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February 17, 2004
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Are you a PMI exterminator?
Double-digit annual property value appreciation in some markets plus an expected drop-off in mortgage activity (although, we're still waiting!) adds up to an excellent opportunity to market your expertise in eliminating private mortgage insurance premiums. Have you considered being a PMI exterminator?
More than 12 million homeowners pay either private mortgage insurance premiums every month or the equivalent as part of their FHA-backed mortgage. Mostly, they're people who paid less than 20 percent down when they bought their home. On average, they're paying 0.04 percent of the loan amount every month to protect the mortgagee in the event of default. If a mortgage is $100,000, that's $480 per year. But many, many homeowners are paying more than that — even more than $1,000 per year. After all, the median home price in America is right around $170,000.
For loans made after July 1999, lenders are required by federal law to automatically cancel PMI when the loan balance falls below 78 percent of the purchase price — not when the homeowner achieves 22 percent equity, which will happen much more quickly with property values going up as quickly as they do. Homeowners, though have the right to cancel PMI (for loans made after July 1999) once their equity reaches 20 percent, irrespective of the original purchase price.
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This is where you come in. The borrower's right to cancel PMI payments is tied to what their property is worth right now. In almost every case, before the lender will cancel, it will require a full appraisal (funny how they always need full appraisals to cancel PMI, when many lenders try to avoid them when doing the deal, huh?) by an approved appraiser. If you're on the fee panel of the biggest residential servicers — Washington Mutual, Wells Fargo, Countrywide, Chase, Bank of America, ABN Amro, CitiMortgage, GMAC, National City and Cendant Mortgage were the top ten in portfolio size at the end of 2003 — the chances are great that you qualify.
Even if a mortgage was obtained before July 1999, most lenders will cancel PMI at the homeowner's request once they have 20 percent equity.
So how do you market your services to homeowners as a PMI exterminator? There are lots of ways. Make sure it's on your website! Appraiser XSites users have the built-in capability to put a ready-made "about PMI" article with paragraphs of great consumer information on their site. Considering all the mortgages obtained in the last three and a half years and the surge in lower down payment loans during the same time, it's worthwhile to make PMI elimination part of your yellow pages ad and other marketing. Write a letter to the editor of your local paper! You're a property value expert, and you have information that's valuable to the paper's readership: if they're paying PMI, they can often get rid of it. Maybe the editor will even think it's a great idea for a feature article for the paper's real estate or business section, and will use you as a resource (quoting you and identifying your business name and credentials, of course!).
Best of all, once you've done a couple PMI exterminations, word of mouth will be a potent marketing tool. Have you ever known somebody to make a decision that saved them thousands of dollars and not brag about it? Make sure you leave business cards with the homeowner and ask them to refer their family and neighbors.
Housing facts, figures and trends
It's always fun to check out the National Association of Home Builders' (NAHB) Housing Facts, Figures & Trends publication. You can download the 50+-page backgrounder in PDF format here.
We've all heard over and over the last few years that housing has propped up our national economy — it certainly props up our economy, in the appraisal business! — but we seldom realize that that goes beyond the down payment and mortgage. The NAHB report reveals:
- In the first 12 months after buying a newly-built home, owners spend an average of $8,905 to furnish, decorate and improve the home.
- Buyers of existing homes spend $3,766 more than non-moving owners on things like remodeling rooms, plumbing repairs and heating/air conditioning.
- For every 1,000 single family homes built, 2,448 jobs in construction and construction-related activities are created and $79.4 million in wages and $42.5 million in taxes are paid.
Other nuggets include: The top metro market for single-family permits in the first nine months of 2003 was Atlanta, with 40,580 permits issued. Other metros in the top five include Phoenix-Mesa, Ariz.; Riverside-San Bernardino, Calif.; Houston, Texas; and Washington, D.C., in that order.
Interactive VA televised training broadcast for appraisers next month
Are you on the VA Appraiser Panel? Would you like to be? The VA has scheduled a televised, interactive training program from noon to 2:00 p.m. Eastern Time March 17. The free broadcasts may be viewed at most VA Regional Offices or any Regional Loan Center (RLC). Attendees can make reservations and get details by calling the contact person at the most convenient regional office or RLC. For those with a fast Internet connection and no firewall problems, these broadcasts are also available in “streaming video” format over the Internet, both at the time of broadcast and afterward. Details regarding this viewing option are available on Loan Guaranty’s website at http://www.homeloans.va.gov/broadcast.htm.
