compliant appraisals. I'm already registered on Mercury Network, and it's the fastest, most compliant and effective way to order appraisals from me or any appraiser without overhauling your entire appraisal ordering process.

Because I'm already a Mercury Network member, after you complete your own Mercury Network profile, you can add me to your appraiser panel, if you choose to. Mercury Network's Intelligent Selection System (ISS) enables you to order appraisals "blind", based on pre-set ordering criteria so you can be confident you're ordering appraisals with complete HVCC-compliance. You'll also appreciate Mercury Network's pre-populated status message and text box-driven communications which provide you with an audit trail for each transaction. To order using Mercury Network, click here.

Where did the HVCC come from?
The HVCC was born from an agreement between the New York State Attorney General, OFHEO, Fannie Mae and Freddie Mac. In 2007 New York Attorney General Andrew Cuomo filed suit against First American Corporation and its appraisal management subsidiary, eAppraiseIT, accusing them of enabling Washington Mutual to pressure appraisers to change values, as well as hand-pick which appraisers should be used for WaMu's appraisal reports.

Attorney General Cuomo then subpoenaed Fannie and Freddie in order to learn more about loans purchased from banks like WaMu and the valuation processes they used. One of the results of the investigation was the HVCC, which was agreed upon and approved by Fannie and Freddie. From May 1, 2009 forward, every loan eventually funded by Fannie and Freddie must be in compliance with the HVCC.

What are the specifics of the HVCC?
The HVCC specifically prohibits any party from coercing, suggesting, or influencing appraisers in any way to produce a specific or desired value for a residential property.

Only the lender or a party authorized by the lender can engage the appraiser and order an appraisal that will be backed by Fannie Mae or Freddie Mac. Mortgage brokers and real estate agents, without lender permission, are not allowed to engage appraisers or order appraisals. Also, internal loan production staff members or any other person who is compensated on a commission basis are not allowed to engage the appraiser or have any substantive communications with an appraiser.

A specific exception has been made for institutions which, because of their small size or limited staff, would be unable to establish absolute lines of independence. These smaller institutions are required to clearly demonstrate that they have implemented prudent safeguards to isolate its collateral evaluation process from influence or interference from it s loan production process.

All loans backed by Fannie Mae or Freddie Mac must abide by the HVCC. The code doesn't apply to FHA and VA insured loans, or to appraisals ordered for non-lending purposes.

Lenders are required to ensure that the borrower receives a copy of the appraisal report at least three days before the loan closing. The lender, not the appraiser, must provide the copy to the borrower, at no extra charge. This allows the buyer to read the report and decide whether to go forward with the purchase.

You can read the full HVCC on Freddie Mac's website by clicking here: http://www.freddiemac.com/singlefamily/pdf/122308_valuationcodeofconduct.pdf

Mortgage Brokers and Appraisals
On March 31, Fannie Mae and Freddie Mac released an update of answers to questions frequently asked (FAQ) about the HVCC, including whether or not a mortgage broker is allowed to order an appraisal directly from an appraiser. The answer is clearly "no" and that has not changed. However, within that same HVCC FAQ update, the question of "Web portals" was addressed. Within the context of appraisal management, Mercury Network falls within the Web portal category.

The 16th question and answer located in the Freddie Mac HVCC FAQ states:
Question: May a lender direct a broker to use a Web portal set up either by the lender, or by the lender's authorized agent, through which the broker inputs a request for an appraisal and then triggers the lender's system to order an appraisal?
Answer: Yes. A lender may direct a broker to use a Web portal in this manner.

Freddie Mac FAQ:
http://www.freddiemac.com/singlefamily/hvcc_faq.html#16
Fannie Mae FAQ:
https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/

If you need an FHA Reverse Mortgage real estate appraiser in the New York and Pennsylvania for a refinance, we can help you. Jeffrey Scott Jacobs is a State Certified private residential appraiser and is on the FHA/HUD approved appraiser roster.

Reverse Mortgage Appraisal

The largest increase in mortgage appraisal assignments we are seeing is in the FHA Reverse Mortgage request category.

