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Newz 3-3-15 Abandoned places, Late appraisal, Cost vs value, Fees
Spam blockers are going wild!!! I have made some changes in subject line and some changes in newsletter content so more subscribers will get this newsletter. I can’t even mention some of the changes as using the words may send this email to spam!!!
Remodeling Magazine recently compiled its annual predictions for remodeling values – project-by-project and market-by-market – for 2016. Call it MoneyBall for home improvement. The impressive sabermetrics-style compilation (the kind used statistical analysis to rate baseball players) looked at 30 projects and how they fared in more than 100 markets, to determine which ones get you the best value when you sell. It also looked at markets where the recoupment cost is highest, and where you probably shouldn’t even bother to do the work.
For example, four of the five projects that cost less than $5,000 for a professional to do were ranked in the top five for cost recouped, the study noted, and the remaining one was the cheapest project in the $5,000-to-$25,000 price range. No project costing more than $25,000 ranked better than 15th, it added.
The Top 3: attic insulation, manufactured stone veneer, and garage door replacement.
The Bottom 3: deck addition, kitchen remodel, and bathroom addition.
My comment: For many years, I have been reading the annual “what improvements pay the most” article sponsored by Remodeling Magazine. Mostly I just laugh. They do have data in 100 markets. But, I don’t think they ever survey appraisers, just real estate agents. Finally, someone is finally saying what I say: Floor coverings and paint pay off the most. That was not on the list. Looong paybacks on expensive kitchen remodels, etc.
Appraisers regularly call me about problems with AMC clients. I always tell them the same thing: Time to look for another client!! AMCs change all the time. I gave up a long time ago trying to keep track. Some like them, some don’t. One day they are good. Another day they get a lender client that wants a lot.
The most recent call was about an AMC refusing to pay for research time after cancelling an appraisal. The appraiser wanted to “get back” at the AMC. The only suggestion I could offer was to try to “blacklist” the AMC on social media. Unfortunately, a “bad client” web site, started a few years ago by Dave Bigger’s son, failed because it was not able to attract enough ads or appraisers willing to pay for it.
There are hundreds of them and most are looking for appraisers. Why are they looking? Lower fees probably. Also, so they can tell their lender clients how many appraisers they “have”.
I am hearing that more appraisers are quitting because they are unable to find acceptable clients. Scope Creep is rampant and getting decent fees can be hard. After many years since AMCs took over, they can’t take it anymore.
On the plus side, lender regulations are cyclical, going back and forth from strict to loose. Now it is strict. That will change. AMC lender clients want them to be picky, picky, picky. But, that can slow down getting appraisals because of endless questions. It is costly for AMCs to employ armies of people to handle this. So, they try to get lower fees from appraisers, which causes more appraisers to leave.
In May 2016, Collateral Underwriter® (CU™) will leverage the Uniform Collateral Data Portal® (UCDP®) appraisal sharing functionality to provide aggregators access to their correspondent-shared appraisals in the CU web application. The information in the CU web application will enable aggregators to thoroughly examine individual appraisal quality – providing greater certainty and transparency in their correspondent loan pipeline. See the CU Appraisal Sharing Notification for more information.As a reminder, Fannie Mae offers a variety of live and recorded training opportunities to help your staff use CU effectively and efficiently. Additional live webinar dates have been added – attend one or more sessions to learn more about CU:
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Virginia Real Estate Appraisal Board Adopts VA fees!
The legislative code of Virginia states Licensed Appraisal Management Companies must provide customary and reasonable compensation to fee appraisers. There are two presumptions of compliance. One based on objective third party information, including fee schedules, studies and surveys prepared by independent third parties, such as government agencies, academic institutions, and private research firms. The other presumption of compliance is based on recent rates paid to a representative sample of providers of appraisal services in the geographic market of the property being appraised or fee schedules of those providers. The legislative code is very clear that both presumptions must exclude compensation paid to fee appraisers ordered by AMCs at both the Federal and State Levels.
The Virginia Real Estate Appraisal Board adopted the VA appraisal fee schedule… The Board analyzed fee studies completed in other states and compared them to the Veterans Affairs’ Fee Schedule in those states. In all states analyzed, the results were similar and showed support for a minimum fee structure.