Topics to be covered include: Program participant feedback on appraiser performance; how to apply for panel membership; and VA expectations of fee appraisers. Handout materials for the broadcast will be available for download from the VA's website one week before the event. Appraisers planning to attend a broadcast should download these materials and bring them to the broadcast. The web address is http://www.homeloans.va.gov/train.htm.
If you want to apply for the VA fee panel in the meantime, Mercury-enabled appraisers can go to the My Clients section of their Mercury Network profile, click on the VA logo, and all the required forms for consideration for the VA fee panel are bundled and completed “checklist” fashion. Then, the stack is faxed to a Mercury toll-free fax number. On the Mercury server end, the fax is converted to an Adobe PDF document and sent to the appropriate VA office — determined based on your coverage area.
Your most ridiculous client request
Last week's challenge was to send along your most ridiculous client request ever. We figured we'd get some doozies, and we did!
A lot of them were a variation on the theme of Michele B. from Spring Grove, Pa.'s most ridiculous request: "The phone rang with a loan officer from a mortgage broker's office, who proceeded to tell me all about the property, and like most loan officers, wanted to know if the value was there before he ordered the appraisal. I pulled the property up on assessment, and discovered it had been purchased only one month previous to the request, with the loan officer looking for a $60,000 increase in value in one month. I explained all this to him, and told him I didn't think I would be able to support that much of an increase in value. At that point, he said, 'well, can you give me the name and phone number of an appraiser who can?'"
This one from Anonymous made us laugh: "Can I have two more log home comps?"
Finally, Nikole U. from parts unknown (remember to tell us where you're from!) had a head-shaker: "I once got a phoned in request for the sale history of the subject. I told them it was on the second page of the URAR and on the FIRREA page. She asked me to please write an addendum that says the sales history is on those two pages. I did. 'The sales history of the subject is on the second page of the URAR and on the FIRREA page.'"
Thanks for writing! This week's question appears to the right.
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Briefs
RHS authorizes use of additional forms
The Rural Housing Service (RHS) had until this month required a full URAR for its Single Family Housing Guaranteed Loan Program. RHS released an Administrative Notice (AN) February 10 that authorized lenders to instruct its appraisers to use 2055s where appropriate or Fannie Mae 1073/Freddie Mac 465 for condominium units. A separate AN encourages use of the new HUD VC forms, which debuted in WinTOTAL last July. As with FHA loans, though, a home inspection by an approved vendor can be substituted for the new VC forms.
Household assets up last three years, thanks to real estate
Wachovia Securities explored the argument that most investors have lost money since President Bush was inaugurated and found it wanting, thanks to home price appreciation. In January 2001, households cumulatively had 18 percent of their assets in equities and just fewer than 26 percent in real estate. In January 2004, equities — which did lose 11.1 percent of their value over three years — accounted for 14 percent, while real estate — which went up by 7.7 percent nationally — accounted for 31 percent. All in all, a $974.8 billion increase in households' real estate value in three years more than offset the drag caused by stocks, and marketable household assets are up $822.54 billion in three years, or 2.89 percent. See the report in PDF format here.
Freddie Mac revises forecast, calls for another record year for home sales
Freddie Mac said last week its models predict another record year of total home sales, on the order of 7.28 million units in 2004. Previously, while total origination was forecasted to increase, owing to still-climbing housing values, units sold were not. "We expect families will take advantage of extremely low mortgage rates and focus on their current living arrangements from both a consumption and investment perspective," Freddie economists said. By 2005, total sales will ease to 7.24 million units, it was predicted.
This week's challenge
Do you have collection problems? Some businesses have resorted to only accepting payment at the door, and report losing some business. Others wait and wait to be paid out of escrow and sometimes have to start a formal collections process. If you have had problems collecting fees, what have you done to help solve the problem?
Share your solutions with other a la mode customers. We'll print the best ideas next week, identifying you by first name and last initial only, and where you're from, so remember to tell us that.
Send your solutions to the editor: mattb@alamode.com. Also send any tips or feedback you might have.
Sales question? sales@alamode.com
or 1-800-ALAMODE Support question? support@alamode.com
or 1-800-ALAMODE
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