FHA Appraisers.com Newsletter Issue #3

Opening Remarks

With Election Day less than two weeks away, it is difficult to ascertain not only the upcoming regulatory changes that will guide the appraisal and mortgage industries, but who will be making these decisions. While it is clear that the Bush administration, in its final days, will be putting forth many environmental edicts that will upset organizations such as the Sierra Club, what directives might also be issued that will impact our business in the future?

Today's Wall Street Journal reports that the Bush administration is weighing a $40 billion proposal to help forestall foreclosures. They reported that the government may offer financial incentives to turn troubled loans into more affordable mortgages with the government and lenders sharing in any future losses from these loans. Plans for the Treasury Department to use part of its $700 billion financial rescue fund to directly buy and renegotiate mortgages are also being considered.

Also under consideration are measures which would utilize Fannie Mae and Freddie Mac to bring down mortgage rates as well as insuring inexpensive, reworked loans through the FHA. It is noted that language in the "bailout bill" obligates the Treasury Department to use its authority to help homeowners in danger of foreclosure.

Main Street vs. Wall Street?

While larger financial institutions may have the inside track with Washington decision-makers, there appears to be an emerging consensus that establishing some stability in the housing market is mandatory if any other measures are to succeed in strengthening the economy. Moody's Economy.com reports that 7.3 million homeowners are expected to default on their mortgages between 2008 and 2010, further depressing home values.

Initial attempts to have the mortgage industry voluntarily rework these loans have not resulted in substantial progress according to many analysts. An example is the new $300 billion FHA Hope for Homeowners program, through which loans can be reworked to allow borrowers who are "underwater" (loans greater than the current value of their homes) to obtain new loans if the lender agrees to reduce the principal. While little data is available on this program, which is only several weeks old, report from the field suggest that some "wrinkles" need to be ironed out for this program to be fully implemented.

Poor Numbers and The Political Factor

The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan dropped 17% last week to 408.1, the lowest level since December 2000, from 489.3 the prior week according to published reports in Newsday yesterday. This appears to be a function of both declining property values, making prospective purchasers wary, as well as a continuation of the overall credit crunch.

In trying to address issues like this, the political parties have both concocted various plans to steer us from disaster. It would seem, however, that whatever happens on Election Day, a multi-faceted approach with unprecedented governmental intervention will be the order of the day.

It would seem prudent and necessary for either party to insist regulators "drill down" to the core real estate assets underlying many of these so-called "toxic" securities and recognition of this fact could also create a need for a large number of appraisals.

What can Appraisers do to Prepare?

--As I've repeated to exhaustion, if you are a licensed appraiser only and not yet certified, it is essential that you take the steps needed to achieve certified status. It is understood that HUD officials will be meeting with Capitol Hill legislators either tomorrow or Monday to discuss this requirement for certified appraisers, along with the timetable for its implementation. It is likely that notice of their decision will be forthcoming shortly thereafter.
--Support the appraisal organizations in which you are involved in their efforts to promote greater professionalism.
--Support a mandatory licensing law in your state if it does not yet have one. Amongst other things, a mandatory licensing law provides that only licensed real estate appraisers can perform real estate appraisals, i.e., this would restrict real estate salespersons from performing appraisals except in the limited instance where they are perfoming a comparative market analysis in the context of a listing presentation . Bill Garber, Director of Government and External Relations of the Appraisal Institute, reports that New York, for example, is likely to seriously entertain such a law early next year, and with the governor's anticipated support, this should finally become law.

Giving Back

While it is my aim for this newsletter to be purely informative and not hit you with a sales pitch for our directory, FHAAppraisers.com, I wanted to mention an offer we are running this week. In this climate, many appraisers are hurting financially, but most of us are lucky enough to say we still have our health. For those who are less fortunate, and in support of Breast Cancer Awareness Month, we will be donating up to $25 dollars per listing ($25 for each highlighted listing, and $15 for each regular listing) to Susan G. Komen for the Cure. If you are interested in joining us and helping a good cause, please give us a call to find out how.

