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Is That Addition Living Area?

Jun 18th, 2012
by Fl appraiser.
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Realtors, have you ever shown a home that includes a new addition or the conversion of another space, like a garage or porch?  Of course you have.  And the next thing you did was review the listing to see if it was included in the GLA by the listing agent.  In the past you may have simply viewed the area to see if it was completed in a workmanlike manner and advised your client. (social ring)

Not so fast!  In order to ensure a smooth closing it would be wise to give more consideration to the addition.  While real estate appraisers have always been required to determine if the space meets a reasonable definition of living area, lenders are requiring additional documentation from the appraisers.  Lenders require that appraisers must document in the appraisal if the addition was built with permits.  Permitted additions should be included in the gross living area, assuming it meets the other requirements.

If the addition was not permitted or the documents cannot be obtained, don’t fear the area can still be considered as living area if:

The non-permitted additions do not increase the FOOTPRINT of the original construction and:

  1. They were completed in a workmanlike manner.
  2. The addition is similar or superior in quality to the original home.
  3. The addition is typical in the market area.
  4. The appraiser is able to demonstrate market acceptance by providing similar comparable sales.

If the addition does increase the FOOTPRINT of the original home, be careful.  The appraiser will be asked to verify the permits and also determine if it was built to code.  Because it is way beyond the scope of the appraisal and most appraisers are not qualified to determine if it was built to code, appraisers should describe the area to the lender and disclose all known facts.  Our experience has been that lenders will be reluctant to lend on properties with this situation.

So be especially careful if you are listing or selling a home that includes an addition that increases the footprint of the home.  Make sure the necessary documents are available to the appraiser to eliminate possible lending issues.

If permits were not pulled or cannot be found for additions that increase the footprint, the appraiser will be asked to describe the obsolescence to remove the addition and return the structure to it original state.

Pinellas County Home Foreclosure Filings Spike as Prices and Sales Level Off

Feb 24th, 2012
by Fl appraiser.
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Whether it was the anticipation of the foreclosure settlement or simply because lenders must eventually move their distressed inventory, initial foreclosure filings in Pinellas County rose sharply in December and January.  This follows the huge drop in filings after the disclosure of the robo-signing scandal in 2010.

Much has been made about the real estate shadow inventory and its effect on home prices.  As a real estate appraiser, my prior analysis showed a distinct link between the available inventory and home values.

With 717 initial real estate foreclosure filings in Pinellas County in January as compared to roughly 400 per month this past summer we could be seeing the beginning of an increased supply of foreclosed homes.  Of course with the Florida foreclosure timeline over 800 days what really matters to the inventory is the number of properties that have made it through the foreclosure process and made it onto the real estate market.  While there does not appear to be an increase in REO (real estate owned) properties recently listed, if lenders have become more aggressive foreclosing on properties, we would expect it to show up first in the number of initial filings.

The number of home sales continues to edge upward with a very slight increase over last January.  As the real estate market continues to work off the overhead of distressed homes, a more rapid resolution to the shadow inventory is necessary for a healthy housing market.  2012 maybe the year that the housing market takes a big step toward normalcy and could provide the last best opportunity to snap up properties at historic bargains.

As the premier provider of real estate appraisals and property valuations in the Tampa Bay area, Marsh Bilby and Asset Value Appraisal and Consulting assists banks, mortgage companies, Attorneys, Realtors, loss mitigators and home owners with a complete line of real estate appraisal and valuation products.

Fannie and Freddie’s Role

Feb 12th, 2012
by Fl appraiser.
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Fannie, Freddie Suits Negate Dodd-Frank

By PAUL SPERRY Posted 02/10/2012 06:33 PM ET

New evidence Fannie Mae and Freddie Mac hid their subprime exposure from Wall Street delegitimizes both the diagnosis of the crisis and its prescription — the Dodd-Frank Act.

First the diagnosis.

After the crisis, President Obama joined Senate Majority Leader Harry Reid and then-House Speaker Nancy Pelosi in framing Wall Street while exonerating Washington-based Fannie and Freddie and the affordable-housing charter that has governed the agencies’ mortgage underwriting since the early 1990s.

To officially certify their false narrative, the Democrat troika appointed a commission to “investigate” the root causes of the crisis. The Financial Crisis Inquiry Commission (FCIC) concluded that — surprise! — Fannie and Freddie played only a “marginal” role in the mess.

