Tag Archives: lenders

Real Estate

Appraisal, Are You Getting Your Money’s Worth?

Photo courtesy of Red Clay Media

Despite Federal Reserve regulations that took effect April 1 requiring lenders to pay appraisers fair fees, many appraisers say they are still offered $200 to $250 by lenders for work billed to consumers at $450 or more.

  • Last year’s Dodd-Frank financial reform law mandated that appraisers receive fees that are “customary and reasonable” for their local market areas, yet the Appraisal Institute says that is not happening.
  • While a portion of the difference between what consumers are billed and appraisers are paid goes to the management companies that connect lenders with local appraisers and take a percentage for their services, often times lenders make a profit from the appraisal as well.
  • Home buyers should care about this for several reasons.  For starters, accurate appraisals are a concern for consumers, as appraisals can be deal-breakers if the appraisal comes in too low. When performed competently, appraisals can be accurate measures of the equity in a home when the homeowner refinances or seeks a second mortgage.
  • Most experienced independent appraisers refuse to work for $200 to $250 because they can’t pay their overhead at that rate, leading less-experienced appraisers, who sometimes travel long distances and are unfamiliar with the area, to conduct the appraisal, which can lead to inaccurate, appraisals.
  • The Appraisal Institute is seeking to persuade the Federal Reserve to tighten its regulations, which created a loophole for lenders and management companies that wanted to keep paying low fees to appraisers.  In the meantime, consumers should demand transparency, asking how the appraisal fee was distributed and why.

Read the full story

For all your real estate needs call or email

John J. O’Dell
Real Estate Broker
O’Dell Realty
(530) 263-1091
Email jodell@nevadacounty.com

DRE# 00669941

Real Estate

The Frustrations of Short Sales in Dealing With Banks

Photo courtesy of Around Hawaii

The California Association of REALTORS® has put full page ads in numerous papers throughout California regarding the frustration of dealing with banks in trying to do short sales with them. A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency

Having had numerous short sales fall through, I fully understand the frustration of buyers and sellers in trying to work with banks in doing short sales.  I don’t know what their problem is. They seem to be extremely great at finding ways to tack on fees for every dealing you do with them, but complete disregard for completing what should be a smooth sale of real estate property of which they have an interest in.

I have two short sales going right now that have been in the works since November of last year. One of the banks, after five months has finally reviewed all the paper work on one of the short sales,  (a simple offer to purchase property) and assigned a negotiator to deal with the purchase contract.  This by no means says that the bank will accept the offer that was made.  I’ve had banks come back after an offer was made and demand $30,000 more than the property was worth. This resulted in the property not being sold in a short sale, foreclosed and the banks losing thousands of dollars because they refused to go along with the short sale.

Here’s a press release from C.A.R. further explaining the frustrations of short sales:

Banks drag feet on short sales, survey finds
The CALIFORNIA ASSOCIATION OF REALTOR® (C.A.R.) published its findings of a survey this week, which show that tedious lender requirements and poor communication hamper short sales.

  • Fewer than three of five short sales close in California, illustrating the complexity and difficulty of navigating lenders’ and servicers’ short sale procedures, according to C.A.R.’s survey, which gauged REALTORS®’ experience in working with short sale transactions – transactions in which the lender or lenders agree to accept less than the mortgage amount owed by the current homeowner.
  • Although not every homeowner or mortgage is eligible for a short sale, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives.
  • Banks are taking much longer to respond to short sale offers than those specified in government guidelines for banks.  Nearly two-thirds of survey respondents said banks took longer than 60 days to respond to short sale offers.  Often, this results in buyers walking away from the transaction.
  • “Increasing the number of successful short sale transactions is one important way we can help California families avoid foreclosure and move our economy closer to recovery,” said C.A.R. President Beth L. Peerce.
  • C.A.R. is asking government agencies, such as the U.S. Dept. of the Treasury, to force banks to complete all short sales following HAFA guidelines and to comply with the program’s time frames.

Read the full story

 

Real Estate

The Price of a “No-Cost” Loan


Some home buyers who may be concerned about paying high closing costs might be tempted by a “zero-cost” or “no-cost” loan option, which requires no cash outlay, but typically adds a half percentage point to the rate.  However, some financial consultants say these loans tend to be most beneficial to buyers planning to have the loan for less than five years.

  • One of the primary differences between a no-cost loan and similar loans is that no-cost loans do not tack on closing costs to the balance, but instead increase the rate.
  • With no-cost loans, third-party fees including the appraisal, credit report, title insurance, recording, and the use of a mortgage broker are paid by the lender.  The fees, including the amount the broker is being paid, are disclosed on the closing statement.
  • Home buyers who bypass a broker and work directly with a lender may encounter less transparency, as loan officers are not required to disclose the amount the bank is making on the loan.
  • Borrowers weighing their loan options are advised to use a mortgage amortization calculator to compare the costs for a conventional loan compared with a no-cost loan.  The Federal Reserve provides an amortization calculator on its Web site at www.federalreserve.gov.

Read the full story
For all of your real estate needs
Call John J. O’Dell
Real Estate Broker
General Contractor