On Tuesday February 23, 2016 The Virginia Real Estate Appraisal Board adopted the United States Veterans Affairs’ Roanoke Regional Loan Center Appraisal and Inspection Fee Schedule as published and updated from time to time, as a government agency fee schedule which AMC’s may use as a presumption of compliance with the requirement to provide customary and reasonable compensation to Virginia fee appraisers.
My comment: Adopting VA fees the easiest way to get C/R for state boards. In some areas VA is low and in other areas it is high. VA takes awhile to change its fees. But, taking an appraiser survey can be expensive and a hassle. Fees change over time, so the survey would have to be re-done.
Late Appraisal: USPAP Violation?
By Isaac Peck, Editor
In a move that outraged many Oregon appraisers last Sept., the Oregon Appraisal Board warned its appraisers via email that failing to submit an appraisal on time “can be” considered a violation of USPAP. According to many, this is a very creative interpretation of the Uniform Standards of Professional Appraisal Practice (USPAP)! The controversy has been simmering ever since. However, the AQB recently issued an FAQ on the subject, settling the matter once and for all.
The Board’s email announcement understandably inspired a great deal of controversy among Oregon appraisers. It also inspired a response from Scott Dibiasio, Manager of State and Industry Affairs at the Appraisal Institute. In an email to the Board, Dibiasio eloquently disagrees with the Board’s position and argues that there is nothing in USPAP that says that a violation of an assignment condition is a violation of USPAP. “What USPAP does say is that accepting an assignment condition that precludes an appraiser’s impartiality, limits the scope of work so that the assignment results aren’t credible, or limits the content of a report so that it’s misleading, is unacceptable. (Scope of Work Rule, U-14, Lines 441-442.) By accepting, and not meeting, an agreed upon Due Date an appraiser has not automatically done anything that would compromise their impartiality, the credibility of the assignment results, or limit the content of a report to such an extent that it is misleading,” writes Dibiasio.
My comment: I have been hearing about this since last September. Seemed strange to me, but not unusual for state boards. Thanks for Isaac for researching and writing about this. There are many reasons for a late report. Of course, it is not a good business practice but I never thought it had anything to do with USPAP. I don’t like it when state boards get business and USPAP issues confused. Appraisers do sometimes, but state boards are regulators and should know better.
Question: Is Turnaround Time an Assignment Condition?
My state’s appraiser regulatory agency sent out a newsletter that says a due date is an assignment condition, and that failing to adhere is a violation of USPAP. Is this true?
Response: Assignment due dates are contractual obligations, but are not assignment conditions under USPAP. Turnaround times and similar items are business practice issues, and are outside
the scope of USPAP.
Assignment conditions are addressed in the Problem Identification section of the SCOPE OF WORK RULE (Lines 421-425). The Rule states in part:
“Assignment conditions include assumptions, extraordinary assumptions, hypothetical conditions, laws and regulations, jurisdictional exceptions, and other conditions that affect the scope of work. Laws include constitutions, legislative and
court-made law, administrative rules, and ordinances. Regulations include rules or order, having legal force, issued by an administrative agency.”
“However, an appraiser failing to comply with contractual obligations could potentially be subject to civil penalties.”
HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to www.mbaa.org
Mortgage applications decreased 4.8 percent from one week earlier c, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 26, 2016. The previous week’s results included an adjustment for the President’s Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 4.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week, reaching its lowest levels since January 2016. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index increased 14 percent compared with the previous week and was 27 percent higher than the same week one year ago.
The refinance share of mortgage activity decreased to its lowest level since January 2016, 58.6 percent of total applications, from 61.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6 percent of total applications.
The FHA share of total applications remained unchanged from 12.0 percent the week prior. The VA share of total applications decreased to 12.1 percent from 13.0 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.83 percent from 3.85 percent, with points decreasing to 0.39 from 0.42 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.75 percent from 3.80 percent, with points increasing to 0.31 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.67 percent from 3.72 percent, with points decreasing to 0.40 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.13 percent from 3.12 percent, with points decreasing to 0.31 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.02 percent from 3.07 percent, with points increasing to 0.31 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.