Karen Ott, New Home AdvisorRoyal Oak Homes - Sorrento Springs23540 Companero Drive, Sorrento, FL 32776P-352-551-7661E-Karen@royaloakhomesfl.comwww.royaloakhomesfl.com
Barry Botwin, Licensed Mortgage Lender with Contemporary Mortgage Services in Altamonte Springs, FL provided the following guidelines highlighting the new time requirements necessary before a Buyer can be eligible to apply for a home loan following foreclosure and/or short sale of a loan in the past:Foreclosure:
· 7 years from the date foreclosure completed and transferred back to bank.
· 3 years from the date foreclosure completed and transferred back to bank and 10% down and extenuating circumstances (i.e. death of spouse).
· 3 years from the date foreclosure completed and transferred back to bank.
· Less than 2 years, but not less than 12 months from the date foreclosure completed and transferred back to bank and 10% down and extenuating circumstances (i.e. death of spouse).
· 2 years from the date foreclosure completed and transferred back to bank.
· 12 – 23 months from the date foreclosure completed and transferred back to bank and 10% down and extenuating circumstances (i.e. death of spouse).
· 3 years from the date foreclosure completed and transferred back to bank.
· Less than 3 years from the date foreclosure completed and transferred back to bank may be considered with extenuating circumstances (i.e. death of spouse).
· 4 years from the date sale closed and transferred to new owner or transferred back to the bank regardless of how much money you put down or what lender you use.
· 3 years from the date sale closed and transferred to new owner.- No waiting period if borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND they are not taking advantage of declining market conditions (i.e. transferred for new job).
· 2 years from the date sale closed and transferred to new owner.- No waiting period if borrower had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND they are not taking advantage of declining market conditions (i.e. transferred for a new job).
· 3 years from the date short sale completed and transferred back to bank.- Less than 3 years from the date short sale completed and transferred to bank may be considered with extenuating circumstances (i.e. death of a spouse).
For Additional Information, you can always contact anyone at Rock Springs Realty or Barry Botwin with Contemporary Mortgage Services (www.contemporarymortgage.com) by email at: firstname.lastname@example.org or phone at: 407-834-3377 Office or 407-234-0329 Mobile. ############################
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As reported in Inman News (www.inmannews.com) August 2014:
The appraisal is probably the most important part of a mortgage application. Lenders originate residential mortgages on the basis of either the sale price or the appraised value, whichever is lower. If the appraisal is too high, sellers worry that they should have asked for more money. And, if the appraisal is less than the agreed sale price, it can be a deal killer unless the seller is willing to take less or the buyer brings additional cash to closing.
But what if the appraisal is wrong — or at least a valuation you want to dispute? What if the comps don’t apply, the appraiser’s data is too old or the appraiser is not familiar with local trends? According to the National Assoc. of Realtors (www.nar.org), about 4 percent of all transactions fall through because of appraisal issues, roughly 200,000 sales per year.
Generally speaking, appraisals are hard to change. Appraisers are likely to stand by their valuations. The options in the case of a disappointing valuation are to ask for a second appraisal, or present the appraiser or lender with additional property information, comps and documents — and then plead for a revision, according to NAR.
Now an alternative is showing up, what might be called “value reviews,” or automated reports that use “big data” to examine appraisals line by line and show how the appraisal compares with expected norms. Never before has there been a way to gauge appraisal results, and with such reports some transactions that might have failed will now go through.
We’re in the process of downsizing and buying a Florida home. We were delighted when the appraisal showed that our property was valued at $232,000 — good news given that the sale price was $220,000.
Then the other shoe fell. Something we had never seen before — a “value review” — arrived from the lender by email, a one-page document that showed the “estimated value” of the property was $200,200. Was the deal off? While we would be perfectly happy to pay less for the property, the odds were pretty good that the owner would not be equally thrilled.
Then we took a closer look at the review. It plainly said that it was not an “appraisal.” It also said that the value of the property might range from a low of $164,164 to a high of $236,236. If you add these figures together and divide by two, you get $200,200.
If the value review was not an “appraisal,” then what was it? Could it kill our deal?
Our loan officer said the value review was an “internal document” and that the loan would still be based on the appraisal results. Since the appraisal was well above the sale price, the appraised value was fine.
But if this was an internal review, then how come it was sent to us?
According to Francois (Frank) K. Gregoire, a Realtor and appraiser based in St. Petersburg and a former chairman of the Florida Real Estate Appraisal Board, we likely received the value review because of “the lender’s attempt/intent to comply with the Dodd-Frank Amendments to the Equal Credit Opportunity Act (ECOA).”
It turns out that ECOA requires lenders to automatically provide free copies of all appraisal reviews to borrowers, but that’s not all: The Consumer Financial Protection Bureau says lenders also have to provide “other written valuations promptly after they are completed, regardless of whether credit is extended, denied, incomplete or withdrawn.
‘Big data’ and appraisals
In the same way that buyers and sellers want appraisals to be on target, so do lenders. They’re looking for a realistic opinion of value, preferably a conservative opinion, because the lender’s goal is not just to make the loan, it’s to make loans with as little risk as possible.
The value review is a way to measure appraisal norms. In my case, the lender was looking for an appraised value that was no more than 20 above or 20 below the “estimated value” shown in the appraisal report. Since the estimated value was $200,200, an acceptable appraised value could range anywhere from $160,160 to a max of $240,240. With an appraisal of $232,000, our valuation was within the acceptable range.
Other lenders might look at the same estimated value and have a different range. Maybe they will only tolerate an appraised value that’s 15 percent above or below the estimated value.
Here’s another way to look at the numbers: We have an agreement to buy at $220,000 and the appraisal says the property actually has a fair market value of $232,000. That’s a difference of 5.45 percent. The lender might require that the purchase price and the appraised value must fall within a certain range to avoid red flags, for example, a difference of no more than 10 percent.
Checking the appraisal, and the appraiser
While a residential appraiser is required to physically inspect the interior of the property — that’s one reason you see so many photos in an appraisal — the value review was done with data and math. Nobody actually stepped inside the home; instead, the review came from things such as recent real estate sales and property tax records.
While the home’s market price is obviously central to the appraisal process, the value review does not stop there. It rummages through the appraisal looking for every possible deviance and abnormality and then presents a red-flag summary.
For instance, the value review answers such questions as:
Is the appraiser’s license valid as of the appraisal date? Is the legal description right? Does the square-foot measurement match public records? Are the buyer and seller different — in other words, is the transaction an arm’s-length sale? What is the 12-month listing history of the property? Do foreclosure sales equal more than 15% of all local transactions? Are photos of comps included in the appraisal?
My particular appraisal raised several issues such as comps that were more than 6 months old and a signature that could not be electronically detected. Such items are not necessarily “errors,” but since they were flagged lenders can instantly see if the matter is worth a second look.
Actually, I was greatly pleased with the value report. It said the home was 54 years old, but because of upgrades and maintenance it had an effective age of 20 years. It also said basically that the appraiser had done a very good job valuing the property.
How does the value review know all of this stuff? The data points come from public records such as assessments, building permits and deeds, plus every time there's a new appraisal it adds more data to the mix. The result is that the system becomes more accurate every time it’s used.
Value reviews are going to become more common, a way to check appraisal accuracy and completeness and also a tool that can teach borrowers much about the property they’re financing. It’s an example of big data being used to protect both consumers and lenders, and for this buyer that’s a very comforting idea. #################################################