My Blog

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.

FHA Appraisals in New York and Pennsylvania…

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

Why an FHA Appraisal?

Recent changes in the HUD FHA program have made a significant and important contribution to the mortgage market for new purchases and for the refinancing of existing mortgages, increasing the opportunities for home ownership and offering relief for home owners faced with unaffordable mortgages or tax burdens. This is a response to predatory lending practices and the increasing number of foreclosures across the country. A new program has been created to help homeowners and is known as the FHA Secure Initiative.

Jeffrey Scott Jacobs is committed to providing competent, fair and honest appraisals to assist with these efforts, and is committed to equal housing opportunity for all.

Why Go FHA?

Some lenders do not offer FHA and some salespeople discourage their buyers from using the program. This is largely due to some property restrictions (location, repairs, etc.) and up front seller costs of the past which no longer apply. Consider these changes and benefits:

With FHA there is no minimum FICO score requirement.

With FHA, if automated underwriting denies your file, that doesn't mean that you can't get the loan funded. The underwriter can make a manual decision on the file. This is the FHA advantage of flexibility of under writers discretion.

FHA allows up to 6% seller contributions and also allows temporary buy downs other programs do not allow.

Non traditional credit is also allowed through FHA and unlike Fannie Mae, one of the trade lines do not have to be rent. So you could potentially have a borrower living rent free with other forms of non traditional credit and still make the loan work.

FHA also doesn't have a maximum cap to the amount of income a borrower can make.

In the past a stigma with FHA was that the sellers ended up having to pay the majority of the closing costs, which is no longer the case. The only non allowable closing cost (cannot be paid by the borrower) is the tax service fee.

Lenders and sales agents also thought that with FHA it was more of a hassle because HUD would require all repairs even minor repairs to be fixed. This is no longer the true. The types of repairs required for FHA are now very similar to a conventional loan and many previously required inspections have been eliminated.

If the borrowers run into trouble and cannot make their payment HUD will work with the borrower on a repayment plan so they won't necessary go to foreclosure immediately.

If you are a direct lender or a mortgage broker that deals with FHA loans, Please call Jeff to discuss your FHA appraisal needs.

Foreclosure/REO appraisal

    Homes in foreclosure and homes that have reverted to your institution's ownership present special appraisal challenges. At Veracity Realty Services, llc, we're more than ready and able to help.

    For a property in foreclosure, you may need to know the difference between fair market value and "quick disposition" value, to know your potential charge-off liability. At Veracity Realty Services, llc, we have experience in both providing snapshots of fair market value for our mortgage lending and servicing clients as well as "quick sale" forecasts that understand your timeline.

    Owners of property in foreclosure, of course, present special challenges. They may be unwilling to allow an inspection of the property. If they have abandoned the property already, they may have neglected care of the home for some time -- or worse, caused damage. We have the experience and training to deal with the special dynamics of a foreclosure appraisal, and you should not hesitate to rely on us.

    For a property that has already reverted to Real Estate Owned, you likewise will be interested in a quick disposition. But you may want to know and compare three values: As-is, as repaired, and "quick sale." These represent the value of the property without any work done to it, with the work required to make the property marketable to full market value commensurate with competing properties in the area, and, somewhere in-between, with minimal investment in repairs -- selling the property quickly, probably as a "fixer-upper." Again, we understand your timeline and the unique circumstances of an REO property, as well as the special information you'll need -- competing listings, market trends, and the like.

    Please browse our website to learn more about our qualifications, expertise and services offered.

Hear Ye !!!, Hear Ye !!!, Hear Ye !!!………….

    Thanks to the support of our clients we have been able to grow in a down market. Your support has enabled us to add 2 new appraisers to our staff, and add 10 counties to our coverage area in New York.

    We are very excited to inform you of our future expansions that are coming soon. We plan on adding 3 more appraisers within the next 6 months, and we will also be adding 5 new counties to our coverage area in Pennsylvania by March of 2008.

    Our Largest expansion will soon follow shortly after that to cover 5 counties in New Jersey by June of 2008. We will then be a company that has coverage in three State's and two major cities.

    We are truly here to service your appraisal needs. If you ever feel we can do something to service you better please let us know.

    Thank you again for your business and we hope to hear from all of you soon.

