OfflineNew Standards for ‘Safe’ Loans
That’s the title of an article this week in the New York Times. It seems the federal government is still issuing new guidelines and regulations to force lenders to do better at verifying that borrowers can actually repay their home mortgages.
A new “ability to repay” rule was issued last month by the Consumer Financial Protection Bureau to become effective in January 2014. This rule sets standards for what would be a “safe” loan and what would not. Of course, no more “no-doc” loans is in there, and a lot more verification of job status, income, assets, debt and credit history as well.
Trulia.com Founder Interview
Trulia.com has become a favorite website for home buyers and sellers. This is despite ongoing criticism of the accuracy of data there, timeliness of listing data and value estimate problems. However, the founder, Pete Flint, is high on the company’s future, saying that more than 25 million unique users access the site every month on desktop computers and mobile devices.
Mobile is the focus of new development at the company since it went public. New products coming out include commute maps to help consumers to match their criteria for time to get to work with homes on the maps.
Appraisers still under fire
The same criticisms of appraisers and how they’re hurting a housing recovery are still out there. In one article a homeowner in CA laments that her condo had an offer of $317,000, but the appraisal came in at $310,000. This was due in her opinion to the fact that the appraiser used the only comparable properties available, all foreclosures, and failed to adjust valuation properly to take into consideration their need for repairs versus her thousands of dollars in upgrades.
The Appraisal Institute places much of the blame on the new appraisal management companies for poor methods in selection, assignment and payment of appraisers.
The appraisal mentioned here is so typical of what happens. The appraiser honestly does their job and comes up with a value. If the value is not exactly equal to the sales price - everyone has a complaint. (Even though there is only a 2.2% difference between the appraisal and the offer - well within the range of value.) If the appraiser "hits" the sales price each time, lenders begin to doubt the appraiser's ethics and wonder if he or she is just trying to get more work from the lender. Either way, the appraiser is always wrong - even if the appraisal value is correct.