Borrowers who have rushed out to refinance their homes, elated by the toppling of real estate interest rates, are now the restless players in the waiting game.
"It's like worrying over whether you'll miss the boat," one homeowner said.
"I bought my home five years ago at a high interest rate. Now I have the chance to refinance it at an incredibly lower rate, but there's also an uneasy feeling. I feel I'm at the mercy of the lender.
"What if rates start climbing again before I get my loan approved and all that money in loan fees is for naught!"
Major lenders, on the other hand, also are in a holding pattern and experiencing similar frustrations, but for different reasons.
"There are two things we are having to deal with," said Jim Dangerfield, Glendale Federal Savings' senior vice president and manager of sales production for Southern California. "One is the delay in appraisals, the other is the sheer volume of refinance and new loan applications.
"This increase in loan activity didn't happen gradually, but overnight--in sheer waves--with no time for staffing adjustments."
The volume of loans handled by Glendale Federal shows a dramatic change from January through March of 1985 when refinance loans totaled $129,225,895, compared with the same three-month period in 1986, which, at $270,696,825, was more than doubled.
Lynn McCallister, senior vice president and chief appraiser for Glendale Federal, said 80% of the firm's appraisals are done by in-house staff. "Appraisals on refinance loans usually take from eight to 10 days.
"Due to the overflow, we've been using fee or contract appraisers, with a time-frame increase to about three to four weeks," he said.
Appraisers Swamped by Work
At Imperial Savings the key word for real estate is no longer location, location, location, said a spokesman for the San Diego-based lender. "It's patience, patience, patience. We are virtually in a taffy-like environment and for those borrowers who need help in filling out their forms, the wait on appointments is about two weeks."
Lenders with few in-house appraisal specialists are themselves dependent on the availability of independent contract or fee appraisers, who are usually drawn from an accredited list and have more business than they can handle.
Jerry Morris, vice president and regional manager of loan production for Beverly Hills Savings, said the Mission Viejo-based lender, is processing $108 million in residential loans, which translates to about 1,200 open residential loans for Southern California.
"The massive increase in loan applications has totally outstripped our ability to increase our own staffing. Processing is set in motion, but appraisals are slowing down our approval and funding ability. It's taking us double the time to close them," Morris said, adding that 92% of loan requests are for fixed-rate mortgages.
About 70% of Beverly Hills Savings' total transactions are for refinancing, 30% are for home purchases. Morris admitted that the delays are frustrating but he hoped to dispel the misconception which some borrowers have that lenders want to slow down the process in the hope that rates will rise.
"All that matters is the rate we close and what we must pay, based on the secondary market," Morris said. "We actually try to close them as quickly as possible."
Appraisers, as well, don't feel they should be the culprits.
Gregory S. Bealer of Studio City, an independent appraiser doing home appraisals for most major lending institutions, is turning down as much business as he is accepting.
"At present, we have in excess of 200 appraisal orders staring us in the face. The 1978 real estate boom has nothing on this one," Bealer said.
"At the moment, our time frame for delivery of appraisals to the lender is about a month, but as soon as we hit this logjam, it will be an eight-to-10-week turnaround. And that's ready to hit, right now."
Bealer said most appraisers he knows are under tremendous pressure. A battle is being waged between loan production people whose job it is to produce the loan profits and those appraisers whose job it is to guarantee the quality requirements of their associations.
In other words, the Federal Home Loan Bank is tightening up the field, requiring a clearer delineation between good and bad appraisal ability.
State Sen. Joseph B. Montoya (D-El Monte) is working with the California Department of Real Estate and the various appraisal organizations to produce a bill that would license or give more uniformity to appraisal standards and procedures based on education, experience and ability.
"Lenders are only using appraisers they feel comfortable with, who can deliver a defensible and extremely creditable appraisal. This has narrowed down the field considerably," Bealer said.