Our Service Area’s

Residential Appraisals In Pennsylvania:

Berks, Bucks, Carbon, Lehigh, Monroe, Montgomery, Northampton, Pike and Schuylkill Counties.

Residential Appraisals In New York:

Bronx, Broome, Chemung, Chenango. Cortland, Delaware, Dutches, Kings, Madison, Nassau, New York, Onondaga, Otsego, Putnam, Queens, Richmond, Suffolk, Tioga, Tompkins and Westchester Counties.

Residential Appraisals In New Jersey:

We will be expanding our Service Area into New Jersey by June 1, 2008

We are always expanding our coverage area. If your company needs a particular area serviced on a regular bases in NY, NJ, or PA, let us know.....

Appraising a haunted house…..

Upon my inspection of the rear yard I found the landscaping to be littered with tombstones from the family graves. I noted the external factor as I measured the perimeter of the house. I took my photo of the rear of the house and noticed a face looking back at me from the attic window. When I removed the camera from my eye the face was gone. Thinking to myself the house was supposed to be empty, I rang the door bell before I entered. I heard footsteps scattering around in the house so I rang the doorbell again and knocked on the door this time. Nobody answered so I went inside. As I stepped in the foyer, the wood floods creaked and I noted the hard wood flooring in below average condition. Spider webs all over the place I noted that there might be an infestation and it should be checked out by an expert in that field. I entered the kitchen and noted that it was dated because of the cooking facilities only included an open fireplace and a cooking pot for witches brew. I took my photos and moved on to the basement. In the basement I found more spider webs again noting the infestation. The utilities were not existent so I made comments on the function obsolescence. I also noted that the basement was finished as a torture chamber and that the bars to hold its occupant did not allow external access. Moving back upstairs to the top floor, I entered the full bath on the top floor. Again dated, the bath was another witches brewing pot. I marked in my notes the dated features and moved on to the attic. As I suspected there was a ghostly figure in a rocking chair with her back towards me. She was rocking back and forth in the chair and asked me to approach. As I did she began to ask how much is my house worth, and then mysteriously disappeared. I left the house wondering how I was to complete the appraisal report, there were no comparable sales to be found. What kind of adjustments should be made for the grave yard, the ghosts, and the condition of the house. Thinking to myself I should have declined this job, I then woke up and realized it was just a Halloween Daydream………

Have a great day and remember that safety come first, we wish you a happy, fun and most of all a safe Halloween…….

From the staff at Veracity Realty Services……..

I sent out an e-flyer as an ad to try and promote more business. I got a lot of feedback from that e-flyer both negative and positive. The negative was that we don’t make numbers for lenders so I thought that might be a good topic open for discussion.

Most of you already know that as a courtesy to my clients, I provide a free service so that your clients wont waste there money on an appraisal that they won’t get the loan on. I do a paper search which is not considered to be an appraisal, but it gives you a range of value of where the value of what the property will appraisal for. This of course is subject to inspections, because certain external, condition, or locational factors may affect the valuation process.

The thought behind the appraised value coming in at what the property is actually worth, and not the number that you need to make the deal is for your protection. It is not our job to make deals but to protect your investment in your client. The paper search that we do cost us both time and money however, we do it for free to better serve you. If the value isn’t there and we don’t get the job, we lose.

I’ve attached a copy of the e-flyer below and would appreciate any comments on this topic.

“At Veracity Realty Services, llc, we’re not number-hitters. That’s not why our clients, like you, hire us. You hire us to be candid, professional and independent.

That’s really the role of any appraiser in the mortgage market: We’re like auditors are for publicly traded companies. During the recent historic mortgage and housing boom, too many of our colleagues fell into the trap of “working the numbers.”

At Veracity Realty Services, llc, we’re here to help you make a responsible, fully informed decision on whether to make a loan, and for how much. We can’t provide a more important service to any of our clients than to sometimes say “no,” you’re taking too much risk if you make the loan you’re being asked to make.

Confidence – your confidence in us, your borrowers’ confidence in you, the country’s confidence in its economy – that’s what the appraisal profession brings to the mortgage process. And that’s what we strive to bring you every single time you engage our services. “

We want to thank you for the opportunity to serve you and look forward to continuing to do so.