(Jimmy Kinley, a local home lender, saw mortgage appraiser abuses start this summer. Some would charge much more just to do a job on time. Sometimes up to $2000. His company didn’t stand for it. – Dennis Martin)
Well, it has been a fun few years in the Denver Real Estate Market. The market has now been pretty intense for about 3 years. But, this summer hit an all new level of “special”. What happen you might ask? The normal summer purchase rush that we have been seeing was magnified with a rarity that we didn’t see coming. And, usually doesn’t happen. Interest rates dropped again to historic lows and real estate appraisers took advantage.
Summer Home Sales Sizzled
Typically interest rates spike up in the summer months and we don’t really see a ton of refinances. This year, the rates hit record lows right in the middle of the summer rush of buyers purchasing homes. This pretty much overloaded an already maxed out appraisal pipeline with refinance appraisal orders and the wheels came off the bus. Appraisals at Cherry Creek Mortgage Company went from taking a week and a half to taking 3 weeks almost overnight. Many national lenders in the Denver market and lenders that focus on refinances were quoting 4-6 weeks for an appraisal. We will call this Phase 1.
Mortgage Loan Appraisers Got Greedy
Phase 2. The appraisers work load increased dramatically. Then, some got tired and greedy. Now I say this part with a grain of salt because I know there are many awesome hard working appraisers out there. I am talking directly to the appraisers that took advantage of a tough situation for their own financial gain. That is called price gouging. And, you would think those mortgage appraiser abuses should be illegal.
We started seeing appraisers ask for more time and sometimes for twice as much money if we wanted to keep our contract deadlines. I even paid some of these ridiculous fees just to meet contract deadlines and paid the extra cost myself. Because, I don’t believe the borrowers should pay it. The funny part is that the market is slowing back down for the season (after labor day in an election year is usually slow).
Appraiser Fees Can Still Be High
We are still seeing appraisers asking for more time or more money. But, it depends on what the lender will tolerate. I guess they think that if it worked in the Summer why not try it in the Fall. And, it is working. Desperate buyers all over town are paying too much to get an appraisal done in time for loan approval and closing.
My team and Cherry Creek Mortgage are not going to stand for that. Appraisers are no longer busy because the market has slowed down a bit. And, now they just want the more money. In these cases, we are now just canceling those appraisal orders and sending then out to a new pool of appraisers that are happy to have the business at normal rates. I figure after price-gouging appraisers lose a bunch of money, they will get over their greed. Because, they are not over it yet. If I charged more money to consumers just because I was busy and tired, my regulatory agency, Consumer Finance Protection Bureau, would string me up by the rafters. They would just make an example of me to other lenders. Our fees are reviewed by that the CFBD. But, appraisers’ fees are not.
Why Do You Need A Local Mortgage Lender?
Here’s a little back ground. I work for Cherry Creek Mortgage Company that is based out of Colorado. We do more purchase money loans that anyone in the state. Yes, that includes the big banks and by a long shot. Back to the story. At the peak of the mess this summer I started to hear from my agents that most lenders were at 4-6 weeks to closings when we were still getting them done in 3 weeks. I started wondering why.
Then I dug in and found out some interesting things. We were charging $500 for an appraisal and the appraiser was getting all $500. That’s about right. So, I talked to two of my buddies that work at different big box national lenders. They were charging $600 to $700 and the appraiser was only getting between $400 and $450. What? Years ago when the government put all these AMC (Appraisal Management Companies) in the middle of appraisal management, some loan companies saw an opportunity to profit by of creating their own AMC. That’s just another greedy technique.
Cherry Creek Mortgage Responded
My Company didn’t feel the need to run-up costs to the consumers any more than they already are. Bottom line, we were simply paying the appraisers more while charging the client less. That way, the appraiser got more money. They liked working with a local company that isn’t calling from some other state and has no clue how we do things here in Colorado. So, I will reiterate my tag line at the top, “get a local lender!!”
Local Lenders Help Buyers in Competitive Offers
This is one of many reasons that you need a local lender, and it is a really big one when Buyers and Agents are competing against multiple offers consistently. Quicker closings and local lender letters WILL make a difference in your offer being picked over other offers. As for me, I will continue to try to change the world and make sure my clients don’t get stuck paying an extra tab because someone saw an opportunity to steal a buck from them. Look out for those greedy appraisers. They are still in the Denver real estate market but not at my loan company.
Want more information? Contact me on the form below or call me at Cherry Creek Mortgage.
Senior Mortgage Originator, NMLS 287498, Direct/Cell: (720)261-1410