Real Estate Blog

In my continuing obsession with appraisal/lending issues given the bank shakeouts that will occur over the next 12-18 months, here’s an email conversation with IndyMac on an appraisal assignment occurred in late May with my appraisal firm Miller Samuel.

The report was ordered with a specific inspection date needed. Up until then, our turn time was consistently 7-10 days, usually inspecting the property within a day or 2 after the order depending on the contact info accuracy and customer cooperation. Granted, 7-10 days is not stellar, but we are very busy, ours clients know this in advance and our competitors (that I would consider competent) have the same turn times as well.

You can see one of our employees frustrations toward the end because we had gone through great effort to accommodate the bank to inspect the property on the day they needed it done and they did not indicate early on that there was any “rush” plus they basically told us we were not needed, after a warm and fuzzy relationship that preceded this conversation. Very odd.

I guess what annoyed me in seeing this email later on, was the comment about their 0 default rate and yet the lender collapsed 2 1/2 months later. I am sure this person was responding to their own branch’s experience but its weird they brought up such a reference in the dialog, inferring (to me, anyway) that it was a big problem looming at the bank).

Incidentally, 300 banks are projected to fail in the next 3 years.

May 28, 2008 email dialog

IndyMac Please provide status on this report - thanks

Miller Samuel [address omitted] will be inspected tomorrow, May 28th.

IndyMac And how soon thereafter can we expect the completed report? Thanks

Miller Samuel All appraisal turnaround time is currently 7-10 business days starting from the time of inspection.

IndyMac We are going to have to cancel this order- sorry but your turn around time is just too long.

Miller Samuel [name omitted] we have worked an entire schedule around this appt.
When do u need the hard copy and we will deliver it.

IndyMac We have appraisers that give us reports back within 2 days of the inspection. This is still not going to work. If you can get us the reports back in that time frame we will have a lot of business for you. I am sorry

Miller Samuel Yikes! That’s called bang it out, hit the number appraising. No that’s not something we participate in. That’s how subprime occurred and why the housing market continues to fall. Conditions for mortgage fraud remain in tact with many lenders because of a lack of concern for quality.
48 hr Speed = Bad appraisals and ultimately bad loans. We can do 5-7 business days. I really hope you guys don’t end up like countrywide and all the rest. But with 2 day turn time its inevitable.

IndyMac I understand your position and would never ask you to do something you are not comfortable doing. This branch does AAA business with typically low ltv’s, high credit, etc. Our default ratio is nearly 0 pct and we pride ourselves on efficiency and effectiveness. I think going forward we should help you gain access earlier in the transaction so you can adequately do your job. If there is something we can do on our end please let us know.

July 11, 2008

IndyMac collapses

July 17, 2008

FBI fraud inquiry after IndyMac collapse

IndyMac Collapse Fuels Fears About WaMu

See the rest here:
“Near Zero Default” A Recent IndyMac Conversation About Speed

How cool is this?

A chart based on the percent change in cpi-adjusted quarterly median sales price from the prior year quarter using the “surface” charting function in Excel. Really!

I don’t know what the chart actually shows, but if I get it printed and matted or made into a quilt…I have an alternative art career if this appraisal gig doesn’t work out (so far so good, thankfully).

Ok, I’ll be on vacation next week, dreaming of defaults, housing prices and inventory.

Yeah right.

See the original post:
[In Search Of Credit] Matrix Taking A Vacation

The upcoming Inman Real Estate Connect San Francisco conference is a must see event for real estate professionals, plus it is in San Francisco, one of my favorite places. Check out the deal for bloggers.

Inman News has been touting the wide swath of speakers as:

• The Best and the brightest;
• Real estate industry’s champions; and
• Industry heavyweights

Ok, ok. I get the hint. I need to lose a few pounds….

Inman Real Estate Connect is great because it attracts decision makers and innovators. I always learn something a lot and meet many great people.

Brad, Joel, Jessica and company know how to run an event.

On Friday in the main conference venue, I’ll be participating in the last panel discussion of the conference:

When Will the Housing Market Turn?

• Alex Perriello, CEO, Realogy
• Joel Singer, EVP, CAR
• Jonathan Miller, Co-Founder, Miller Samuel
• Patrick F. Stone, Chairman, The Stone Group

Should be a great time.

View post:
[Gettin’ Heavy] Real Estate Connect San Francisco 2008

Note: ignore the icky duplicate column to the far right - Matrix is being tweaked slowly as time permits!

In the recent edition of PMI’s Housing and Mortgage Market Review (which is now a better read since chief economist David Berson came over from FNMA), focus was on affordability this month. Mortgage lending has gotten back to basics since last summer. Thats a positive long term view and will hopefully promote better overall financial stability of the banking system. It will be interesting to see how long this new found religion lasts after lenders post substandard profit performance over the next several years.

Underwriting standards remain tight, but there is a general feeling that affordability is better now that mortgage rates are relatively stable and prices have fallen in many markets.

NAR publishes a housing affordability index which the PMI analyzes. Affordability has jumped substantially over the past 6 months. The index bases its index on three factors:

• Mortgage rates (modest gains)
• House prices (NAR existing home sale stats are skewed by mix)
• Family income (slower growth)

Prices are the real wild card here since the other two factors aren’t improving affordability. The PMI report spends a lot of time analyzing the OFHEO and S&P indexes which use the repeat sales methodology.

