Standard & Poor's released an early view into the extent of Hurricane Sandy damage to the economy. "It is too early to accurately assess the credit impact, in our view, as it will depend on the extent of flood and other insurance coverage, the length of business interruptions, and any regional macro effects," the report states.
The aftermath for appraisers, however, is a rush to repeat recently completed contracts.
As FEMA continues to declare areas affected by Hurricane Sandy as a disaster zone, lenders and investors will require new collateral inspections for properties appraised within the last 90 days or for properties with pending appraisals. Until the affected property can be assessed, the closing will be on hold.
Oklahoma City-based a la mode, inc., a company that develops technology for the real estate and mortgage industries, released a statement to HousingWire stating that 3,300 appraisers are currently working the area affected by Hurricane Sandy.
Due to the large amount of storm-damaged properties, lenders and AMCs are ordering a special type of appraisal report titled a Catastrophic Disaster Area Inspection Report for areas declared a disaster zone by FEMA.
“Since the day after Sandy hit, about 20% of our pipeline is requests for disaster assessments,” said Kim Perotti, executive vice president of AXIS Appraisal Management.
The Catastrophic Disaster Area Inspection Report is designed to determine what impact, if any, the recent disaster has had on the marketability and subsequent collateral value of the subject property.
This form allows a lender/broker to determine if the property is still viable collateral for the loan already in progress without having to order an additional appraisal. An appraisal, 1004 or Exterior Only, has a more complex scope of work which leads to higher fees and longer turn times.
“I think the most important thing for lenders to remember is that they’re able to have someone who is an expert for that area inspect the property for damage and not delay closing,” said Parrish Foster, residential real estate appraiser with a la mode, Inc. “The short turn times that an appraiser can do with these inspections will help with a faster recovery for those affected by Sandy.”
Perotti advises lenders, “Recognize the situation. In order to expedite disaster service, local appraisers, who themselves are impacted by the storm, will have extended turn time with traditional appraisals, so it is important to be cognizant of that and have open dialogue with your AMC to determine priorities.”