PITTSBURGH, April 17 /PRNewswire/ -- ValuAmerica, Pittsburgh, a leading developer of settlement services technology, today announced a new release of its ValuNet xsp software that will prevent directed appraisals and ensure compliance with current valuation requirements of the Federal Reserve, Federal Deposit Insurance Corporation, Office of The Comptroller of the Currency (OCC) and Office of Thrift Supervision (OTS).
The system will also help lenders to comply with the terms of the recent agreement on appraisals between the New York Attorney General and Fannie Mae, Freddie Mac and OFHEO.
Since the passage of FIRREA, in 1989, various types of lenders -- commercial banks, thrifts, mortgage banks and credit unions -- have been required to put in place safeguards to ensure against loan officer influence in the appraisal selection process and interference or pressure to 'hit a number' for an appraisal. Recently the GSEs and the New York Attorney General agreed on a new Home Valuation Protection Code that puts new appraisal rules in place for lenders that sell to these agencies.
"Despite repeated warnings from these regulators, very little has been done in retail lending channels to create a firewall between loan officers and appraisers," said Robert Murphy, Chairman and Chief Executive of ValuAmerica. "It's the industry's worst-kept secret: some lenders apparently would rather face a fine from their regulators than risk alienating their commission-based loan officers by preventing them from meddling in the appraisal selection and review process. Inflated appraisals were a major part of the S&L crisis twenty years ago, and they are a significant factor in today's credit/housing crisis -- just read the headlines.
"Now that Fannie and Freddie have developed their new code, lenders should be looking for new ways not only to end appraisal pressure but to document their compliance," said Murphy.
ValuNet xsp is designed to prevent loan officers from selecting or contacting appraisers. The system automatically selects appraisers for each assignment, based on their licensing, skill levels, location, price, workload and past performance.
While loan officers and processors can use ValuNet xsp to order appraisals, AVMs and other valuation products, as well as a complete suite of title and settlement services and products, they can not specify who gets the order. "It's all done by a 37-point algorithm," said Murphy. "The lender does not know who is doing the appraisal until it is returned. If there is a reasonable question about a comp or how a value was derived, it goes through us to the appraiser, so there is no chance to influence or pressure the appraiser. The system typically does not share information on the contract price, in a sales situation, or the amount the borrower is looking for in a refi.
"Aside from an initial set up and support fees, there are no transaction costs for the lender with our software, and it can connect to tens of thousands of licensed appraisers in all 50 states. If used properly, it finally puts an end to this problem," said Murphy.
ValuNet xsp enables lenders, title companies and other settlement services providers of all sizes to access technology and products previously available only to large vendor management captives. It gives them immediate access to thousands of embedded settlement services providers: appraisers, abstractors, title underwriters, credit, flood and tax services, etc. ValuNet xsp helps them reduce their costs of managing settlement services -- activities that account for as much as 40% of origination costs.
ValuNet xsp was jointly developed by ValuAmerica and Deloitte Consulting, and today the platform is hosted by Computer Sciences Corporation (CSC). To date, more than 60 million transactions have been completed using the ValuNet platform. Mortgage Technology Magazine selected the ValuNet platform as the recipient of the Mortgage Technology "Synergy" Award.
For more information on ValuNet, go to valuamerica.com or call Shawn Murphy 440-539-0967.
About ValuAmerica
ValuAmerica is a national, high-tech provider of settlement services and a leader in supply chain management. The company was founded by a management team that pioneered the concepts of appraisal and vendor management. In addition to developing and licensing settlement services technology, ValuAmerica is also an independent vendor management company that delivers a full range of products to lenders.
CONTACT: William F. Campbell of Campbell Lewis Communications forValuAmerica, +1-212-995-8057, or Mobile, +1-917-328-6539,bill@campbelllewis.com
Web site: http://www.valuamerica.com
Comptroller Dugan provides the OCC's views on the agreement between the Office of Federal Housing Enterprise Oversight, the New York Attorney General, Fannie Mae, and Freddie Mac. Download OVV_HVCC_letter_20080527.pdf
The letter, dated May 27, 2008, characterizes the Home Valuation Code of Conduct (or HVCC) as having “adverse consequences … for the safe, sound, and efficient operation of national banks’ residential mortgage lending activities, as well as for the cost of mortgage credit to consumers.” “The OCC endorses the principle that real estate appraisals must be conducted free from influence or coercion by any party,” Dugan writes in the letter. “But this objective should be achieved directly … not by dictating the corporate and internal organizational structures of lenders.” Source: HousingWire.com
The letter, dated May 27, 2008, characterizes the Home Valuation Code of Conduct (or HVCC) as having “adverse consequences … for the safe, sound, and efficient operation of national banks’ residential mortgage lending activities, as well as for the cost of mortgage credit to consumers.”
