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Home Valuation Code of Conduct: Now What?

Frequently Asked Questions

The way appraisals are ordered and transmitted to the client has changed!

The way appraisers must determine value has changed!

Listed below are the most frequently asked questions regarding appraisal-ordering procedures and what now must be included on an appraisal report. Just a note—HVCC applies to conventional loans only. FHA, VA and USDA loans are exempt from this rule.

How does an appraisal get ordered?

You must order an appraisal thru an Appraisal Management Company who in turn, assigns the appraisal order to ANOTHER appraiser—or the mortgage company’s independent person who has nothing to do with the origination of the loan.

What is an Appraisal Management Company?

It’s a third party, independent company formed for the specific purpose of being a middleman in the appraisal ordering process. With this additional layer of management, the appraisal costs more.

Can I talk to the appraiser?

Lenders must provide a copy of the purchase agreement but are prohibited from speaking with the appraiser about value. However, there is nothing in the HVCC rules prohibiting real estate agents to discuss the transaction with the appraiser.

What’s the buzz about the “value trending” appraisals must now include on the appraisal report?

In addition to traditional sales comps, appraisers must now provide a “trending analysis”. It’s a new form where they must include the following information: Sales Price compared to Listing Price (shown as a percentage); months of housing supply, days on the market, sales activity compared to the overall sales, seller concessions and number of sales of foreclosed properties. Yes, it could affect the appraisal value.

What if the value comes in lower than the sales price?

The real estate agent needs to provide additional information or comps to support the value to the lender.

The lender in turn, sends to the appraisal management company, who gives it to the appraiser. Expect delays.

Can an appraisal be assigned to another lender?

Yes, but the lender who ordered the appraisal must agree to the transfer.

Can the borrower/client pay for the appraisal at the door?

No, it must be paid by credit card by the lender ordering the appraisal.

What’s the 3-day appraisal notice to the borrower all about?

The borrower has 3 days to “review” the appraisal and the loan cannot be closed until the 3-day waiting period has elapsed. However, the borrower can sign a waiver if they wish to close earlier than the 3-day waiting period.

The appraisal report can be sent to them by email or if no email address, a printed copy by the appraisal management company.

If you have more questions about these need appraisal methods, email me: cnassief@tmes.com

Or

Call: 703-255-5810

We are dedicated to keeping you informed!

What You Need to Know About the $8,000 First Time Home Buyer Tax Credit

Who Qualifies for the Tax Credit?

• Never owned a home
• Have not owned a home within the last 3 years--determined by HUD 1 date when previous home was sold
• Purchased a home to be a primary residence between January 1 and November 30, 2009
• Owned a rental property or vacation home which was not used as a primary residence over the last 3 years
• If married and one person owned a home within the last 3 years, the other did not, they do not qualify
• If unmarried and one person owned a home within last 3 years and other did not, they can “designate” the tax credit to the one who is considered the FTHB.
• If parents cosign on a mortgage (and own a home) and the child is a FTBH, they are eligible for the tax credit.
• Non-US Citizens may qualify if they meet resident-alien status (IRS Pub 519)
• Revenue or Housing Bond financing are eligible for tax credits.

Types of Properties

• Primary Residence – Single family, 2-4 units (must occupy one unit) town homes, condos, manufactured homes, mobile homes and houseboats.
• New Construction – “Purchase Date” is the date the owner occupies the home (between Jan 1 and Nov. 30, 2009) Note: They could have owned land and are in the process of building.

Income Limits

• $75,000 Single Person (Partial Credit up to $95,000)
• $150,000 Married Couple (Partial Credit up to $170,000)
• Based on Adjusted Gross Income (AGI) line on IRS Form 1040, 1040A or 1040EZ

Amount of Credit

• 10% of Sales price
• Up to Maximum of $8000
• Partial Tax Credit if income exceeds $75,000 or $150,000

Repayment Tax Credit

• If sold within 3 years, the entire tax credit needs to be repaid! After 3 years, no repayment is due.

Buyers should check with a tax advisor on how it will affect their individual tax returns.

MCC - Mortgage Credit Certificates, A Blast From The Past

With all of the creative financing options of the past several years’ one option that has been forgotten is the good old-fashioned Mortgage Credit Certificate (MCC). In the early to mid 90’s the MCC was a popular tool for many first time homebuyers. Here are answers to some common questions about the MCC program.

What is an MCC?
An MCC is a dollar for dollar tax credit on a borrower’s federal tax return. This credit is used to offset a tax liability.

Who is eligible?

MCC’s are generally limited to First Time Homebuyers. Some State/Local Housing Financing agencies allow buyers in targeted area’s to be non-first time buyers. Generally MCC’s are limited to low to moderate-income borrowers. Income limits vary according to the geographic location of the property.

Who issues the MCC Credits?

MCC’s are generally issued by State Housing Finance Agencies and in some cases Local Housing Finance Agencies can also issue an MCC Credit Certificate.

How much is the credit and how is it calculated?

An MCC credit is equal to a minimum of 10% of the interest paid by a borrower during the year and can be as high as 50% of the interest paid for some borrowers.

How will it help my clients?

If a borrower pays $5,000 a year in interest and has a 20% MCC credit, that credit amounts to an extra $1,000 for the borrower over the year. That equals an extra $83.33 per month in the borrowers pocket and can mean as much as an extra $5k to $10k in buying power for a client. In addition for borrowers with higher debt ratios the MCC credit may help them qualify.

Can my clients use this with the First Time Homebuyer Tax Credit?

Yes, MCC’s can be used with the First Time Homebuyer Tax Credit.

Can my clients use this to increase the amount of their tax refund?

NO! This is a tax credit that means in order to get the full benefit of the credit your client must have a tax liability at the end of the year. This liability is “washed” away by the tax credit. Most borrowers create a tax liability by changing their withholdings out of their paycheck. That means more money in every check with no tax liability at the end of the year. This makes that dream house much more affordable!

How do my clients take advantage of the MCC program?
We will help your clients determine their eligibility. If eligible we will help them complete all necessary paperwork.

Give me a call to learn all of the details and to find out how to use an MCC to sell more homes!

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