At the National Association of Home Builders Green Building Conference in Raleigh NC last week there was a confirmation that “Sustainable” building is selling faster than “traditional” building! So that’s GREAT NEWS!

The BAD NEWS was that appraisals are not reflecting the “value” and some of the technical items used to make the homes “green” are too complicated for consumers to really understand!

Unfortunately, the prospect of sharp reductions in monthly utility bills has not gained much attention from the lending community, and mortgages recognizing those savings remain mostly an idea whose potential has been largely unrealized.

Another ongoing challenge is that the concept of green housing is not well understood by the general public, conference panelists said, and a significant share of prospective buyers are actually turned off by it. Green builders were advised to market the specific benefits of their homes rather than selling green, and to avoid providing too much technical information, which can quickly go over the heads of buyers and discourage sales.

It’s not clear when the Obama Administration will tackle how to create a “GREAT” Energy Efficient Mortgage… but clearly we don’t have one at this time!

“Green homes face a red light,” said Dave Porter, CAPS, CGA, CGP, CMP, MIRM, of PorterWorks. “Appraisers don’t understand costs and buyers can’t get the full financing they need.”

In a show of hands from the audience at Porter’s breakout session on the latest in appraising and lending on green building, only a few said that one of their customers had ever been offered an energy efficient mortgage (EEM) or energy improvement mortgage (EIM) or that an appraiser had solicited information on the energy features of one of their homes.

Citing Fannie Mae guidelines advising lenders not to assume that an appraiser is competent, Porter told builders, “You have every right to say I want a competent appraiser. You do not need to roll over on this. If they have not seen or appraised a green home, ask for an appraiser who has appraised one of these homes or has knowledge in energy efficiency.”

For more information from the NAHB – click here.

Personally – I think we are several years away from having a meaningful EEM program available… #justsayin’ – they have to be able to appraise (before Fannie and Freddie will create a real program), which means statistics will need to show that they ARE selling.  Right now, most MLS services don’t even have historical data or fields to indicate that a home is even Energy Star Efficient!  There are TOO MANY certifications!

“help to expedite loan closing when a borrower decides to transfer their application to another lender during the transaction process.  The changes also ensure that lenders are not obtaining second appraisals solely for the purpose of getting a higher value or eliminating required repairs.”

When a borrower (who is in process) moves their FHA loan from one lender to another, the original lender is required to move the FHA Case number to the new lender.  At that time, most lenders will require a NEW appraisal.  FHA wants to discourage this, and says you can only order a 2nd appraisal under limited circumstances.

These circumstances include:

• The DE Underwriter for the second lender found material defects with the original appraisal. 
• The original appraiser is on the second lender’s exclusionary list. 
•  The first lender failed to provide a copy of the appraisal in a timely
  manner, which causes potential harm to the borrower for events outside of the borrower’s control. These events include rate lock expiration, purchase contract deadlines and foreclosure proceedings.
• In all cases the lender must document the loan file regarding the reason for the second appraisal and both copies of the appraisal reports must be retained in the case binder.

In addition to THESE changes – FHA also announced that they will be changing procedures for ordering FHA appraisals, which move them firmly closer to the HVCC ruling that Fannie and Freddie adopted earlier this year. 

 FHA will prohibit appraisals ordered by mortgage brokers or borrowers, in addition to the current restriction of real estate agents’ involvement in the appraisal order process.  Does this mean that a Broker can not order an appraisal?  No.  It simply means that they can not SPEAK to the appraiser, and it will be ordered on a rotation basis, OR ASSIGNED by the LENDER.  This process has worked POORLY for the consumer (IMHO) and I’m sad that FHA took this position.  But – these are the rules, and we will work with them!

If you are looking for a FHA Mortgage in Cary, considering a purchase in Raleigh, or refinance in Johnston County, call Steve and Eleanor Thorne!  We know all of the mortgage program details, and we have the LOWEST Mortgage Rates in NC!!

USDA home loans are made in genearlly rural areas.  The new Freddie/Fannie appraisal is designed specifically to identify for the underwriter any recent changes (read DECLINING changes) identified in a particular subdivision or small locality… well, in a mostly rural area, you don’t always have consistantly priced homes, so if you are asking about a small local geographic area, it’s very possible that the property values will look as if they are declining.  That’s why it is important, now more than ever, to work with a HIGHLY skilled Appriaser who can competently and carefully give the FULL details regarding the area in the additional comments sections provided.

Here’s the news:
New Appraisal Requirements for Single Family Housing Guaranteed Loans
 
For new application packages submitted to the Agency on or after July 1, 2009, Rural Development will require the Fannie Mae/Freddie Mac form 1004MC “Market Conditions Addendum to the Appraisal Report” be included in the appraisal.  Beginning July 1, 2009, Lenders should order appraisals to include the Fannie Mae/Freddie Mac form 1004MC.  For loans already in process, the Agency will continue to accept appraisals without the Fannie Mae/Freddie Mac form 1004MC until July 31, 2009.  The form is not required if an application package has already been submitted to the Agency, or if an appraisal has already been conducted that did not include the form.  This applies to all guaranteed loan requests, including those manually underwritten or submitted through GUS.  An Administrative Notice on this topic is forthcoming.

If you are considering purchasing a home, and using the USDA home loan mortgage program, please contact us!  We specialize in these (and other) government loan programs!  Steve and Eleanor Thorne, First Financial Services, 919-649-5058.  There are MANY areas in Wake County that qualify for USDA financing, and ALL of Johnston County Qualifies for USDA mortgage loans!  Click here to see maps of specific areas qualifying for USDA mortgages!