Appraisals, Mortgage Lenders, and Your Success


     
     When I started writing this post, I thought it provided 
food-for-thought solely for Agents and Brokers. 

But as I got further into writing it, it became clear 
that Appraisals, and the importance of Lenders reading 
and understanding them, touches a much broader audience.  
It directly touches every professional involved within a real estate 
transaction ... and should influence the lending referrals they make.


     Does the Mortgage Lender you presently refer to read the Appraisals they receive?  Do they understand them?

     If not, you might want to conduct a search for another Mortgage Lender for your referrals ...

     These days, Mortgage Lenders should read and thoroughly understand the contents of the Appraisals they receive on their transactions.  Those Appraisals contain valuable info and insight into the property being considered for financing.  

     Plus:  Those Appraisals are viewed by their Underwriters as a portion of the Underwriting Process.  A successful Approval relies on them.  Any issues that can be found and addressed early in the process ... and prior to entering Underwriting, will help speed that Approval and the entire process along.

     Admittedly:  My 20+ years/background as a Licensed Real Estate Appraiser makes me a fairly rare breed of Mortgage Lender.  First, I actually like reading Appraisals.  

     Add ... that I read every page.  All 25 to 30+ pages.  It helps me weed-out potential issues before they happen.  I avoid time delays and surprises later in the Process.  I hate surprises ...

     I believe that knowledge gained, paired with my experience, serves my clients and referral partners well.  How?  Let me explain ...
     
     Consider the following:  Have you ever had one of your deals fall apart, or not close on time, for any of the following reasons?

     1.  Factual Data:  
  • The data was wrong/missing  
  • The names of the Buyer/Seller didn't match the Contract
  • The names didn't match the property's Legal Owner 
  • The Appraisal didn't note the Agreed Upon Seller Closing Costs Credit (written into the Contract)
  • The Sales Price was stated incorrectly
     2.   Flood Plain issues:
  • The Flood Plain was indicated as YES (and actually not)
     3.   Zoning  
  • Zoning was illegal or non-conforming
     4.  Property Type
  • Property Type was incorrectly categorized as a Townhouse/PUD, but was actually platted as a CONDO. Or vice versa. (This info is SO important! Click HERE for my blog addressing it
     5.  Condition Rating 
  • The Condition Rating assigned by the Appraiser is unacceptable collateral to Fannie Mae, Freddie Mac, FHA, VA, USDA, etc. 
     6.  Appraisal Subject To:   
  • Repairs, extraordinary assumptions, inspections, or other conditions that add time to the transaction, add costs, or are simply not feasible
     7.  Value Conclusion:
  • The Value Conclusion was not supported adequately to sustain an Underwriter's Review.  
  • Comparables were simply not comparable, too far away, not timely enough.  Or adjustments for varying features, square footage, lot sizes, condition ratings, will/do not stand up after Review

     These (and more) are all "behind the scene issues" that can crop-up on Appraisals during an Underwriting Review.  Issues that can slow-down a transaction's processing and Approval ... or derail it.

     Your Mortgage Lender should be capable of acting proactively regarding Appraisal issues.  They can't take Appraisals for granted.  They must look beyond reported value estimates, be aware, and educated.

     Collateral for a Mortgage Loan (and the Lender):  Collateral is a huge deal.  And, for now at least, the Appraisal provides us the best opportunity to understand that collateral.  

     An Appraisal Report, one written with relevant facts, statistics, theories, and reflections of the current market ... should reduce or eliminate risk for clients and for Lenders.  This is especially true when the property being financed is a unique or more challenging property.

     An Appraisal should read like a good book.  Telling a complete and compelling story.  It should help the reader clearly understand the Appraiser's approach, thought process, and conclusion. 

     So I'll ask again: 

     Does the Mortgage Lender you presently refer to read the Appraisals they receive?  Do they understand them?

     If your Mortgage Lender doesn't, that can be extremely detrimental to your client, their transaction's success, and your business ... 


     *  Are you in need of Mortgage answers, info, or service in the Chicagoland area?  Contact me today!  I'll put my 37 years of mortgage experience and expertise hard to work on your clients (and your) behalf.
     I can be easily found at:
Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  815.524.2281



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Gene Mundt, Mortgage Lender, a Lender with 37 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including:  The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL.  


Your Referrals are Greatly Appreciated!



  

      

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