Universal Lending recently lauded volunteers and seniors in the Universal Lending Foundation's Adopt-A-Home program. Left to right: Doug Collum, of Universal Lending Secondary Marketing and foundation volunteer; Mable Banks, an Adopt-A-Home senior; Dorothy Trimble, Adopt-A-Home senior; and Rick Dolfinger, a volunteer and husband of Doni Dolfinger, a reverse mortgage lender for Universal Lending. Photo credit: Patrick Hester, Universal Lending.

On Sept. 11, 2001, employees at Universal Lending Corp. were no different than people everywhere: They were glued to their TVs, as the horror of the terrorist attacks unfolded.

“Then, on Sept. 12, 2001, everyone was still watching TV,” recalled Peter Lansing, president of Universal Lending, one of the largest locally owned mortgage banking companies in Denver, and a sponsor of InsideRealEstateNews. “And on Sept. 13, they were still watching TV.”

It came to the point that Lansing began to become worried about productivity. Rather than offer employees financial incentives, he motivated them with an altruistic goal: Every loan they made, a percentage of the profit would be set aside with the idea of sending $100,000 on Jan. 2, 2002 to  the American Red Cross in New York to help deal with the aftermath of the terrorist attacks.

The employees went back to work, and it worked. They met their goal.

“If you remember, what happened is that the Red Cross said that Americans were so generous, that the money was coming in faster than they could put it to use,” Lansing said. News reports at the time said that the American Red Cross had raised more than $1 billion by early 2002, but had spent $154 million, and closed a special fund earmarked to deal with Sept. 11.

What to do?

“So we had $100 grand, sitting there, and had to decide what to do with it,” Lansing said. “And that is how the Universal Lending Foundation was born.”

It’s one thing to raise the money, another thing on how to spend it.

“Since we are in the real estate business, we wanted to do something involving housing,” Lansing said. “There are a lot of housing issues, such as the homeless issues.” But he was drawn to helping seniors.

“We were familiar with housing issues faced by seniors, because of our reverse mortgage program,” Lansing said. “A lot of seniors can’t maintain their houses. Deferred maintenance can create unsafe and dangerous places for them to live. It also can lower the value of their homes. We decided if we could help seniors maintain their homes, we might help keep them out of foreclosure, if they had to sell.”

The program is called Adopt-A-Home. Typically, they spend up to $5,000 on a home, mostly on the outside of the homes, he said. On occasions, however, they have done even bigger jobs.

Adopt-A-Home grows

Lansing didn’t want to say how much money they have raised, but it is substantial. Also, they have teamed up with other companies and individuals to help with Adopt-A-Home. On Nov. 19, Lansing lauded partners for their hard work. Partners included Universal Lending employees, Advantage Credit Inc., Heritage Title Co. and Richey May Co.

Mary Wells, the executive director of the program and a Universal Lending employee, said volunteers typically do not do very much inside of a home for liability issues. Volunteers spend one day a month on homes they have adopted on such things as:

• Cleaning yards
• Trash removal
• Gutter cleaning
• Replacing broken porch steps
• Replacing carpet on porches,
• Painting
• Landscaping yard to eliminate future maintenance
• Tree and bush trimming
• Installing railings on front porches
• Rebuilding broken fences and gates.

One of the seniors who has been helped through Adopt-A-Home was Mable Banks, a 67-year-old retired woman who lives in the Park Hill area.

She was recommended for the program by a fellow parishioner at the church she attends, the Pilgrim Right Baptist Church. She said having her home adopted has been a God-send.

“I had more weeds in my lawn than blue-grass,” Banks said. “They took out all of the grass and weeds and put down some kind of plastic sheeting to kill the weeds. Then they put chips down in one area, rocks in one area, and chips in another area. They made me a little flower-bed area, and took out these big old stones. I’m going to put in some big pots out there.”

The volunteers also removed an old shed in her backyard. “It was really dilapidated,” she said. “They also took down some limbs off a tree, and cleaned up a bunch of branches. They also hauled away a lot of junk and trash back there. Things like old chairs, old boxes, and an old barbecue pit. I had an old lawnmower back there that wasn’t working and they took that away.”

