Appraisal News and Business Tips

2-9-17 Newz// Dodd Frank repeal?, Secret Places, CU ratings manipulation

11 Secret Spaces Hiding in Famous Places

Thousands of people pass through these destinations each day unaware there’s a hidden gem tucked inside.
Here are a few:
– Secret Apartments in the New York Public Library
– Secret Compartment in Leonardo da Vinci Statue – Italy
– Vanderbilt Tennis Club at Grand Central Terminal – New York
– Gustave Eiffel’s Secret Apartment – Paris
My comment: Just for Fun. Fascinating!! Good fotos and info. New York seems to have a lot of secret places…
—————————————————————–
FREE ASC/Appraisal Foundation Webinar from Network of State Appraisal Organizations
On January 18th, NSAO sponsored a webinar with Jim Parks with the Appraisal Subcommittee and David Bunton with The Appraisal Foundation. The webinar received glowing reviews by those who attended and is available to those who missed it. The NSAO looks forward to other webinars in the future. These webinars are only possible because of your membership with VaCAP and other State organizations.

For links and to view the presentation, (scroll down the page) go to: http://appraisersblogs.com/harmful-CU-AMC-trend 

————————————————————————-
The 25 most expensive homes for sale in the U.S. right now
Homes are in Austin TX, Boston, Chicago, Detroit/Michigan, Hamptons, Los Angeles, New Orleans, New York City, Philadelphia, San Francisco, Seattle, Ski Country (CO), Washington, D.C.
Excerpt: #21 Legacy Springs Ranch, $81M, near Austin TX
Another ranch?! Yes, another ranch. This one, located 70 miles northwest of Austin, boasts a bonkers 19,505 acres, filled with streams, lakes, and pastures. The property includes a 6,000-square-foot limestone main house, along with two guest houses, 22 well and windmill complexes, not to mention invaluable hunting and stargazing opportunities.
All 25 homes have links to the listings for lots more info.
—————————————————————–
Rating Number Game – CU rating number magically moved lower on the scale to get under 2.5 by Dave Towne
 This was discussed on Phil Crawford’s Voice of the Appraiser podcast. The recordings are on the blog post.
Excerpt: Some of the manipulation appears to involve use of additional comparable sales (not necessarily ‘comps’) which are closer to the subject than the original comp properties. When additional properties closer to the subject are added to the report, the CU rating number magically moved lower on the scale. A report can be submitted to CU as often as any change to the report is made.
Read the full blog post, plus the comments at:
My comment: Nothing new here. Lenders always want to close loans. This is just another way to do it. Read the comments and post your own!!
——————————————————————-
What’s Your (Appraisal) Problem?
by Bryan S. Reynolds, CDEI, AQB Certified USPAP Instructor
The first step of the appraisal process is identification of the problem.  Many appraisal practitioners take this step for granted. A clear understanding of the valuation problem is needed before entering into an agreement for services. Here are a couple of reasons why.
Let’s assume a property owner contacts you and wants their single-family house appraised. This property is located in a tract subdivision in which you have appraised many properties over the years. This is what is considered an easy house to appraise because there are many similar homes in the subdivision, a considerable number of closed comparable sales, and many active competing units. Supply and demand are in balance as is typical for this highly desirable neighborhood.
But… the hammer falls later in the article when the owner gets the appraisal.
My comment: Well written and worth reading. If you only do lender work, it is very easy to forget the First Question of Appraising: What is the problem? I have learned to be very careful. The client may not understand the appraisal issue. I recently did not use the correct date of value on an estate appraisal. I had to completely re-do the report. My fault. Did not understand the problem. Sometimes the alternate date of valuation is needed (6 months after death).
==========================================

Supporting Adjustments:
Let’s be Reasonable!
Why CU and AVMs cannot replace appraisers
By Denis DeSaix, SRA

 
In the December 2015 issue of the paid Appraisal Today
Excerpt: What should we do?
Here are some suggestions that can improve our ability to communicate our analysis and conclusions:
* Clients expect X, and if they don’t get X, then they expect Y
Our clients expect to see certain items adjusted in the grid. Sometimes these expectations are reasonable and sometimes they are just legacy-expectations (everyone else does it, and it has always been done like that). We should know what the expectations are (within reason). If we decide those expected adjustments are not necessary, then the client expects to be told why. Address the client’s expectations with some discussion of why an adjustment was or wasn’t made or why the amount adjusted may appear high or low. Provide the logic/rationale of the decision. Explain your appraiser judgment, and why you did what you did.
* Not every difference needs an adjustment
Identify the significant components of value and focus on analyzing their impact. The technical term for what we adjust for in the grid is elements of comparison. The typical buyer for a house cares about house size, condition/upgrades, location-influences, and sometimes site-area differences. In my practice, I try to focus on the significant elements that affect value. Those are the items that, if I get right, I’m confident that my value conclusion will be reasonable and credible.
* Don’t sweat the small stuff
Ask yourself the question for your market, “Does a buyer really care about a fireplace, and if so, can I reasonably estimate its contributory value?” Does the market react to smaller differences in lot size? Some of us may have been trained that such adjustments are necessary. We need to break-out of this mindset and consider focusing on adjustments for those items that make a difference.
* Explain why there is no adjustment if you think someone else would ask. This goes to client’s expectations. Sometimes I spend more time explaining why an adjustment is not applied than I do discussing the analysis for an adjustment I did apply.
* There are two types of adjustments: Quantitative and Qualitative
A quantitative adjustment is a specific adjustment in the grid. Sometimes there may be an element of a property where, in the appraiser’s opinion, it adds appeal but there just isn’t enough data to extract an adjustment. In other words, it cannot be quantified.
To read the full 4+ page article with lots of practical tips, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
 
