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Conservative Appraisals Increasingly Mentioned in 2015; Did Something Change?
Friday, March 20, 2015
A few weeks ago there were a flurry of
comments on MBS Live from members
expressing concern about a sudden increase in appraisals reflecting market
values well below what had been expected.
In some cases the low appraisals had merely required the restructuring
of the loan, in others they killed the deal.
There were enough of these comments that we decided to see if there was
a trend or if we could identify any cause for this apparent phenomena.
We spoke to several of the loan
officers and sales managers who had reported receiving multiple low appraisals, but we could discern no particular
pattern. At first it appeared that it
was refinances that were being affected.
Matt Hodges, sales manager for Presidential Mortgage Group, said over 50
percent of his refinancing appraisals had come in low over the previous few
weeks but none of those for purchases.
This made a certain amount of sense, he said, given that appraisal
requests for refinancing cannot carry any guidance about value or the size of
the intended loan. Requests for purchase
appraisals, on the other hand, are accompanied by the sales contract making
appraisers at least aware of the approximate target.
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