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Foreclosure Attorney in Miami Reviews Collateral Underwriter Program

Zombie foreclosure in Miami
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In today’s real estate economy all lenders and underwriters are looking for ways to avoid risky investments. Which is a conservative state of mind constructed from the foreclosure crisis we’re still recovering from. With this in mind, Fannie Mae is rolling out a new program in the hope of eliminating appraisal errors that lead to more risky investments, but will this program really help?

Beginning Jan. 26, Fannie Mae plans to allow mortgage lenders access to a new proprietary home valuation database. It will allow them to assess the accuracy of the appraisal report prior to lending for a new mortgage. In theory, it’s a good plan, however, the execution has many appraisers worried that this will cause unjust delays and additional costs and will negatively impact the real estate market.

The real estate market nationwide, and particularly in South Florida, is quite fragile, adding another hurdle to the real estate sales process is likely going to further delay the recovery of the market.

The Fannie Mae software will use surrounding homes with similar specs to appraise the property in question, which is the process appraisers use, but it will base the revised appraisal on 20 surrounding homes not used by the appraiser in their report. This will cause appraisers to be inundated with questions or claims to explain why they chose the specific properties and not the others in the surrounding area. Oftentimes, appraisers know the area well enough to understand the difference in neighborhoods that the software will not easily pick up.

This alone will cause delays while the bank is sorting out their data, and it will burden the buyer and seller with paying the appraiser for the extra time they will have to spend on each sale. In addition to delays, the new program could even stop sales from closing.

According to the Fannie Mae spokesperson, this program is meant to “flag mistakes.” As a foreclosure attorney in Miami, I want to see us as a nation, take steps to prevent another collapse, but being an extremist in either direction is never the solution to a problem.

 

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