“The OCC endorses the principle that real estate appraisals must be conducted free from influence or coercion by any party,” Dugan writes in the letter. “But this objective should be achieved directly … not by dictating the corporate and internal organizational structures of lenders.”
Source: HousingWire.com
The nationwide average for a gallon of regular unleaded rose to $3.937, up slightly from $3.936 the previous day.
The climb in gas prices, which have steadily risen over the past three weeks, comes amid the start of the summer driving season, which unofficially kicked off over the Memorial Day weekend.
The AAA survey shows gas prices are up about 9% from a month ago and nearly 23% higher from year-ago levels. The average price for gas has passed the $4 a gallon mark in 11 states, as well as in Washington, D.C.
The most expensive state for buying gas is Alaska, where a gallon of regular unleaded costs an average of $4.201. The second most expensive state is Connecticut, where a gallon of gas costs $4.196, according to AAA.
The least expensive state for purchasing gas is Wyoming, where a gallon costs $3.751 a gallon on average. The second least expensive state for gas is Missouri, where a gallon runs $3.753 a gallon.
In the face of surging prices, consumers are cutting back on the number of miles they clock on the road. Americans drove 11 billion miles less in March this year than the same month a year ago, the Department of Transportation said Monday.
The Federal Highway Administration's "Traffic Volume Trends" report, produced monthly since 1942, showed that estimated vehicle miles traveled on all U.S. public roads in March fell 4.3% - the sharpest drop for any month in the report's history.
Gas prices have increased by a quarter over the past year, while the price of crude oil has more than doubled.
The July futures contract for crude is trading around $132 a barrel on Tuesday morning, after hitting a record high price above $135 a barrel last week. Crude prices have been pushed to hit record highs on supply concerns, a weak dollar and increasing global demand for diesel fuel.
The latest niche product designed to tap the trillions dollars of equity tied up in seniors' primary residences has spread not only to second homes but also to residential rentals and commercial properties.
Equity Key has rolled out an equity-share option that differs from a reverse mortgage in that the program does not charge interest on money taken out of the home. Instead, it gives Equity Key an equal share in the future appreciation of the property based on its present market value.
The concept is similar to the Rex Agreement, another new equity-sharing vehicle that also claims a share of future appreciation. The main differences are that the Rex Agreement has no age restriction while Equity Key is aimed at homeowners between the ages of 65 and 85. The Rex Agreement is not available for second homes and investment properties at this time.
According to Equity Key, it pays the property owner a specific lump sum (approximately 12 percent to 15 percent of the property's value) or an annual recurring payment in the approximate amount of 0.9 percent to 2.4 percent of the home's value. In exchange, Equity Key splits any future appreciation on a 50-50 basis with the property owner. The owner retains the equity he or she has accumulated.
When the owner moves out or passes away, Equity Key sells the property, and the accumulated equity (all the equity the owner had prior to the Equity Key transaction plus 50 percent of what accumulated subsequently) goes to the owner's heirs. The homeowner's estate has the first right of refusal to purchase the property at the current market value, according to the company.
Here's how equity-sharing agreements work in a typical situation: Let's assume a home is valued at $500,000 and the owner signs an equity share for a $50,000 advance. If the house sells seven years later for $600,000, the equity sharing company gets $100,000 -- $50,000 in repayment and half of the $100,000, the home's appreciation since the deal was signed. If the value is flat after seven years, the sharing company gets only $50,000. (With Equity Key, the owner does not have to repay the initial advance if the owner meets the term of the agreement.)
If the house's value decreases by $100,000, the sharing company and the homeowner would share the loss equally -- $50,000 each. The equity-sharing company would receive no money upon the sale while the homeowner would be liable for the remaining $50,000 of loss.
Owners must continue to maintain the property while keeping taxes, insurance and any mortgage payments current, and not exceed the agreed-upon limit on the total principal amount of any loans that may be secured by the home.
Providers of reverse mortgage alternatives are betting they will draw customers because of their fewer upfront fees and costs and absence of an interest-bearing mortgage. The big unknown is the future value of the home. Regardless of the peaks or valleys of appreciation, the owner will owe the equity-sharing company 50 percent of the value from the time the agreement was signed until the day the property is sold.
Reverse mortgage funds can be distributed either in a lump sum, regular monthly payments, line of credit or in a combination of those options. When the house is sold, or the last remaining borrower dies or moves out of the home, the loan amount plus the accrued interest is repaid. The borrower can't owe more than the value of the home. There are no restrictions on how reverse mortgage funds are used.
