Craig Haskins' Title Lab

PENNSYLVANIA - AMERICA'S FUEL WASTELAND

craig@knightbarry.com (Craig Haskins) — Thu, 26 Jun 2008 00:00:00 GMT

It’s time for a fun blog. Today, June 16, 2008 I flew to Philly. I arrived at 8:30am and headed to downtown. A sketchy cabbie tried to force me to pay cash. I said no. That jerk wanted to keep it under the table. I say heck no. Pay taxes like the rest of us. Anyway, why am I here in Philly? I have to be fingerprinted in order for the Pennsylvania Department of Insurance to run a background check with the FBI. You see, Knight-Barry is in the process of obtaining insurance licenses throughout the country. And the wonderful State of Pennsylvania requires that applicants be fingerprinted within its state lines. So we shelled out good money for me to catch a flight to Philly and a cab ride downtown to spend 90 seconds with a fingerprint guy. (YES, I passed all background checks for you creeps who are wondering) Any way, I think it’s insane that this State (actually they call themselves a Commonwealth) made me waste all of that jet fuel to be fingerprinted. It’s their weak attempt to keep competition out of Pennsylvania – which is just what this title industry needs (sarcasm). So by 11am, I’m ready to head back to Milwaukee. But my return flight is at 8:35pm so I have 9 hours to waste in Philly. This is where the story gets better. I made the most of my trip. Here goes.
	12noon – before heading to Pat’s Cheese Steak joint, a fellow fingerprint victim tells me to head to Jim’s Steaks. Ok, fine. After waiting for 30minutes in line, it was awful.
	1pm – walked two blocks to The Famous 4^th Street Deli where I woofed down two choc chips cookies. Finally, something in Philly that doesn’t stink.
	2pm – took a tour of the Nation’s first Capitol. Very cool. The guard cracked me up. Looks like he’s guarding Fort Knox. 3pm – me and Lady Liberty Bell. They have the bell in this really neat building with a lot of neat artifacts.
	4pm – what’s a trip to Philly without running up the stairs like Rocky Balboa. Here’s me and Rocky. Yo Adrian rings out a zillion times as I stand in the rain with the Rock.
	5pm – got lost in a really neat neighborhood. Beautiful street. Cool homes.
6pm - back to South Street for another cheese steak. This time I’m at Lickity Split which is across the street from Yucky Jim’s Steak (not the official name). Sammy #2 is great. It’s hot. Not too many onions and peppers. Gotta run one block to get another cookie. Then find a cab and back to the airport.
Oh yeah. The story ends when an email arrives informing me that we’re now licensed in Pennsylvania – or as I call it – the most fuel wasting state (err commonwealth) in the good ole US of A.

WISCONSIN LENDERS PREPARE FOR STRICT APPRAISAL GUIDELINES.

craig@knightbarry.com (Craig Haskins) — Thu, 5 Jun 2008 00:00:00 GMT

Ok, let’s get one thing straight. I’m a title insurance professional attempting to blog about the appraisal process of lenders. At the bottom of this article, there is an area for you to submit comments, anonymous or not. So if I get a fact wrong, please make a comment. Do realize, you are not reading the Wall Street Journal - here goes.

A plan by Fannie, Freddie, the Office of Federal Housing Enterprise Oversight and New York Attorney General Andrew Cuomo to establish new appraisal standards called the Home Valuation Code of Conduct (“HVCC”), is causing a ruckus in the lending community. I’m told that many local Wisconsin lenders have already adopted in-house standards to thwart inflated home appraisals and that HVCC is not needed.

Here’s the issue from what I understand. When a homeowner needs a mortgage, the lender reviews an appraisal to determine the value of the home. The appraisal is completed by a licensed appraiser who is hired by the lender or its broker. The value established by the appraiser is a key component to making the loan. If the appraisal comes in a few thousand dollars off of the anticipated value, the lender may deny the loan. The HVCC supposedly reduces the lender’s ability to influence the appraiser’s decision. Apparently, the promise of repeat business to an appraiser could influence the appraiser’s willingness to adjust the appraisal the few thousand dollars needed to make the loan. And this influence is being blamed for assisting with the current housing/lending/credit crises.