She’s lived in the home for the past 21 years, and it now looks great, she said. “I’m really happy with it,” Banks said. “It has a different look. I would think it has raised the value of my home. Nobody would buy a home the way it looked before, with all the weeds and junk in it.”

Banks said the Adopt-A-Home program is helping her entire neighborhood. She said she knows of about five others houses in her neighborhood that have been been spruced up by volunteers with Adopt-A-Home. She said it was so beneficial, that she wants to spread the word to others.

“I’m recommending several other seniors for the program,”

Contact John Rebchook at JRCHOOK@gmail.com

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• Just the facts, ma’am

Prominent real estate attorney was one of the experts speaking at a panel discussion at the Green Gables Golf Club on appraisal issues.

Facts, not feelings.

Facts provide the fuel that drives the appraised value of a home, a panel of experts told more than 100 real estate brokers attending a half-day conference today titled: “Who Moved My Value: Pricing a Property to Sell.”

Appraiser Matt George and Jocelyn Predovich, president of Limetree Lending at "Who Moved My Value: Pricing a Property to Sell."

The wide-ranging conference at the Green Gable Golf Club – sponsored by Limetree Lending Group and Land Title Guarantee – addressed a number of topics, including the Home Valuation Code of Conduct (better known as HVCC); what a broker’s relationship should be with an appraiser; and the impact of foreclosures and short sales on the appraisal process. Even marijuana “grow” homes came up during the wide-ranging panel discussion, which gave brokers three hours of continuing education credits. (The experts said the jury is still out on getting loans for homes used to grow pot.)

“I think we all have one thing in common – we are all working 10 times as hard to make 10 times less money,” said Jocelyn Predovich, president of Limetree.

Appraisers are the “eyes and ears” of lenders, and are crucial to determining whether to make a loan, said Gayle E. Campbell, the president of Universal Lending’s underwriting division. (Universal Lending and Land Title are sponsors of InsideRealEstateNews.)Increasingly, she noted, investors stuck with bad loans are looking to force lenders who initially underwrote them to either to take them back or pay them money. That means responsible lenders are spending more money upfront to make sure the loans they are approving are sound ones that can be sold on the secondary market and will not come back to haunt them, Campbell noted.

Appraisers are the messengers

“I know that appraisers have been maligned a lot in the past,” Campbell said, as if they are to blame for a housing market that hasn’t yet recovered. “But they are simply giving me facts – information that can be documented. She noted that one of the pet phrases of Peter Lansing, president of Universal Lending is, “If it is not document-able, it is not mortgage-able.”

At the heart of the matter is the HVCC, which traces its roots to March 2008, when Fannie Mae entered into an agreement with the Federal Housing Finance Agency (then the Office of Federal Housing Enterprise Oversight), and the New York Attorney General’s office to adopt appraisal policies relating to lenders. It went into effect a few months later, and was quickly adopted by the industry, even though it is not a law.

“It’s mainly a code of conduct, targeted at lenders,” said panelists Larry A. Hoy, principal of Paragon Appraisal Service.

Its intentions were good – allow appraisers to to make objective valuations, without fear they will lose business from banks and other lenders if they did not “hit” the numbers for a purchase or a refinance, Hoy said.

And lenders pressuring appraisers was widespread, said Boulder lawyers Oliver E. Frascona.

“New York Attorney General Andrew Cuomo found that more than 90 percent of the appraisers were feeling threatened,” Frascona said. “Given any margin of error, that is a huge number.

Realtor help wanted

But HVCC also is widely misunderstood and had unintended consequences, Hoy said.

“Many people believe that real estate agents can’t communicate with appraisers,” Hoy said. Not only can they talk with appraisers, but their help typically is welcomed. But real estate brokers should not be telling appraisers things such as “you’ll have no issue with this one,” or start any conversation with these two words: “I feel…” Brokers received a hand-out noting that “Feelings (are) only welcome when supported by facts.”

Mark R. Seccombe, the chief appraiser at Universal Lending, who acts as a liaison between brokers and borrowers and appraisers, said they recently had a situation where a ranch-style home did not appraise enough for a loan.

The real estate broker gave Seccombe two comparable homes that had been incorrectly entered into MLS as tri-levels instead of ranch homes.