If this article helped you to get fewer questions on your adjustments, 
it is worth the subscription price!!
$8.25 per month, $24.75 per quarter, $89 per year (Best Buy)  or $99 per year or $169 for two years 
Subscribers get, FREE: past 18+ months of past newsletters 
plus 4 Special Reports, plus 2 Appraiser Marketing Books!!
To purchase the paid Appraisal Today newsletter   go to
www.appraisaltoday.com/products  or call 800-839-0227.
To purchase the paid Appraisal Today newsletter   go to
www.appraisaltoday.com/products  or call 800-839-0227.

If you are a paid subscriber and did not get the February 2017 issue, emailed February 1, 2017
, please send an email to info@appraisaltoday.com  and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it
=============================================
Dodd Frank(enstein) – what does it mean for appraisers?
Below are links to 4 recent articles from different angles from mortgage industry perspectives
Lawyers say Trump executive order does not overhaul Dodd-Frank
More like a call for analysis and review
Excerpt: President Donald Trump’s executive order to roll back the Dodd-Frank Wall Street Reform Act doesn’t do much by itself. Instead, the move mostly points to an already existing act championed by House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, to replace Dodd-Frank, a blog post from Mayer Brown attorneys Laurence Platt and Joy Tsai stated.
…………….
Mixed reactions to Trump’s push for Dodd-Frank overhaul
Unsurprisingly, of course…
Excerpt: … left-leaning people and organizations calling the move an outrage and other assorted adjectives, and those that lean right having the polar opposite reaction.
……………………..
Regulatory executive order – keep it in perspective – a primer
From Rob Chrisman’s Daily commentary for Feb. 7, 2016
Scroll down to the Government & lending section.
Excerpt: So last Friday, Donald Trump signed an executive order which directed a review of Dodd-Frank. There were the expected breathless headlines in the business press (with a stroke of a pen, Donald Trump eliminates Dodd-Frank, he’s “gutting” Dodd-Frank), however this is just a “review and report back to me” order. A full repeal of Dodd-Frank would be impossible, and probably would not be supported by the lending industry: we have spent the past 6 years becoming compliant with Dodd-Frank – do we really want to have to adopt some new system?
…………………………
An appraisers thoughts on the repeal of Dodd-Frank
Excerpt: So, if Dodd-Frank is repealed, what changes will we see in our day to day functioning as residential real estate appraisers? While there were some bad consequences of HVCC and Dodd-Frank, there were also some good things that happened. 8 possibilities are listed, such as trainees, C/R fees, etc.
Read he full article here plus the comments, which are always interesting ;>
……………..
Cheat Sheet: What Trump Can – and Can’t – Do to Dodd-Frank
Excerpt: Does this mean that Dodd-Frank will be repealed?
No. Not only is a complete unwind of the 2010 law unlikely in the current political environment in Washington, but even Trump officials themselves have said there are aspects of tougher regulation that they like.
My comment: Sorry, I have no idea what will happen and no speculations ;  It is a hot topic in appraising. If you want to know what others say, and make your own opinions, read some of the articles above.
———————————————————————-
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 
Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.
Mortgage applications increased 2.3 percent from one week earlier

WASHINGTON, D.C. (February 8, 2017) – , according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 3, 2017.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 9 percent compared with the previous week and was 4 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 47.9 percent of total applications, its lowest level since June 2009, from 49.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.9 percent of total applications.

The FHA share of total applications decreased to 11.9 percent from 12.1 percent the week prior. The VA share of total applications increased to 12.7 percent from 12.4 percent the week prior. The USDA share of total applications remained unchanged at 0.9 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) decreased to 4.35 percent from 4.39 percent, with points remaining unchanged at 0.34 (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 $424,000) decreased to 4.27 percent from 4.32 percent, with points decreasing to 0.31 from 0.34 (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 4.16 percent from 4.17 percent, with points increasing to 0.37 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.55 percent from 3.61 percent, with points increasing to 0.34 from 0.33 (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 increased to 3.39 percent from 3.33 percent, with points decreasing to 0.18 from 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate increased 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.

Leave a Reply