So, Cuomo’s plan is to take the hiring of the appraiser out of the lender’s control. How far out of the lenders control? HVCC prevents lender employees and brokers who are involved in the origination of the loan from choosing the appraiser, which is the standard practice now. The new plan would require lenders to outsource the appraisal process to some other entity. Fannie Mae and Freddie Mac would spend $24 million over five years to create and staff an "independent valuation protection institute" to monitor appraisal standards and provide a complaint hotline for appraisers and consumers. Sounds great, doesn’t it?

I spoke to four local Wisconsin lenders, all which will remain nameless since this is a blog and I’m not a real journalist, and asked them how they currently handle appraisals. Their policies are below and seem very reasonable. Perhaps Mr. Cuomo should take a look at how the good ole state of Wisconsin handles real estate lending.

Lender #1: This lender removed the loan officer from the process years ago to comply with guidance it received from the Office of Thrift Supervision. The bank’s processors order the appraisal on a rotating basis from an approved list. The loan officers have no communication with the appraisers.

Lender #2: The loan officers still order appraisals based on trust established with this lender’s management team. Many of this lender’s loan officers are “certified lenders” and can render an underwriting decision and are instructed to not influence the appraiser. This lender’s relationship with its mortgage insurance company remains strong and the insurer has not asked this lender to change its current process.

Lender #3: A year ago this lender changed its procedure to comply with some new appraisal regulations. It went from allowing the loan officer to select the appraiser to implementing an appraiser roster that is rotated by the operations manager who assigns the appraiser even before the file is processed. This lender admits that it receives complaints from both the loan officer and the borrowers who claim that they feel the appraisers are sometimes too conservative. The bank’s management stands by its process yet is sometimes willing to give the borrower the option to have a 2^nd appraisal completed by a different appraiser on the approved list. To further stiffen its standards, this bank is rolling out a new process that does not supply an estimated value to the appraiser, which this lender hopes will give the appraiser a completely unbiased opinion of the value

Lender #4: this lender is ordering on a random, rotating basis. The lender’s management team has no complaints from loan officers except for one – not all appraisers work at the same speed. Obviously the loan officers (and the borrower) would benefit from ordering an appraisal from the quickest appraiser since the closing would occur sooner. This lender supplies a copy of the offer to purchase to the appraisers. On refinance loans the lender tells the appraiser what the borrower thinks the home is worth. The only communication between the loan officer and the appraiser happens when the appraisal comes up short.

And then there’s the case of a recent closing this author attended in which two appraisal fees were shown on the HUD. Naturally, I asked the lender if there was an oversight or if there were really two appraisals performed. I pondered if this lender was taking an ultra-conservative approach by hiring two appraisers and basing the value on the average. I was completely wrong. When I spoke to the loan officer, he stated that the first appraisal came in about $19,000 short of the desired number so he ordered the second appraisal which hit the magic number.

Back to the HVCC. John Dugan, the US Comptroller of the Currency says the proposed rules would violate federal law and could have a negative impact on the mortgage industry by raising lenders' costs of making mortgages and increase the cost of home loans for borrowers without strengthening consumer protections.

What’s your theory? Ready to make a comment? Go ahead. Press the button.

DAY THREE AT ICSC: BACK TO REALITY.

craig@knightbarry.com (Craig Haskins) — Wed, 21 May 2008 00:00:00 GMT

Dorothy from the Wizard of Oz and Craig from the Vegas strip: "There's no place like home."

The difference is that I wasn't wearing ruby slippers while walking the strip in Vegas after eating dinner at Alize on the 58th floor of the Palms casino with a group of friends, customers and potential new customers. It's 12:30 in the morning and it's still 97-degrees. I check my cell phone for Milwaukee weather and it's 49-degrees. Wow.  My plane back to reality departs in 9 hours.

Anyway, I attended the US Bank party at the Bellagio with a handful of other Wisconsinites including (and pictured here) Joe Tierney, Jessica Dunn, Brad Dallet, Brad Page and Jeff Green. It was a great ending to my first but not last trip to the ICSC conference.

Next year, expect a few more of us to attend this conference and continue our goal in 2008-2009 to cover America.   By the way, remember that Knight-Barry covers all of America for title insurance and real estate closings.