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.
And how has that affected the cost of an appraisal? Bealer admitted that the price has gone up. In the San Fernando Valley, his cost of an appraisal for a three-bedroom, two-bath home valued at about $180,000 is $225; by June the appraisal fee will be raised to $250 for a similar property.
Warren Raybould, California Federal Savings' senior vice president for residential lending nationwide, said most loan appraisals (refinance and purchase) were being accomplished in 10 days, and that funding could be expected in another 25 days. "Our loan volume, however, has substantially increased to double what it was six weeks ago.
" I believe the media has helped both to promote the loan activity in a positive way, but also it has helped to clog it."
The reports have sometimes inadvertently contributed to greater confusion and indecision on the part of the borrower, who then proceeds to shop around, placing applications with more than one borrower simultaneously, Raybould said.
A spokesman for Security Pacific National Bank reported that from Jan. 1 through March 21 this year, the bank handled 5,261 real estate (mostly refinance) loan applications totaling about $512 million for California. Of these, 1,500 loans, valued at $155 million have closed within an average 60-days.
"Delays in one form or another are just apparently inevitable at this time," he said. "For instance, last year we handled only 778 such loans from Jan. 1 through March 31, so this gives one an idea of the magnitude of the increased activity with which we have to deal.
Great Western Savings may be the exception, however.
The major nationwide real estate loan originator (with $6.7 billion in loans last year), has reported a continuing momentum for the first quarter of this year. Last year, loans originated in the first quarter totaled $809 million; that figure for the first quarter of 1986 is $1.5 billion in residential loans, all closed in less than 30 days.