The amount of baby boomers retiring and turning to their homes to provide them with additional income is increasing dramatically. Having lived in their homes for many years, they usually have a wealth of equity available to them that could help with their life expenses such as household improvements, retirement homes, vacations or even to help out other family members.

With these types of loans the home is required to meet HUD/FHA’s minimum property standards.

When some one has lived in a home for a long period of time there is usually bound to be some items that need some repair or maintenance and it is the FHA appraiser’s duty to disclose noted items. This means that deferred maintenance and health and safety items will have to be remedied in order for the property to qualify for FHA mortgage lending.

Examples of this deferred maintenance is that some that were built before 1978 can not have flaking or peeling painted surfaces due to the possibility that lead based paint hazards may be present, evidence of structural damage or termite infestation would need to be disclosed, as well. Other items in the household like the effective age of the home, necessary repairs such as broken seals on windows or windows them selves, water damage, drainage problems and anything that would effect the livability of the home must be disclosed.

The beauty of the program is that the reverse mortgage allows for any needed repairs to be fixed or corrected as part of the transaction so that the applicant may not incure any immediate out of pocket expense and these expenses can be incorporated into the transaction.

Jeffrey Scott Jacobs is a HUD/FHA appraiser who has many years of experience and has the knowledge to handle this type of appraisal to make your lending transaction go smoothly and as easy as possible to help you get the job done. If you have any comments or questions about the HUD/FHA Appraisal process feel free to shoot me an email or give me a call…

The following is an artical on the alamode website concerning HVCC Laws that will affect all of us and there resolution to some of the changes to come. Please read it and feel free to make comment.

Mercury Network: More important than ever
The mortgage market has seen its share of ups and downs, and collateral value is at the core of lending once again. You need accurate, independent appraisals done in compliance with all of the existing and new regulations, especially with regards to the new HVCC ("Home Valuation Code of Conduct"), which is slated to take effect on January 1st 2009. Of course, with a new regulator of Fannie and Freddie and all the market turmoil surrounding them, nobody even knows if the HVCC will actually take effect. So, you're in a quandary. Do you outsource appraisals to an appraisal management company and take on the risks associated with abandoning appraisers with whom you've had a good working relationship for years? Or do you manage them in-house and risk being accused of influencing values? Is there a way to hedge your bet and get the best of both worlds?

You bet there is. Since 2002, Alamode's Mercury Network website has been used by more than 200,000 mortgage professionals to order and manage tens of millions of appraisals, at full fee to the appraiser. And with Thier new update to Version 3.0, you get all the "double blind" ordering and communications that protect your legal liability, without losing access to your existing appraisers and without alienating them by inserting an appraisal management company in the middle. Veracity Realty Services is already set up on this system and it HVCC compliant.

You use us already and don't even know it
Even if you aren't using the Mercury Network website right now, you're using our appraisers. That's because over 50% of all the appraisers in the country connect to you using our desktop and web products right now. You might order an appraisal by phone, fax, or email, but the report is likely prepared and delivered to you using our Mercury Network technology backbone. Look at the bottom of your delivered appraisals and you'll see "a la mode" there over and over and over.

So sign on today and start using the "other side" of the Mercury backbone. You'll get an easy-to-use website interface (that scales up to full server-side XML integration if you're a bigger originator), better appraisal management, full nationwide coverage, more flexibility in handling appraisal assignments, complete automated rule checking of appraisals, and of course 100% compliance with existing and upcoming regs. There is no larger system, no more robust system, no more flexible system for managing collateral valuation than the Mercury Network.

You can be ordering and managing your first appraisals in minutes.

Compare:  Traditional appraisal management companies
Have you looked at AMC platforms and don't really know where to begin?  Unlike most AMC platforms that are built for large lenders systems that don't interact well with real people, Mercury Network is built so that it's easy to configure and use.  You can setup your account and start placing appraisal orders immediately.  You can build your fee panel based on criteria that matter to you.  In the near future, you'll even be able to import your existing fee panel and configure your custom appraisal review rules and each of these two things will take literally minutes.