If Equity Key acquires the property at the end of the agreement term, it will charge an acquisition cost equal to actual third-party costs to sell it. This cost will not be greater than 8 percent of the fair market value of the house at the time of sale.
In order to participate, homeowners must be in good health and able to qualify for a life insurance policy. Ineligible homeowners include smokers, those with Type 1 diabetes and others who've had recent bouts with cancer. Equity Key takes out an insurance policy to protect its interests in case the homeowner dies before the company recovers its initial investment. If the owner does not meet the Equity Key requirements, the $300 application fee is refunded.
If you plan to tap in to any property equity -- primary residence, second home or rental -- do so wisely and with the help of professional advice. Depending upon your circumstances, one way might be better than another.
During today’s Committee vote, an amendment offered jointly by Sen. Robert Casey (D-PA) and Sen. Mel Martinez (R-FL), was approved to revamp requirements for eligibility to the FHA Appraiser Roster. Under the amendment, all new FHA appraisers must be members of nationally recognized professional appraisal organizations or state Certified, in addition to having completed education on FHA appraisal requirements. The amendment is recognition that FHA appraisals are unique and should be performed by experienced and qualified appraisers. Further, the amendment adds to requirements for appraiser independence in FHA appraisals and new appraisals as part of the proposed foreclosure prevention program at FHA also supported by the Appraisal Institute.
“We strongly support the Casey/Martinez FHA appraisal amendment and the appraisal requirements contained in the Senate bill,” said Bill Garber, Director of Government and External Relations of the Appraisal Institute. “With FHA playing an increasing important role in the housing market, and given the importance of appraisals to foreclosure prevention efforts outlined in the bill, it is critical that FHA appraisals be accurate and reliable and performed by competent appraisers. This amendment and the underlying provisions of the bill are a sound and reasonable step forward for FHA appraisals, and complement the work performed by Rep. Paul Kanjorski on this issue in the House.”
An amendment proposed by Sen. Elizabeth Dole (R-NC) to supersede the recent appraisal agreement between the Attorney General of New York, Fannie Mae, Freddie Mac, the Office of Federal Housing Enterprise Oversight failed to be included in the bill passed by the Committee and was not offered as an amendment because of heavy opposition from several Committee members, including the Committee Chairman, Sen. Christopher Dodd (D-CT) and Sen. Charles Schumer (D-NY).
The bill, entitled the Federal Housing Finance Regulatory Reform Act, is the companion bill to legislation that passed the House last month (H.R. 3221). For more information on the Senate bill, visit the Senate Banking Committee at http://banking.senate.gov/public/index.cfm?FuseAction=Articles.Detail&Article_id=60e2e758-a69d-4ce5-b1a1-efe4e9ef58d2&Month=5&Year=2008
As many of you may or may not know, there has been quite an upheaval in the real estate appraisal profession, that is due to change the face of the appraisal and lending world as of January, 2009 if the new HVCC regulations pass as written. (Home valuation Code of Conduct.) This started when Attorney General Cuomo was investigating Fannie Mae and a large Appraisal Management company for fraudulent activity as it relates to the foreclosure mess we are in today.Ever since appraisers have been doing business, lenders have applied pressure to "hit a number" to make the deal work, Realtors and homeowners have also applied their fair share of pressure, but it was the lenders that basically threatened to take business from the appraiser if they did not make the deal work.Well many appraisers folded and did some unscrupulous things, but for many, it meant you either make the lenders happy or lose your livelihood. The ironic thing is that the sole reason appraisers exist is to PROTECT the lenders from making risky loans on real estate, but since brokers were not the ones LENDING the money, they were not too concerned with risks to the lender!Unfortunately the general public feels that the sole responsibility for this HUGE foreclosure mess we are in is due to APPRAISER fraud...Well they did not do this without help...the lenders had a big hand in this but whenever a home went into default, who did they penalize and punish....the lender....Oh no, it was and always is the appraiser. We are always the fall guy and it gets tiresome for many of us as we are really trying to do our jobs to the best of our ability.The whole point of this BLOG is this: If the HVCC passes as it is written, most mortgage brokers will be taken out of the appraisal ordering process and the only ones who will be doing the ordering will be the BANKS and Appraisal Management Companies. This affects Homeowners, Realtors and Brokers by removing ANY influence you feel you have with any mortgage brokers with whom you do business. There will be no relationship between the person ordering the appraisal report and the appraiser, total independence. Get ready for most of your deals going south due to the appraisal not meeting the value.This is not all bad, as the appraisal should be what prevents the loan from taking place IF the home is not worth the price and if you are a Realtor who represents buyers, you want your buyers protected too right? But having total independence from the appraiser does not necessarily mean an accurate and fair appraisal.What if the BANK who is randomly selecting appraisers uses one who has no clue about a particular type of property. In our case we specialize in Lakefront property. With the new HVCC rules, Realtors, Homeowners