Membership Outreach & Annual Business Meeting September 14-15, 2011

1. Membership Outreach & Annual Business Meeting September 14-15, 2011

2. RUSS HARAUS Vice President & Operations Manager of the Single Family Division with Appraisal Research Counselors

3. “The Role of the Realtor In the Appraisal Process”CAR Member Outreach 2011 Presented By;Russ Haraus, V. P. Operations, Single Family DivisionAppraisal Research Counselors

4. Session Topics: • First let’s look at the Big Picture • Market Complexity • Consequences – Tighter Lending Policy • National Perspective • Dodd Frank Reality • Lender & Realtor Realistic Solutions • Useful Websites

5. Market Complexity • We work in an increasingly complex real estate market with high foreclosure rates and frequent short sales. • We have also experienced one of the longest recessions in history. • In addition, we are working under a much “tighter lending policy” with increased regulations and liability. • Because of these factors the “Appraisal” has never been more important.

6. What are the Consequences?

7. Tighter Lending Policy & The Appraisal • The Industry Is Tightening; Greater Down-payment Requirements, High Credit Scores, Tighter Mortgage Insurance Requirements, Additional Regulations, Rules and Compliance issues, plus Increased Lender Quality Control. • Additional Lender requests injected into the appraisal process, MI Company and Investor Initiated Underwriter Requirements. Which vary per Lender and are over and above what is required by Fannie Mae or Freddie Mac. • The Dodd Frank Act is now law with the Consumer Financial Protection Bureau operating.

8. Tighter Lending Policy & The Appraisal • Consumer Financial Protection Bureau is up and operating. www.cfpb.org

9. The Broader Perspective…www.calculatedriskblog.com From a national perspective; these trends and policy changes have dramatically affected the US economy and consumer confidence in many areas. Unemployment and foreclosure rates, consumer confidence and homeownership, to name a few.

10. The Broader Perspective… • Let’s step back and look at the broader perspective…how has this recession compared to all others since WW11?

11. Where are we? Let’s Compare Recessions…www.calculatedriskblog.com

12. Now let’s talk about the Dodd Frank Act. Last year Congress passed the Dodd Frank Act. There has been allot of misinformation surrounding Dodd Frank, the reality is …

13. Reality about the “Dodd Frank Act” • As realtors, you can talk to the appraiser! In fact, you must meet the appraiser on every deal. Who better to provide accurate support for the listing and sales price of the property? • The lender does not have to use a National Appraisal Management Company. Your lender can use local appraisers from their approved list.

14. The Dodd Frank Act Offers Lenders Realistic Solutions • Lenders can establish an Independent Appraisal ordering and monitoring department separate from loan production. Free from reprimand or influence of the lending areas on the bank. • Lenders can identify a core list of qualified local professionals to do appraisals in your market area. • Lenders must establish an independent and qualified review procedures for all appraisals of new and existing portfolio loans.

15. Lenders; Realistic Solutions • The lender should have an established “Reconsideration Of Value” procedure in place. It will allow you to understand the problem and address it. How? Email your concerns to the appraiser through appropriate channels. • This email is then shared with the parties involved whether it is the loan processor, underwriter, MI underwriter, investor and appraiser, for a review and response.

16. Realtors; Minimize the surprise of a Low Appraisal. • One way is “Getting Back to the Basics.” Do you, as the realtor, have a procedure in place? • Start the conversation early with your clients and explain the “lending process is subject to increased scrutiny, regulation and tighter lending requirements” • Explain the “complex nature of the market for appraisers” to your clients. Frequency of foreclosure and short sales have affected the market and value of their home.

17. For Realtors; Minimize the chance of a Low Appraisal. • Plan for potential problems in the contract when taking a listing. • Review the current market with your sellers and buyers or borrowers, often. • Show them a current CMA which may or may not support the contract price. • Use your Automated and Online valuation tools to get a glimpse of the current real estate market. MRED is an excellent source. • Use the lender’s “reconsideration of value” procedure to review the appraisal along with appropriate comparable sales.

18. Useful Websites: • Fannie Mae - www.eFannieMae.com • https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/appraisalguidance.pdf • Freddie Mac www.freddiemac.com • Illinois Mortgage Bankers Association www.IMBA.org

19. Useful Websites: • The Appraisal Foundation • www.appraisalfoundation.org. • The Appraisal Institute • www.appraisalinstitute.org. • Appraisal Research Counselors www.AppraisalResearch.com.

20. Presented By; Russ Haraus, V. P. Operations, Single Family Division, Appraisal Research Counselors RHaraus@AppraisalResearch.com www.Linkedin.com