However, the problem with the NAR Affordability Index is not which price index is selected. The problem is that it does not consider availability of credit. Underwriting standards are the highest they have been in years. Its not an apples to apples index because the formula doesn’t consider this major variable (it wasn’t necessary to consider this 10 years ago because underwriting standards were relatively stable) to affordability. Availability of credit is now the key driver of affordability.

To say affordability is “way up”, while technically true, has no real world application. The word “affordability” in this application is simply the name of a metric, not a correct word to describe whether borrowers are more able to purchase a home.

If affordability is “way up”, why are home sales declining and foreclosures rising?

Logic says that if affordability is up significantly, we would have seen a surge of home purchases since the beginning of the year. That hasn’t happened. Why? Because many who would have qualified for a mortgage in 2005, doesn’t qualify today even if there was no change in their financial condition.

Reality. Can’t live with it, can’t live without it.

Looking At Housing Affordability In The Real World

Periodically, I like to round-up some of my favorite recent blog posts or articles that are housing market/credit/economy related. It’s journalism heaven: housing provides an endless supply of stuff to write about and this week was no exception.

Credit:
[Housing On Fire] Blogoshere Hose-Down, Heaven Can Wait Edition

Trulia launches yet another innovation today called Trulia Snapshot that further shows that they are the leaders in capturing and managing listing information for consumers. (disclosure: I am on their industry advisory panel)

Its one of a number of innovations they have released that deals specifically with the visual representation of data.

Trulia Snapshot is a tool that allows you to browse properties listed for sale on Trulia in a very different way. The photos are placed over a map of the local you are interested in and you can view by most to least expensive, oldest to newest, etc.

My favorite feature is being able to see where the specific listing sits within the housing stock available for sale.

Very cool.

See the rest here:
[Trulia Snapshot] Visualizing Listing Shots Are, Well, A Snap

The New York Times business section has some sort of chart mojo going on. They have been creating some interactive charts for a while now that are simply amazing.

In this weekend’s article (sorry, I’ve been out - see previous post), In Housing, the Strong Turn Weak Vikas Bijaj, with contribution by Christine Haughney, layout out the state of housing across the US using the CSI numbers. (I contributed the Manhattan stats) The numbers were striking. In markets that have been doing well are showing weakness.

Click here for the interactive charts for each of the 20 markets covered using actual or cpi-adjusted numbers matched against the aggregate. Please look at Las Vegas and Phoenix.

And some pretty telling charts. Take a look at inventory.

See the rest here:
[CSI Stats] Fun With Charts: Its All About Inventory

For many years my wife and I have read and enjoyed Randy Cohen’s “The Ethicist” column in the New York Times. For the life of me, I can’t believe some of the questions.

Even better, the New York Times now has The Ethicist as a podcast, with a new version released every Friday. I pack my iPhone with podcasts and this column is one of my regulars.

This week, I was self-consciously chuckling on the quiet commuter train ride in. It seems that someone was torn by whether or not to lie on their mortgage application.

So much for the differences between right and wrong. It is Memorial Day weekend and we want rays of sunshine!

If you listen to it from now until next Thursday, you can simply click “play” directly off the NYT Podcast page. Look for “The Ethicist for 05/23/2008“

or download the MP3

View original post here:
[The Ethicist] Money Drunk Sun = Lying On Mortgage Application?

Had to dust off my chart tools and re-visit Three Cents Worth, my erratic semi-regular but too infrequent posts on Curbed. This week I go tidal on listings and sales.

Click to view post.

Check out previous Three Cents Worth posts.

Read the original:
[Curbed] Three Cents Worth: Manhattan Ebb & Flow

Had to dust off my chart tools and re-visit Three Cents Worth, my erratic semi-regular but too infrequent posts on Curbed. This week I go tidal on listings and sales.

Click to view post.

Check out previous Three Cents Worth posts.

Originally posted here:
[Curbed] Three Cents Worth: Manhattan Ebb & Flow

Had to dust off my chart tools and re-visit Three Cents Worth, my erratic semi-regular but too infrequent posts on Curbed. This week I go tidal on listings and sales.

Click to view post.

Check out previous Three Cents Worth posts.

Go here to read the rest:
[Curbed] Three Cents Worth: Manhattan Ebb & Flow

Had to dust off my chart tools and re-visit Three Cents Worth, my erratic semi-regular but too infrequent posts on Curbed. This week I go tidal on listings and sales.

Click to view post.

Check out previous Three Cents Worth posts.

Continued here:
[Curbed] Three Cents Worth: Manhattan Ebb & Flow

Had to dust off my chart tools and re-visit Three Cents Worth, my erratic semi-regular but too infrequent posts on Curbed. This week I go tidal on listings and sales.

Click to view post.

Check out previous Three Cents Worth posts.

Go here to read the rest:
[Curbed] Three Cents Worth: Manhattan Ebb & Flow

Had to dust off my chart tools and re-visit Three Cents Worth, my erratic semi-regular but too infrequent posts on Curbed. This week I go tidal on listings and sales.

Click to view post.

Check out previous Three Cents Worth posts.

View original here:
[Curbed] Three Cents Worth: Manhattan Ebb & Flow

Had to dust off my chart tools and re-visit Three Cents Worth, my erratic semi-regular but too infrequent posts on Curbed. This week I go tidal on listings and sales.

Click to view post.

Check out previous Three Cents Worth posts.

More here:
[Curbed] Three Cents Worth: Manhattan Ebb & Flow