AppraiserLoft is proud to say that we have been utilizing a powerful wholesale appraisal process for close to a year now. Our system allows the broker or originator to order and maintain status on each appraisal through an FHA compliant portal that is built custom to each lenders specific requirements and branding.

Considering our substantial experience in the Reverse Mortgage market and FHA loans over the last 4 years, we feel that our platform and support staff are a perfect solution for FHA wholesale lenders. In fact, we are currently applying this process to most FHA and Reverse Mortgage lenders nationwide. We know your market, your pain points and how to take great care of the senior borrower. It is what we have done for years.

Our wholesale process is very smooth and although we expect the same sort of transition issues that came with HVCC, we feel that in the end the originator, lender and of course borrower will have a compliant and user friendly experience. Of course this will take give and take. We encourage our clients to suggest modifications and adjustments.

FHA Invoicing and Cost Plus – Paying Appraisers Well

AppraiserLoft has taken great pride in the fact that we pay our appraisers very well. Over the last year we have been using our “Cost Plus” process with appraisers nationwide. Under this process, we can guaranty a fee to appraisers that ensures they are well paid. Our reasonable management fee is simply applied as a separate item listed on the invoice. Not only does the “Cost Plus” process show great respect for our appraisers, it also assists in meeting the FHA requirements pertaining to distinction of actual appraisal fees vs management fees. We have been doing this for over a year as a national flat rate price and it works extremely well on a national basis.

Not all AMC's low ball the appraiser. Do your homework on this before making assumptions. True there are many AMC's who sacrifice quality for margin, but that is not the case for all of us. In the end, it is essential that the appraisal be accurate to move your deal along. Through experience, we have learned that quality appraisers don't work cheaply. You have pay for quality work. We feel that our “Cost Plus” process addresses this fact completely.

Bottom line is that you can have both compliance and excellent quality-service. It all depends on your appraisal partner and how willing they are to adjust and modify their process and pricing to meet your specific needs. As an appraisal partner, AppraiserLoft seeks to balance the compliance requirements with service and quality. You can have it all.

Payment and COD

Under most of our client scenarios, the originator will be asked to pay for appraisal upfront with credit card, e-check or by allowing our team to collect from the borrower on their behalf. Our wholesale portal will allow the originator to order and collect through the same platform. Once again, this process has been in use with most of our clients for years and it works very well even in the Reverse Mortgage market. There are other ways to receive payment besides COD. We have seen it in action for years now.

We know that these appraisal adjustments be unwanted by some and overdue by others. If HVCC is any indication, we also know that with time and experience, the process will work smoothly. AppraiserLoft here to help with the transition.

Best wishes to all.

If AMCs are NOT used, the Lender would be responsible for all the tasks the AMC currently services. Lenders do not want to inherit these responsibilities because they will not be compensated. If AMCs are NOT used and Lenders are forced to integrate appraisal management into their day-to-day operations, then we would see prices rising substantially to offset the Lender's inexperience, lack of personnel and undeveloped technology/platforms to deal with these new requirements.

There are AMCs out there like Landmark Loan Services who have already streamlined this process with borrower's pocketbooks first in mind. The changes in price (as stated in one post) will remain largely unaffected. Static prices in ANY industry is an unrealistic expectation!

In these times of depressed values, borrowers need to understand the uncertainty that exists. It is the broker-lender's responsibility to educate their clients to know the pros & cons of making a decision to proceed. HUD is being proactive to corral potential lawlessness before it can get started. Let us not forget values were given liberally in the traditional mortgage world putting our country into this housing market disaster.

If a reverse is a viable financial solution for a senior homeowner then an attempt at closing despite the appraisal cost is worth a try, is it not?

Sometimes results cannot be predicted unequivocally and costs rise — these are realities in our lives. Remember this change is intended to help our industry, not hurt it. There are plenty of other weaknesses in this industry that are far more pressing than this policy change. This is a move in the right direction.

Important note: My last response was directed at The Cynic, not Appraiser_loft_Shane which RMD positioning made it appear. AMCs may work well, perhaps, if indeed the Senior Borrower interest is placed first. I'm just concerned how Loan Originators arrive at a reasonable home value prior to an expensive FHA Appraisal to ascertain whether the FHA HECM Formula will work for a young Senior with high mortgage debt. Many Seniors are in desperate financial situations: I would hate to raise a Senior's hopes needlessly.

If a customer or lender orders an appraisal without knowing if it will qualify for a reverse mortgage in advance (the value is not high enough to cover their mortgage) then they will get stuck with the cost of an appraisal that was unnecessary. Seniors should not be subjected to this. HUD should allow appraisers to at least give a rough estimate of value otherwise the customer will be paying for an appraisal when they do not qualify for a reverse mortgage.

James,

This practice has been in place for years. As the mortgage business began drying up, lenders began getting concessions.

Here was the problem. Originators wanted more deals and had to reach out to seniors who were less and less afluent and were illiquid. These seniors were concerned that if they got the appraisal they could not afford to pay for it if the loan did not go through. These originators began promising seniors that if they went forward, there be no fees if the loan did not go thru (pre borrowers paying for counseling).

Some originators (and brokers) negotiated deals that they would pay for the appraisals on loans that go thru but they needed to get a different compensation structure to offset those that did not. The agreement was that all appraisals would be charged the same, about $50 more than their current agreement per appraisal but on ones that did not, the originator would only pay $50. As appraisers saw the mortgage market drying up, some went along with these agreements.

Such arrangements made the appraiser a party to the transaction. In essence they were paid a small base and a bonus based on success. To many of us these appraisers lost their independence.

This will not work for all the valid reasons listed above. In four years doing RM's I have only had 4 deals fall apart due to under-appraisal…all with AMC's…all with the same “Top 5 ” lender. I will leave the business before I will turn my financial future over to an appraiser who discount a fee by 50% just to find work.

This is causing a downward spiral of valuations further compounding the collapse of home values. Congress knows this and if the bureaucrats can't fix it they will rewrite the rule themself.

Good appraisers will walk away from HVCC and leave the culls who are already in there hurting seniors with bad valuations. The lender UWs are devaluing homestead property appraisals and violating the law while they do it. Seniors don't get to see the appraisal they paid for in most until the closing which prevents them from making clear decisions on whether the reverse is a good thing for them. Add to that the huge number of seniors who will walk away from reverse because they cannot pay for an upfront appraisal cost (a discriminatory policy) and it becomes an unworkable process. Every LO/Broker and Appraiser needs to be screaming at the top of his/her lungs to their congressional folks that they have lost their vote until this thing is fixed. You'd think the media would have picked up on this months ago.

As predicted we are beginning to get a glimpse of the HVCC program; a double dip into recession led by another housing slump. It's not like we couldn't predict it. Run experienced appraisers out of the business and rely solely upon freshly trained experienced appraisers who have never seen a recession much less a major housing decline.

I hate to say I told you so but I've been predicting this for over a year. Enjoy your new recession Andrew. It's only a matter of time before it's traced back exclusively to your greedy little scam.

I have a question. I was considering building a custom home, which I couldn’t afford with a conventional mortgage. I was told by the builder that since I am over 62 and have no heirs, a reverse mortgage would work well for me to pay off this new home. The bulder said that the appraised value would increase between the construction loan and the mortgage, so the lump sum from a reverse mortgage would pay off the home. I’m not convinced that a reverse mortgage was designed to buy something one can’t otherwise afford and I decided not to go ahead because it all seemed too risky for my retirement, but I haven’t been able to find out the answer to my basic question. Is it true that the appraised value of a custom built home automatically increases between the start of the construction loan and the conversion to a mortgage?