Small bank appraisal exemption and Brokering Reverse Mortgages in Massachusetts
Two for the price of one, well, none actually ...
Couple of quick issues ...
1.What's the advantage of being a "small" institution under the appraiser independence requirements?
Maybe you've heard that there is a partial exemption from the appraiser independence requirements for small institutions. Curious what the fuss is all about?
You'll find the regs here at 12 CFR 1026.42 and here's an FDIC resource that might be easier to understand.
So I actually think this exemption is actually pretty limited.
First, it only applies to an institution with less than $250 million in assets. A small institution is one that had $250 million or less in either of the last two calendar years.
Second, even if your institution qualifies, I'm not sure how much it helps.
A large institution has an unlawful conflict of interest if a person performing "valuation management functions" (e.g., reviewing appraisals or selecting appraisers for the approved list) also has an interest in the loan transaction (e.g., they are a loan officer)
But a small institution is allowed to do this without it being an unlawful conflict if it meets two other requirements: (1) the person performing valuation management functions is not compensated based on the value reached in the appraisal. (2) Any employee who orders or reviews appraisals is not involved in approving loans.
If you're reading this and thinking, "Big whoop! I don't need my loan officer reviewing appraisals of their own loans or want them managing the appraisal list." ... Well, I agree with you. I don't think this exemption is much of a big deal.
2.Brokering reverse mortgage loans in Massachusetts
Some institutions realize that reverse mortgage loans can be a good product for the right customer. But even so, it often doesn't make financial sense to have a reverse mortgage specialist on staff. (It's not really a product many lenders want to market aggressively). Not to mention the resources needed to get regulatory approval in Massachusetts.
Solution?
Seems that more institutions are brokering reverse mortgage loans to lenders willing to dedicate the resources to being in the reverse mortgage business.
Is this a good idea? Doesn't seem to be a bad one. One word of caution is that, even if you're just acting as a broker, in Massachusetts you must work only with a lender that has regulatory approval in Massachusetts. As unlikely as this sounds, it might happen more than you think that a lender doesn't realize that it's license has lapsed or that it was ever necessary to begin with.
Take 2 seconds and check if your lender-partner is approved to originate reverse mortgages in Massachusetts on the Division of Banks' website.
For more guidance on doing reverse mortgages, here is a helpful regulatory bulletin from the Division of Banks.
In Other News:
No wonder it's so hard to get someone to fix my porch!! According to a NAHB study, Massachusetts tops the list of average renovation spending per household
Do you live in a region where people are over- or under-estimating the value of the their homes (when the appraisal comes in)? Quicken Loan's research here.
Worried that management vision isn't getting out to the rest of the organization? How about trying to ask this question at the end of every big meeting: "What do we need to communicate to our people?"
How fast should you close loans? Clients always ask this during operational assessments. The answer varies wildly per institution, but here are at least some raw numbers to get you started:
National average right now is about 45-50 days app to close for conventional loans. In New England, a closing speed of 30 days is a difference-maker, something to build a marketing campaign around. Of course, in other markets you need to close a loan in 15 days to be competitive. Imagine that! What about HELOCs? You're doing great if you can close a HELOC in 7-10 days. If you're closing a HELOC in 45 days, something may be wrong. (Note that I'm not sure the CFPB is to blame for this - when you look back, the average was even higher in 2013).
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