Revised Version of BPO Standards and Guidelines Released

October 4, 2010

The National Association of Broker Price Opinion Professionals (NABPOP) and eMortgage Logic released Version 4.0 of Broker Price Opinion Standards and Guidelines (BPOSG) effective September 16, 2010.

BPOSG is a compilation of standards and best practices for BPO practitioners – real estate agents and brokers. A Broker Price Opinion (BPO) is a report that is prepared by a real estate agent or broker that details the probable selling price of a house or property. The standards and guidelines contained in BPOSG are utilized in determining the probable selling price of residential real estate properties. BPOSG can be thought of as set of quality control measures that adhere to the fundamentals, techniques, procedures, and best practices for real estate price evaluations.

The standards portion dictates what a BPO practitioner must do such as ethics and conduct, disclosures, proper application of techniques, etc. Guidelines are best practices and/or procedures that are widely accepted, yet allow for flexibility in application. The guidelines contained in BPOSG allow for flexibility in order to meet a diversity of requirements that are needed throughout the valuation industry.

BPOSG has been well received within the industry since its first edition and the latest version serves to bring the guidelines up-to-date and make sure they are still relevant.

eMortgage Logic supports the education and training that NABPOP provides and encourages their partners to adhere to the BPOSG and become NABPOP certified.

President and CEO of the Scottsdale, Arizona-based NABPOP Ralph Sells said of the release, “The BPOSG has grown to be a collaborative effort by many industry professionals and has expanded in scope and recognition.”

Sells continued, “We feel the BPOSG is important and imperative to the success of our partners in the field as well as our employees reviewing BPOs. The BPOSG is quickly becoming the industry Gold Standard for real estate and mortgage professionals. I’m pleased with its wide use and acceptance and we look forward to new changes and ideas from the community since the BPO Standards and Guidelines are a dynamic document meant to grow and evolve.”

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BREAKING NEWS: FHA Suspends 90-Day Anti-Flipping Rule for 1 Year

January 19, 2010

Effective February 1, 2010, the Federal Housing Administration (FHA) will place a one-year moratorium on its 90-day anti-flipping rule under waiver of  requirements of 24 CFR 203.37a(b)(2). , unless otherwise extended or withdrawn by the Commissioner. This will allow buyers with FHA-backed loans to buy homes that have been held for less than 90 days.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties, ” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

The waiver is limited to those sales meeting the following conditions:

  1. All transactions must be arms-length, with no interest between the seller and the buyer or any other parties involved in the sales transaction.
  2. The seller holds title to the property.
  3. LLCs, corporations, or trusts that are serving as sellers were established and operated in accordance with state and Federal laws.
  4. No pattern of previous flipping exists for the property, as shown by multiple title transfers within the last 12 months.
  5. The property was marketed openly and fairly.
  6. Assignment of a contract for sale will trigger a red flag.

In cases where the sales price is 20% or more over and above the seller’s acquisition cost, the waiver will only apply if the lender:

  1. Justifies the increase in value by retaining supporting documentation and/or a second appraisal which verifies the seller has completed legitimate renovation, repair, and rehabilitation to substantiate  the increase in value, or in cases where no work is performed, the appraiser provides sufficient explanation of the increase in value.
  2. Orders a property inspection and provides the inspection report to the purchaser before closing. The lender may charge the borrower for this inspection. The use of FHA-approved inspectors is not required.
  3. At a minimum, the inspection must include: the property structure, including: the foundation, floor, ceiling, walls and roof. The exterior, including: the siding, doors, windows, decks, balconies, walkways, and driveways. All interiors and all insulation and ventilation systems, fireplaces, and fuel-burning appliances.
  4. The waiver is limited to forward mortgages and does not apply to Home Equity Conversion Mortgage (HECM) for Purchase program.

Findings

FHA finds that eliminating the 90-day resale restriction for buyers will permit buyers to use FHA-insured funding to purchase other bank-owned properties, or properties sold through private resale, which will allow homes to resell as quickly as possible.


Credit After a Short Sale vs. Foreclosure

December 7, 2009

 

One of the most commonly asked questions about a short sale is how it will impact credit and the ability to purchase a home in the future. Whether you are a buyer, seller or investor, it’s imperative to educate yourself on this all important aspect of credit to become fully informed before making a final decision or in order to assist sellers in determining the right course of action for their financial future.

Here to help sort through the confusion is a quick primer on credit after a short sale vs. foreclosure. Remember, every situation is distinctive so these estimates represent the average experience of most individuals.

Note: Depending on the situation, circumstances may vary.

Average Time to Rebuild Credit to Purchase a Home

  • After a foreclosure: 5 – 7 years
  • After a foreclosure with extenuating circumstances such as, but not limited to: disability, death of a spouse, etc: 3 – 7 years
  • After a Deed in Lieu (DIL) of foreclosure: 4 – 7 years
  • After a Short Sale: 0 – 2 years

Other Alternatives

The above averages represent typical buying patterns for those using regular lenders to obtain a conventional loan or government backed loans; private investors are still viable options that enable many people to purchase another home immediately after any type of financial fiasco, including foreclosure. However, mortgage rates tend to be less favorable and requirements more stringent than ever. Just a few years ago it was quite easy to obtain a sub-prime mortgage for a relatively low rate above the preferred status, but today, much of that has changed. While it is still possible to obtain the equivalent of a sub-prime mortgage, be prepared to come up with a much larger down payment and higher overall rates.

Short Sales Win Hands Down

Sellers wishing to minimize damage to their financial future clearly come out ahead when using a short sale but it’s still possible to further decrease the downside by avoiding a 60-day late payment, working closely with the lender to achieve a quick price agreement, and setting aside as much funds as possible for a new loan. In fact, homeowners that maintain a solid payment history and work-out an agreeable short sale deal early may find it desirable to downsize to a new home by setting aside additional funds equal to 20% down. With Private Mortgage Insurance (PMI) and a reduced debt-to-income (DTI) ratio, sellers are finding it possible to take advantage of lowered property values to immediately purchase another home for a fraction of the cost (and debt burden). 

Conclusion: It’s a win-win for all involved but, only if you understand the benefits and work aggressively to seal the deal.

*This post has been adapted from Real Estate News & Commentary by Chris McLaughlin


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