and Brokers will not be able to intervene and say....We must have an experienced appraiser in a given field, be it Lakefront, Oceanfront, Riverfront, Golf Course, Condos, etc etc. You get my point!Lenders and Realtors and even Homeowners will be subject to federal offenses if they pressure the appraiser in any way to "hit a number".Personally most appraisers are happy that for ONCE, we can just do the jobs that we were trained heavily for and that is to provide an unbiased opinion of value for the subject property, however many of us spent years developing our business relationships with the mortgage brokers, Realtors and homeowners only to have that taken away.There were thousands of appraisers that wrote to the Attorney General and to Fannie Mae & Freddie Mac (including yours truly) to voice their concerns about the way the new guidelines were written, so we shall see.One big issue we have is that lenders can use AVM's (automated valuation models), BPO's or other avenues to obtain a value for the subject property, without having to disclose this to the potential homeowner, in other words, they can play the system until they get the number they want without consequence. Lenders will not be held accountable by using these forms of unregulated and unrestricted forms of valuation but are held accountable when an appraiser is providing the valuation product.The end result is they will avoid appraisers and use these less than reliable forms of valuation and we are right back where we started, faulty loans on properties that have not been properly appraised.So if you are asked to join in on the protest against the HVCC as currently proposed, please consider joining us in this fight, because WE ALL LOSE, Realtors, Lenders and Appraisers and of course the HOMEOWNER!As I mentioned above, I am all for punishment of lenders who apply pressure on appraisers, we need to be left alone to do our jobs! But I am not for throwing the Baby out with the Bath water, which is what is happening and it will affect your business!Just thought you should know what is going on in the appraisal world. Have a great day!Mary Thompson
Q: We are looking to consolidate our debt. Our mortgage lender turned us down for a home equity line of credit (HELOC), so what are our other options? We have been in our home for only 18 months so there is not much equity.
And, we have tried approval for other loans from the same lender but were denied. Should we try other lenders?
A: No. You're done for the moment. Every time you apply for credit and are denied, you hurt your credit history and your credit score goes down. The lower your credit score, the less likely you will be approved by another lender.
If you've been turned down for a loan, you're entitled to see a copy of your credit history and credit score to find out why they've turned you down. In your case, however, it sounds as though you're trying to get blood from a stone.
If you don't have any equity in your property, you cannot refinance in order to consolidate debt. Mortgage lenders are getting picky about how much cash you can borrow against your equity. These days, they're not doing 100 percent loans, or anywhere close to that. If you're in a declining market, where home prices are falling, they might not refinance you if you have less than 5 percent or even 10 percent equity in your home.
Since you're out of refinancing options for the time being, if you want to get your debt under control, you'll have to do it the old-fashioned way: Stop spending and find a way to bring in more income each month, even if it means taking a second or third job.
Q: I have two primary homes but would like to buy another. A friend wants to live in one of my primary homes and pay me rent.
My question is: How do I structure this in order to deduct taxes/interest on all three homes? I was thinking about setting up a sole-proprietorship on my current home that's to be leased out to my friend. Also, if the homeowner association does not allow tenants, can I get in trouble by law if I rent the property out?
A: No one can have two "primary" homes. The word "primary" means first. The home in which you live most of the time is considered your primary residence. The other house you own is your second home, or perhaps a vacation home.
The IRS currently permits you to deduct the interest you pay on up to $1 million in mortgages and $100,000 in home-equity loans on your primary and secondary residence. There are additional restrictions on these limits and these amounts are for married couples. Likewise, real estate taxes paid on a primary and secondary residence are generally deductible.
So, now you want to buy a third "primary" home. There is no provision in the IRS code for deducting the interest and taxes on a third "primary" residence. In fact, it sounds like you are about to start being an investor in real estate. If your friend starts to pay you rent, you can claim that property as an investment property. You'll be able to write off the expenses of owning the property (mortgage interest, insurance, taxes, maintenance, etc., along with other investment benefits) against the income you receive from your tenant.
The problem you may run into is with your homeowner association. If the HOA does not allow rentals, and you rent out your home, you run the risk of being fined by the HOA, or worse. They could sue you for violating HOA rules. You don't want to go there.
What I suggest you do is sit down with a knowledgeable real estate attorney who can discuss these issues with you in detail and provide some sort of workable structure for what you're trying to do. For more details on tax deductions, please go to IRS.gov and read Publication 936, Home Mortgage Interest Deduction, and Tax Topic 505, Interest Expense. You may also find Publication 530, Tax Information for First-Time Homeowners, of interest as well.
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