vice president, research
national association of realtors
by darrick meneken
Despite losing about 270,000 members since 2006, the National Association of Realtors remains the nation’s largest trade organization with more than a million constituents — including about half of all U.S. real estate agents, who earn the Realtor designation. We asked Paul
Bishop, the group’s vice president of research, about the relationship between Realtors and
mortgage brokers and what the association expects in coming months.
ByGriff Straw president solidifi u.s.
FANNIE GETS THE PICTURE(S)
What’s the first thing mortgage brokers should know about working with Realtors?
Realtors depend on being able to provide the best information and the best resources to their
clients so they can sustain longer-term relationships based on referrals. They want to develop
relationships with mortgage brokers, as well.
I have always said that when it comes to determining
real estate’s true value, nothing replaces a seasoned
professional appraiser’s on-site impressions. Fannie
There is a great deal of uncertainty about current under writing requirements. Mortgage brokers can assist Realtors in developing expertise [there] so Realtors can be better resources
for their customers.
This past June ( sctsm.in/FM0630), Fannie updated
its appraisal requirements for loan applications
taken after Sept. 1. This adds to an appraiser’s
responsibilities in an effort to improve report quality.
Is it in Realtors’ interest to make sure regulators don’t do away with the whole-
Yeah. I don’t think there’s any benefit to having mortgage brokers legislated out of the business.
But it all goes back to what benefits consumers — having a transparent system in which consumers
feel as if they’re getting all of the information they need to make a decision about buying a home.
With millions of distressed properties on the market,
Fannie Mae wants to make certain it is not stuck with
damaged goods. Starting this month, the agency
is requiring all appraisal reports to include interior
photos of the property’s kitchen, main living area and
Home sales dipped dramatically earlier this year following the expiration of
homebuyer tax credits. What will the effects of slow summer sales look like?
A softer summer market will mean the recovery in sales and prices may take longer than we
would like. To the extent that the number of homes for sale increases faster than sales, we will
see some downward pressure on prices that will prevent prices from rising too quickly. But a
stable market isn’t all bad. Stable prices mean that the wealth many people have in their homes
will be preserved rather than eaten away if we were to enter another period of price declines.
In the past, appraisers simply would note damage.
But a picture paints a thousand words — and some of
these homes have lengthy tales to tell.
How likely do you consider a double dip in the housing market?
We’re not anticipating a double dip as far as looking ahead to the rest of 2010 and 2011.
That’s contingent on the economy moving forward, even if at a relatively mediocre pace.
We think the tailwinds of higher affordability and favorable mortgage rates are probably going
to keep us away from the double dip going forward.
Fannie also is taking measures to keep lenders from
using less-experienced appraisers, be it for cost
reasons or because they might be deemed more
pliable. As the June announcement puts it, “appraisers
who lack the requisite knowledge, experience, and
access to appropriate data must not be utilized.” The
announcement also includes an update “to reflect
Fannie Mae’s requirements whenever an appraiser
chooses to use either a foreclosure sale or a short sale
as a comparable property.”
When might home prices bounce back?
Home prices are going to be flat or maybe up and down over the next several quarters.
Reasons for near-term volatility include the pace of the economic recovery, increases in homes
for sale and shadow inventory.
Most economists expect the economic recovery to progress slowly in the next few quarters.
As the housing market stabilizes, more sellers will put their homes on the market if they feel
there are more buyers in the market.
Is there a historical comparison to today’s market?
There really isn’t. When you look at past business cycles, one of the things you often see is that
real estate and homebuilding lead the economy out of recession. One of the things that’s probably different in this cycle is that real estate and construction are at best going to track what’s
going on with the rest of the economy rather than lead it out of recession.
Darrick Meneken is an associate editor at Scotsman Guide. Reach him at (800) 297-6061 or firstname.lastname@example.org.
Professionals making a difference
This past July, luxury real estate developer and investor
Frank McKinney (right) completed his fifth Badwater Ul-tramarathon, a 135-mile invitational footrace from California’s Death Valley to the base of Mount Whitney. McKinney
sought race sponsorships of $1 or more per mile for the Caring House Project Foundation, an organization he started
to build self-sufficient housing projects for the desperately
poor and homeless, particularly in Haiti.
McKinney says he raised about $25,000 through this
To learn how, check out the rest of this story at sctsm.in/4248.
— Darrick Meneken
To share your company’s story, e-mail email@example.com.
Fannie likely is correct in believing it should help
improve the valuation process and ensure it has
the most-relevant information about the properties
securing the loans it buys. It is prudent risk
management to be more involved in all aspects of the
A few years ago, if Fannie had a quality-control-audit hit
on some facet of a loan file, it was a simple matter to
insist on the loan’s repurchase.
That is still available, of course. But buybacks have
put many companies out of business, and there is not
much help for investors when buybacks occur.
We can expect more changes like these in coming
months. If providing interior photos is now standard
operating procedure for your lenders’ appraisers, we
may well see video files next as a “virtual tour” of the
property for investors. Internal- and external-appraiser-panel-management standards — with metrics and
analysis backing them up — also may make sense,
given the additional interest Fannie is taking in the
Griff Straw is president of Solidifi U.S., a leading technology-enabled appraisal-management company and provider of col-lateral-risk-management and data-analytic services. He writes a
monthly column on valuation issues for Scotsman Guide. Straw
is a 30-year mortgage banker, a former Freddie Mac technology
executive and a Mortgage Bankers Association Master Faculty
member. Reach him at firstname.lastname@example.org or (703) 496-7579.
To read previous Valuation Insight columns by
Griff Straw, visit sctsm.in/straw.