Utah Rates, Programs, Purchases or Refinaning by Utah's Mortgage Guy

It seems that just when things are bad for value, they are going to get worse. Even though in Utah our values are doing pretty well compared to the rest of the nation it has been a real challenge getting a value that allows many people to take full advantage of current record low rates in Utah. And things will get worse with the new legislation that is going into effect in the next few months for the entire nation.

For those of you that are not aware the geniuses at Fannie Mae and Freddie Mac were sued by the state of New York. The VERY SHORT version of the case was that the 2 lending giants allowed for too much communication (good or bad) between Lenders and appraisers. The state of New York felt this led to inflated values and bad loans which hurt entire community’s home values because of foreclosures. Well it looks like New York controls the country because soon the entire country will have a new set of appraisal ordering rules to abide by.

On May 1 2009 Fannie Mae and Freddie Mac will no longer purchase closed mortgage from any lender that allows the Loan Officer or anyone involved with loan production to order an appraisal and/or talk to the appraiser about the appraisal at any time. Yep sounds ridiculous? Well it is. I will have to soon just hope I get a competent appraiser and hope he knows your area well enough to get you fair market value.

So what can you do? The first thing is to refinance now before the rules go into effect and you are spending big money for appraisal that you cannot use because appraisers will not longer be chosen by ability, experience, or competence... just by the fact they are on a list that they will randomly send them appraisals.

The few tests of this system I have heard about have resulted in one lender from Arizona having values 10% lower on average for the 10 appraisals he ordered through this new system? Why? Because if an appraiser has zero reason to use the top 5 out of 10 comps instead of the bottom 5 out of ten comps then he will use the worst 5 always. This will result in less scrutiny from an underwriter and less work due to fewer conditions from the lender. An appraiser now may just come up with "worst case" values instead of a fair opinion of value that he justifies in the appraisal based on size, condition, location, and many other factors.

This new rule alone could send values in Utah lower by 5 to 10%. Scary but it is here and it sounds like it is too late to change it.

As always call me for any questions and/or concerns regarding your homes value or your current home loan situation. We still do FHA refinance and purchases, VA refinance and purchases, Conventional refinance and purchases, and jumbo loan refinance and purchases. I lend only in Utah.