Cost and risk management are primary concerns for every lender, but newer, scalable technology for appraiser panel management has become equally important.  Fortunately, the Mercury Network technology that many of the leading AMCs have enjoyed and depended on for years has been expanded and made available directly to lenders.  Our robust web-based technology platform connects lenders directly with their fee appraisers in a secure, firewalled environment. Best of all, all of the tools that today's compliance-driven business demands are here. There's even a seamless connection to the sophisticated review engine that runs on the appraiser's desktop so the quality control checks are run prior to delivery to the lender's in-house staff.  Industry standard XML data is bundled in the original, unaltered report, and in the near future, our new Report Analytics will be bundled with each report providing detailed and custom market analysis which help underwriting teams make smarter decisions. 

How to Prepare for an Appraisal

As you know the appraisal is one of the last necessary factors before a sale or refinance can happen. It allows the property transactions to occur among the buyer, seller, real estate agent and mortgage lender, or is the last step for refinancing.

Before an Appraiser arrives at the subject property, there are a few things you should tell your client. By law, an appraiser must be state licensed to perform appraisals prepared for federally related transactions. Also by law, your client is entitled to receive a copy of the completed appraisal report from you the lender. Since you are my client I cannot release it to them without your expressed written consent. So please let your clients know how they can receive a copy of the appraisal from you.

To facilitate the appraisal process, it's beneficial to have your clients provide these documents to the appraiser at the time of inspection:

• A plot plan or survey of the house and land (if readily available)
• Information on the latest purchase of the property in the last three years
• Written property agreements, such as a maintenance agreement for a shared driveway
• List of personal property to be sold with the home if any
• Title policy that describes encroachments or easements
• Most recent real estate tax bill and or legal description of the property
• Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells
• Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available)
• A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending". ( The appraiser will need the sales contract or purchase agreement prior to the property inspection).
• Information on "Homeowners Associations" or condominium covenants and fees.
• A list of "Proposed" improvements if the property is to be appraised "As Complete".
• A copy of the contract of sale. ( The appraiser will need the sales contract or purchase agreement prior to the property inspection).

Once the appraiser has arrived at the subject property, your clients do not need to accompany him or her along on the entire site inspection, but your client should be available to answer questions about your property and be willing to point out any home improvements.

Here are some other suggestions:

• Accessibility: Make sure that all areas of the home are accessible, especially to the attic and crawl space
• Housekeeping: Appraisers see hundreds of homes a year and will look past most clutter, but they're human beings too! A good impression can translate into a higher home value
• Maintenance: Repair minor things like leaky faucets, missing door handles and trim
• FHA/VA Inspection Items: If your borrower is applying for an FHA/VA loan, be sure to ask your appraiser if there are specific things that should be done before they come. Some items they may recommend might be: Install smoke detectors on all levels (especially near bedrooms); install handrails on all stairways; remove peeling paint and repaint the effected area; provide inspection access to the attic and crawl spaces.

Please note that we all work hard to make sure that the transaction of a sale or refinance goes as smoothly as possible for everyone involved in the transaction. If the property, rooms in the property, or if certain areas of the property can not be accessed this may delay the process and make things more difficult for all. If we all work together, and educate the loan applicant we can make their experience a pleasant one.

Please feel free to comment on this article and state your opinion on how we can make things easier for you..

Thank again for your business,

Jeff.....................

    Mortgage fraud has made headlines locally and nationally. Most of the time, mortgage fraud involves identity theft or fraud — making a borrower appear to be somebody else, with a better job, more income or fewer debts. Somebody more credit worthy.

    But some mortgage fraud involves a broker, appraiser or loan officer telling the mortgagee — the lender — and the borrower that the house is worth more than it is. This way, they can close a larger loan and make a bigger commission. Since real estate agents also usually make a percentage of the sale as commission, sometimes they can be involved. In reality, most loan officers, mortgage brokers, appraisers and real estate salespeople are ethical and would never think of engaging in mortgage fraud. But mortgage fraud of this type always originates with one of the parties who make a commission on a closed sale.