“I gave that information to the appraiser, who thanked me,” Seccombe said. “I’m from Denver and have been an appraiser for 32 years. It’s all I know. I speak the appraiser lingo. I know that when an appraiser is looking at a ranch, he doesn’t want to compare it to a tri-level or a two-story home.”

Information that real estate brokers were encouraged to provide to appraisers included sketches, drawings, surveys, floor plans, old appraisals. Other things that are welcomed include features and upgrades, the approximate cost of remodels, other properties that support the value and is there a backup offer for the house, and whether the property had been under contract before, but had fallen through due to reasons that had nothing to do with the property.

“Socialized appraising”

But one unintended consequence of the HVCC is the proliferation of AMC’s, or Appraisal Management Companies,  which provide a pool of appraisers for lenders, said Matthew E. George, chief appraiser of Eagle Appraisals in Centennial. The idea was that banks could not hand-pick appraisers who will give them favorable appraisal, thus punishing appraisers who played by the rules.

“For a lender to tell me he needs $300,000, that is just wrong,” George said. “It’s good that they can no longer try to coerce me. But the pendulum has swung too far. That is ‘socialism appraising.’ ” He said it would be comparable to home buyers being told that they would be assigned a real estate broker or a lender from a pool of qualified brokers and lenders.

He said in some cases, pool appraisers from Colorado Springs have been assigned to appraise homes in Boulder. In the past, a bank could have chosen an appraiser familiar with the Boulder market.

And attorney Frascona said that a real estate broker can be very specific in a contract in spelling out who is required to provide services.

“There is nothing wrong writing into the contact that you require Land Title as the title company or Universal Lending for the mortgage, or any other company that you know will provide excellent service,” Frascona said. “A lot of brokers don’t think that is allowed. That is just crazy. I know longer build homes, but when I did, I required that prospective buyers had to choose from a list of three lenders I gave them.”

Cryer: It’s back to the future

Tom Cryer, who was an appraiser for years before joining the Kentwood Co. as a broker, said that the “new generation of appraisal management companies,” is the same thing that happened in the 1980s, when the Denver-area home market was in a world of pain from over-building and an energy market that crashed, costing the area thousands of high-paying jobs.

“The idea is that you had these go-between companies that stood between you and the transaction, when the world was going to hell in a hand basket,” Cryer said. “The AMCs were supposed to fix it. But you know, you get what you pay for it.” Cryer doesn’t believe that the AMCs will go away with new financial reform making  rounds in Washington, D.C. “They’re too ingrained in the system,” Cryer said. “And a lot of lenders like them. But it does create this cab-driver-with-a camera mentality.”

Appraiser Hoy said that one thing that the listing brokers and home sellers need to understand that sometimes the distressed market is the market, and that typically will mean lower prices.

“If you look at 20 comps, and all of them are foreclosures, then, that is the market,” he said. However, answering a question from Frascona, he said that appraisers won’t pay much attention to the price lenders pay at the public trustee auction, when the county foreclosure process ends. But when the bank sells the home in the open market, that is a comparable, he said.

One thing he doesn’t put any stock in, however, are services such as Zillow.com, which makes its own valuation of properties on properties nationwide. Zillow, however, in the past has noted it stands by its numbers, when used properly by real estate professionals and consumes.

“Zillow sucks,” Hoy said, to applause from the audience.

“Make sure you put that in your article,” said one broker attending the conference. “There is nothing I hate more than meeting somebody who wants to sell their home and has been pouring over Zillow information. It gives them a totally unrealistic idea of what their homes is worth.”

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To get a perspective on this, I turned to Peter Lansing, president of Universal Lending, and a sponsor of InsideRealEstateNews.com.

Universal Lending probably does more FHA-insured loans than any other lender in the Denver area. Even during the go-go days of  so-called liar loans, subprime loans, and alt-A loans – remember those? – Lansing stuck to his knitting and stayed away from toxic loan products, which is one reason I jumped at the chance when he offered to sponsor my blog.

While I was on the phone with Peter, he looked up his loan volume for July. He did not have June figures broken out.

He found that 79 percent of his loans last month were for buyers, not refinances, which I’m thinking will be the subject of a future blog.

