(Host) Record low interest rates have helped many people become first-time home owners. The low rates have also prompted thousands of people to refinance their mortgage – some several times. While lenders are still offering low rates, a shortage of appraisers is making it difficult for some Vermonters to take full advantage.
VPR’s Nina Keck has more.
(Keck) Residential real estate appraiser Ron Mecier unlocks the door of a home he’s appraising and grabs his clipboard.
(Mecier) “First thing I’ve got to do is make note of the floor plan of the property of the house. And in each room I go into I’m looking at the condition, quality and d cor.”
(Keck) Mecier works with Central Vermont Appraisers in Rutland. He says in his 15 years on the job, he’s never been so busy. And while that’s good news for appraisers, Mecier says it’s bad news for borrowers since they’re having to wait longer and longer for their appraisals.
(Mecier) “We’re out on average about six weeks for an appraisal. And we were at one point in time, we were getting it down to about four weeks, but then another wave and the rates came down again and the next thing you know we were up to six, seven and even eight weeks.”
(Keck) That kind of delay can cost borrowers thousands of dollars in interest fees. Matt Hemphil is with CTX Mortgage, and on the board of the Vermont Mortgage Bankers Association.
(Hemphil) “Essentially, what happens is that when we receive a loan, we can pretty much credit approve it immediately. The delay happens with the paperwork piece and a large part of that paperwork piece is the appraisal. And the appraisers are taking – depending on the area of Vermont – they’re taking anywhere from four to eight weeks to come back to us.”
(Keck) Typically, Hemphil says a bank will lock in an interest rate for 30, 45 or even 60 days.
(Hemphil) “If we don’t close within that 30, 45 or 60 day time frame, the rate lock is lost and the customer will have to go back to what’s called ‘current market,’ which is whatever the rates are on that particular day. The problem the last few weeks is that interest rates have risen pretty dramatically in the last few weeks – about a half a percent. If customers lose their rate lock when rates are very low, that can be an issue, because the banks can’t give them that rate anymore.”
(Keck) In other words, if you locked in your interest rate at 5% four weeks ago, but you won’t get your appraisal for another four weeks, you may have to settle for an interest rate of say, 5.5% when you finally close. And with a mortgage of $150,000, that extra half of a percentage point adds up fast. Some lenders have extended their rate locks. Merchants Bank, for instance, went from 30 to 45 days to better accommodate the appraisal lag, but even that may not be long enough for some clients. Again, Matt Hemphill:
(Hemphill) “Vermont appraisers have a very, very difficult time and the main reason is you’ve got 251 towns in Vermont and you’ve got 251 different registries. And a lot of time you have to travel and get to the different registries and sometimes that registry is only open 11:00 to 1:00 p.m. as long as it’s not hunting season. So a lot of the delays are really caused by the lack of a computerized system within the state.”
(Keck) While having local real estate documents available on the Web would be more convenient, Vermont Secretary of State Deb Markowitz says the issue raises troubling privacy and safety concerns.
(Markowitz) “There’s a difference between public and published. A public record you have to come in, you sign the book, you look the clerk in the eye. If it turns out you’re a bad guy, there’s some evidence, you know, if you take that record and do something bad, use it to rob someone’s home, there’s a trail to you. But it’s different than simply publishing on the Web so that people anonymously can pull up information and do whatever they want with it. And that’s a conversation we’re really having across government.”
(Keck) Markowitz says even if they could make the information safe, she says it would cost tens of millions of dollars to scan and index all the various documents. While she believes the state will get there eventually, she doesn’t expect it to be any time soon. Which means, borrowers hoping to take advantage of today’s low interest rates, will have to be patient.
For Vermont Public Radio, I’m Nina Keck in Rutland.