    Sometimes, fraud like this can be accomplished without an appraiser involved. Honest, professional appraisal reports are simply altered, or honest, professional appraisers' signatures forged. But in reality, a deceitful appraiser often makes it easier to perpetrate mortgage fraud. At the same time, appraisers are also homeowners', lenders' and the economy's best defense against mortgage fraud.

    Appraisers are paid a set fee for their work whether a deal is closed or not. Appraisers are hired by and work for the lender that is considering loaning the money to buy a house. That lender is interested in an objective, third party, professional opinion of the true value of the home. The lender needs to know that if the borrower defaults, the collateral used to secure the loan — the house — is valuable enough to cover their loss.

    Appraisers do not work for individual, commissioned loan officers, mortgage brokers or real estate agents. If they did, there would be too much pressure to "make the deal work," rather than arrive at a professional, considered opinion of the market value of the property. Appraisers also do not work for borrowers, at least in the context of a mortgage loan. But borrowers work closely with mortgage brokers, loan officers and real estate agents, and benefit the most from a third party, objective valuation of the home they want to buy.

    If something catastrophic happens, such as a job loss, illness, divorce or death, and a borrower can no longer make payments on the home they've mortgaged, they will need to be able to sell the home for enough money to cover the balance of their mortgage. So, nobody benefits more from an appraiser's professional opinion of value on a home than the new homeowner, even though there is no direct client relationship.

    Like some mortgage brokers, loan officers and real estate salespeople, some appraisers are "bad apples" and will agree to go along with a scheme to defraud lenders and homebuyers so bigger commissions can be had. Not us and not the vast majority of appraisers. Again, the appraiser is paid a set fee whether the loan closes or not, and does not work for any of the commissioned parties to the transaction. Appraisers are therefore a homeowner's, and a lender's, best front line defense against mortgage fraud.

    As always I encourage comments and feel that this blog helps us all learn how to make this a better market place and working environment for all of us. Please send ideas and topics that you would like for me to cover in future blog articles, or I welcome you to write your own that I will be glad to post on my site.

Thank you all again for your business and continued support.......Jeff

Appraisal reviews

The Federal Reserve has recently reiterated that "financial institutions must have an effective, independent real estate appraisal and evaluation program," and that appraisers performing reviews should "have the knowledge and expertise to assess compliance with the Federal Reserves appraisal regulations and guidelines." Here at Veracity Realty Services, llc, we provide appraisal review services that are independent, qualified, professional and square with the Federal Reserve's guidelines.

Appraisal reviews "should determine whether the appraisal or evaluation is appropriate for the transaction, the risk of the transaction, and whether the process by which the collateral valuation is obtained ensures independence and quality," the Fed says. They "should also indicate whether the appraisal or evaluation report is consistent with the engagement letter, which sets forth the scope of the appraisal assignment. "The Fed also notes that "some banks supplement routine reviews with post-funding evaluations of appraisal quality for some of their higher-risk or greater-value transactions as a control to assist in detecting valuation problems."

In addition to conforming our work to the forms and guidelines of our review clients, there are four Fannie Mae forms that are generally used for review services, and we can prepare an appraisal review on any of them. They include an appraisal "desk" review, a "field" review, a "short" form and a "narrative" form. Here at Veracity Realty Services, llc, we are experienced in all types of appraisal reviews, review procedures and the responsibilities of review appraisers.

We understand what makes a quality appraisal and what the most common deficiencies are, especially in our home market. At the same time, we are professional enough to recognize that our competitors in our market are capable of doing a good job! The Uniform Standards of Professional Appraisal Practice (USPAP) govern appraisal reviews as well as appraisal reports, and you can count on us to ethically evaluate appraisal reports performed by others. Those others may be reviewing our work, too!

In short, here at Veracity Realty Services, llc, you can rely on our independent judgment, because we offer professional, objective, ethical appraisal review services for our clients. Browse our website to learn more about our qualifications, expertise and services offered.