And he found that 75.4 percent of his loans were FHA-insured, and 4.8 percent were VA loans. So 80.2 percent of his loans were government-backed. Year-to-date, 65.6 percent were FHA loans and 9.9 percent were VA loans.

A couple of years ago, of course, everyone was getting a conventional loan. They were easy to qualify for, and they were less expensive than FHA-insured loans.

Lansing noted that Brian Chappelle, principal of Potomac Partners in Washington, D.C. said that Alt-A loans constituted 10 percent of Fannie Mae’s portfolio, but more than 40 percent of its losses. And while the average FICO score of the Alt-A borrower was 722, the default rate was so high because lenders did not have to verify their income and other metrics to make sure they are good borrowing prospects.

Part of the reason that FHA-insured loans are so popular, of course, is that it is lower-priced homes that are selling.

“That sounds like good data,” said Lou Barnes, principal of Boulder West Financial Services, when I told him about the DataQuick report. Nationally, a couple of years ago, when conventional loans were so easy to get, FHA-insured loans accounted for only 10 percent of all loan. "That is what everybody tells me, not just in Colorado, but everywhere, the lower-priced ranges are doing well."

Barnes said a friend in Bakersfield, Calif., told him that foreclosures are priced so below-market that “it is triggering bidding frenzies.”

But Barnes said it isn’t so much that buyers are hankering for FHA-insured loans, is rather it is almost the only lending game in town.

“To put FHA in context, other loans have disappeared,” Barnes said.

And, as best as he can tell, Fannie Mae and Freddie Mac are using the most stringent qualifications for lenders than ever in their history.  They have the most stringent underwriting since he started in the business in 1978, and from what he has been able to ascertain from family members and others with a long history in the lending business, they have never been so tight with lending before.

I asked Lansing if he thought it was a good thing that people are turning toward FHA-insured loans.

“My answer to that is as long as you are using good credit analyis and lending with good lending practices, which means looking at four basic areas every time – down payments, good credit and good job history,  money left over for emergencies, and good cash flow, meaning what percentage of gross earnings you’re spending on housing -  whether is is an FHA loan or a conventional loan,  is not important.”

Contact John Rebchook at JRCHOOK@gmail.com

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And as I had written about when I was at the Rocky Mountain News, the Times reports that these would-be home foreclosure saviors often take upfront fees and do nothing to lower the monthly mortgage payment. Indeed, they are preying on people when they at their weakest and most desperate. When talking to distressed homeowners they’ll say things such as:  “Isn’t worth $1,000 to save your home?”

Of course, it is. But too often, the home ends up in foreclosure anyway, despite the implicit promise of the loan modifiers.

“My personal opinion is that most of this is a scam,” said Peter Lansing, president of Universal Lending (the co-sponsor of InsideRealEstateNews.com.) He said he can understand why homeowners are turning to them, because they are frustrated with dealing with red tape at lenders. The over-worked lenders are trying to triage the cases to determine who simply wants lower payments, i.e., everybody, and who actually needs help to keep from losing their homes, Lansing notes.

Lansing said the loan modifiers want to get paid upfront because they know they won’t make any money at the closing, if they are successful.

Asking for a a payment upfront, especially with no guarantee of lowering the rate or payment, is a red flag, Lansing notes.

“I don’t pay anybody  upfront for any service,” he said. “I won’t pay upfront to have my lawn mowed.”

He noted that Erin Toll, the head of the Colorado Division of Real Estate, “is violently opposed” to consumers paying upfront for loan modifications.

Colorado has launched investigations or sent cease and desist orders to about 20 companies doing loan modifications in Colorado, Zachary Urban, spokesman for the real estate division told me.

Urban said he has even received phone calls at home from apparently shady loan modification companies, even though he is current on his mortgage.

He said it is hard to tell if former subprime brokers in Colorado are now promising to unravel the loans they made.  But that is an unsavory practice, he said.

“It’s like they’re making sure they screw you one more time before you lose your house,” Urban said.

One thing Urban wants to make clear, however. He said that people who knowingly took high fees to make toxic loans that they knew borrowers weren’t qualified for, and are now offering people saddled with these loans phony help, are not representative of the mortgage industry.

“They’re a cancer on the industry,”  Urban said.

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