But recently filed SEC lawsuits against Fannie and Freddie for massive fraud contradict that finding.

They offer a mountain of evidence that the government-sponsored mortgage giants played a leading role in the crisis.

Instead of $600 billion in subprime and other risky mortgages, Fannie and Freddie held or guaranteed $1.6 trillion. That means they failed to disclose a whopping $1 trillion in risk to investors.

The new total is close to the $1.8 trillion estimated by former Fannie chief credit officer Ed Pinto and cited on these pages the past couple of years. The SEC complaints completely discredit the findings of the FCIC, which rejected Pinto’s data and validated the phony numbers.

When at the start of the investigation the evidence fell into FCIC Chairman Phil Angelides’ lap, he “began a concerted effort to suppress it,” according to FCIC Commissioner Peter Wallison. Here’s what happened:

• After Pinto in March 2010 provided commission staff with a 70-page memo containing Pinto’s data, Angelides refused to set up a meeting between the commission and Pinto.

• After Wallison asked that Pinto be given a chance to testify in an open hearing, Angelides declined to let the American public hear his testimony.

• Instead, Angelides in August 2010 circulated a staff memo to all the commissioners challenging Pinto’s data as “flawed,” then refused to give Pinto a chance to respond.

• After Wallison pressed the issue, Angelides tried to discredit the data in the media by having a leftist think tank founded by Angelides’ partner, John Podesta, put out a report smearing Pinto. (The report by the Center for American Progress’ David Min has now been rendered a howlingly bad piece of scholarship.)

• After a fed-up Wallison included Pinto’s research in a 100-page dissent from the FCIC’s majority report last year, Angelides censored it almost in its entirety from the copy of the report he made available for purchase in bookstores.

The Hidden Truth

Feb 12th, 2012
by Fl appraiser.
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Audacity Of Dishonesty Hijacks Truth In Lending

Subprime Scandal: Announcing a massive $26 billion mortgage deal with “abusive” banks, the president blamed everybody for record foreclosures except the party most culpable: government.

Speaking Thursday from the White House, Obama scolded “irresponsible” and “reckless” lenders, who “sold homes to people who couldn’t afford them.”

He also cited buyers who bought homes bigger than their budgets, and Wall Street bankers who packaged the shaky mortgages and traded them for “profit.”

“It was wrong,” he asserted. And now the nation’s “biggest banks will be required to right these wrongs.”

Obama acts as if the private sector bears all the responsibility for the mortgage mess. But he and his attorney general know it’s merely a scapegoat for the reckless government housing policies they and their ilk drafted and enforced in the run-up to the crisis.

Starting in the mid-1990s — in a historic first — it became federal regulatory policy to force all U.S. lenders to scrap traditional lending standards for home loans on the grounds they were “racially discriminatory.”

President Clinton fretted that blacks and other minorities could not qualify for mortgages at nearly the same rates as whites and Asians. So Clinton codified more “flexible” underwriting standards in a “Policy Statement on Discrimination in Lending,” and entered it into the Federal Register.

At the same time, he set up a little-known federal body made up of 10 regulatory agencies — the Interagency Task Force on Fair Lending — to enforce the looser standards. It threatened lenders to either ease credit for low-income borrowers or face investigations for lending discrimination and suffer the related bad publicity. It also threatened to deny them expansion plans and access to Fannie Mae and Freddie Mac.

“The agencies will not tolerate lending discrimination in any form,” the 20-page document warned financial institutions. The task force enforced these policies throughout the Bush administration.

According to Peter Ferrara, senior fellow at the Carleson Center for Public Policy:

“This overregulation reached the point of forcing lenders to discount bad credit history, no credit history, no savings, lack of steady employment, a high ratio of mortgage obligations to income, undocumented income, and inability to finance down payment and closing costs, while counting unemployment benefits and even welfare as income in qualifying for a mortgage.

“This” he said, “turned into government-sanctioned looting of the banks.”

The Justice Department — along with HUD, which regulated Fannie and Freddie — proved the most aggressive members of the fair-lending task force. Eric Holder, then acting as deputy AG, ordered lenders to actually “target” African-Americans for home mortgages they couldn’t otherwise afford. Obama cheered Holder on as an inner-city community organizer who also pressured banks to ease credit for home borrowers.

In other words, the same two officials now leading the charge to punish “abusive” lenders had egged them on before the crisis.