Opening Remarks
The first month of 2009 has been fairly busy for many appraisers with lower interest rates stimulating increased mortgage loan activity nationwide. FHA appraisers report steady business with December 2008 figures up sharply; published reports indicate that FHA loan applications from December 1st to 15th reached a high of 136,685, up almost 78% from the previous period. 76,401 mortgages were insured by the FHA during this period.
The Hope for Homeowners program has provided no assistance to either homeowners of appraisers during this period as it still has not gotten off the ground. The importance of the FHA role during the current "credit crunch" is recognized by many and it is anticipated that many measures will be implemented in coming months to facilitate FHA lending. For example, Representative Al Green of Texas has introduced H.R. 600 "FHA Seller-Financed Reform Act of 2009" two weeks ago which would again allow seller-financed downpayment assistance for FHA mortgages. Also, there has been increasing discussion of raising FHA loan limits again. Without delving into the merits of any particular legislation, it is important to note that attention is being paid to the importance of the FHA with the elimination of many other conventional loan programs.
During the month of January, several changes were enacted by the FHA including a requirement that purchase loans require a minimum down payment of 3.5%. A second appraisal will now be required by the FHA for all cash out refinances where the loan to value exceeds 85%.
Most projections for 2009 are saying that FHA volume will continue to increase substantially. Many FHA appraisals are being channeled through management companies, to the chagrin of many appraisers. While the proposed HVCC does not mandate the use of AMC's and also does not apply to the FHA (being an agreement with the FHFA as conservator of Fannie Mae and Freddie Mac) the trend has been for increased use of AMC's.
Planning Ahead
Whether or not you are currently satisfied with your level of appraisal business, the events of the past year should serve as a warning to all appraisers to always be planning ahead and take nothing for granted.
Diversifying one's practice into non-lender appraisal business is important in keeping a steady flow of appraisal business year round. Divorce and estate appraisals have no off-seasons or down years and other areas promise to increase substantially. Possible changes in bankruptcy laws in conjunction with the economic/housing crisis could lead to a significant increase in bankruptcy appraisals. A report in Newsday on 2/2 stated that the National Bankruptcy Research Center in Burlingame, California reported a 33% increase in personal bankruptcy filings nationally in 2009 and if legislation passes giving bankruptcy courts the power to modify mortgages, the number of bankruptcies will increase tremendously.
Demand for tax grievance appraisals is also growing substantially and appraisers would be wise to research the requirements for such appraisals within the jurisdictions in their market area as local laws pertaining to such appraisals vary widely. The declining values nationwide along with the attention placed on over-assessed property in many areas make this a potentially huge revenue stream for many appraisers. Even better, these "pay-at-the-door" customers can help out substantially with cash flow.
Getting into bed with AMC's: a big question for many appraisers. The answer to that question is similar to many others; try it out on a limited scale, possibly limiting the geographical area to the immediate area that you know best and in which you can perform appraisals most efficiently. Don't be afraid to fire an AMC if you try them out and don't like them, as there are plenty of AMC's out there and new ones forming all the time. Don't let them intimidate you! Also, don't let them owe you too much money for too long.
Marketing, Marketing, Marketing
Marketing one's appraisal practice should always be on an appraiser's "to do" list, whether times are good or business has slowed. When times are good, consider investing some of that new revenue into new media. Where are the procurers of appraisal services looking when they need an appraiser? And how exactly are they making that search? These are important decisions for appraisers to make when allocating their advertising dollars.
Diversify your advertising: try things like direct mail, print, and on-line advertising. This can help to create steady income streams along with the possibility that the next phone call may end up being your biggest account for the next five years!
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 www.fhaappraisernewsletter.com
Regards,
Bill Collins
bill@fhaappraisers.com
www.fhaappraisers.com
www.fharoster.com
(877) 4FHA-VALU
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