Regards,
Bill Collins
bill@fhaappraisers.com
www.fhaappraisers.com
www.fharoster.com
(877) 4FHA-VALU

Special News Bulletin - Possible delay in implementation of FHA certification requirements

It has come to our attention that the FHA is strongly considering delaying the requirement that appraisers be certified for an additional six months. While they previously anticipated extending the certification requirement in a number of states, they are now looking at the possibility of extending implementation in all fifty states partly due to their concern that a shorter time frame presents an undue financial hardship for many appraisers. While this is counter to the congressional legislation mandating the use of certified appraisers only, it appears as though there is a good possibility that this extension may take place.

While this is the case, usage of certified appraisers only by the FHA does seem a certainty and appraisers interested in remaining on the FHA roster should make the necessary arrangements to satisfy their educational requirements as soon as possible. This possible delay is good news for many appraisers if it comes to pass but the situation appears to be fluid and licensed appraisers are well advised to complete the requirements to be certified as soon as possible in the eventuality that congressional mandates override FHA concerns and implementation does take place within a shorter time frame.

Issue 2

Opening Remarks

I can't recall a period where appraisers faced such uncertainty. With the domestic and worldwide economies in turmoil, our own industry awaits news on whether the old model is gone forever, and if so, what will the new model look like. Reasonable projections made by respected appraisal industry analysts are now relegated to the trash each week as they are superseded by changing events. As I write this Monday, U.S. financial markets are rebounding strongly from the worst week ever for domestic equity markets, as are worldwide markets. The U.K. government is taking control of two large banks with indications that U.S. policymakers may be changing some of their focus from acquisition of troubled assets to direct investment in U.S. banks. Announcements are anticipated this week from the Treasury Department as to the terms under which banks could qualify for capital infusions.

Ongoing Change in the Appraisal Industry

Many appraisers are excited about their own business prospects with all of the bailout talk, hoping for it to be a second coming of the Resolution Trust Corporation, sometimes referred to as "The Appraiser's Full Employment Bill." TARP (the Troubled Asset Relief Program), EESA (the Emergency Economic Stabilization Act), and H4H or HOPE (the Hope for Homeowners Program) have led to H4A (Hope for Appraisers). The Appraisal Institute Newsletter on October 8th, amongst many excellent descriptions of the impact of these bills, stated that "Participants in the new HOPE for Homeowners Program...will be required to obtain a new FHA appraisal on their property." The HOPE for Homeowners Program began quietly on October 1st and is scheduled to run until September 30th, 2011, with most analysts figuring that it will be several months before it is fully operational. So, FHA Appraisers do have some reason for excitement as we head towards the end of the year

Update on New FHA Certification Requirements

As of October 1st, the FHA stopped accepting applications from licensed appraisers for placement on the FHA roster. Licensed appraisers who were on the FHA roster prior to that date may continue performing FHA appraisals until further notice. While FHA officials indicate that such notice might come for many by November 1st, this date is very likely to be moved up as they attempt to implement this congressionally mandated action fairly, without ending up with a shortage of appraisers in some states. It appears likely that approximately 1/2 of the 50 states will be given an additional six months to a year to make this change. These are likely to be the states with the lowest percentage of certified appraisers relative to licensed, although other factors (such as anticipated loan volume, or concentration of certified appraisers within one part of the state) may come into play. When the change occurs in your state, licensed appraisers will be purged from the FHA roster with reinstatement to (supposedly) occur immediately upon achieving certification status.

Update on Other Regulatory Changes

Nothing substantive has come to pass regarding the HVCC since our last newsletter, but it is known that implementation will not take place before February or March of 2009. It also appears that it may be substantially revised from what was previously rumored.

Appraiser "To Do" List

-If you are not certified, Why are you reading this and not in class?? Many appraisal education schools are offering expanded class selections. As always, contact the Appraisal Institute or McKissock to see their classes in your area.

-When business is slow, work on improving your marketing, including analyzing ways to improve your exposure and gather more of the upcoming FHA appraisal work.

-Work on expanding your private practice (tax grievances, bankruptcy appraisals, estate work, matrimonial appraisals)

Closing Remarks

We really hope you find our newsletter to be informative! If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue. If you want to look back at past issues you can see our archive at http://community.icontact.com/p/fhaappraisers

Regards,

Bill Collins

bill@fhaappraisers.com

www.fhaappraisers.com

(877) 4FHA-VALU