New CU 4.2 makes it easier for lenders to change comp and subject data. MI companies can access CU

Excerpts: During the weekend of Dec. 9, we will implement Collateral Underwriter® (CU™) 4.2, (which includes) the ability to edit the subject and appraiser-provided comparable sales property characteristics. CU 4.2 will also provide mortgage insurers (MIs) with access to CU. Lenders will be able to give their MI risk partners access to appraisal-specific data by providing them the Doc File ID generated at the time of appraisal submission.

Comparable Sales Review Edit Feature
The ability to edit subject and appraiser-provided comparable sales property characteristics (currently available via the pencil icon in classic CU) will be added to the Comp Review page. Clicking on the pencil icon in the Edit column of the comparable sales review table will open the Edit Property Characteristic pop-up. If there are data errors or missing data elements, the edit feature can be used to modify the data elements and rerun the model with the revised data.
Click here to read the full release
My comment: Lenders have been able to change subject and comp data and now it will be easier? I didn’t know that they are able to change the data now. MI companies have access to CU? What about appraisers?

FHA: Appraisers responsible for water quality reporting?

Office of Inspector General Report (OIG): HUD Did Not Provide Sufficient Guidance and Oversight To Ensure That FHA-Insured Properties Nationwide Had Safe Water
Excerpts: In response to the water contamination crisis in Flint, MI, HUD issued a questions and answers document on February 8, 2016, to remind lenders and other stakeholders involved with FHA transactions that to be eligible for FHA insurance, a property must meet FHA’s property acceptability criteria. The document states that if the lender is aware that a property is located in an area serviced by a public water system with unacceptable levels of contaminants, a water test is required. However, HUD has not incorporated this or any other clarifying language into the Handbook. The Handbook states only that lenders must confirm that properties have a sufficient supply of safe and potable water, appraisers must comply with the Uniform Standards of Professional Appraisal Practice competency rule, and appraisers must notify lenders if the property does not have a continuing and sufficient supply of safe and potable water.

HUD officials stated that lenders rely on appraisers to determine whether water testing is required. However, none of the appraisals for the 49 loan files for properties connected to a public water supply, which had issued notices of lead contamination before the appraisal date, mentioned that the notice had been issued or included evidence of water testing.

Link to OIG report – search for appraise. Some very negative comments. If you do FHA appraisals read this report !!

My comment: Once again, appraisers are blamed. I quit doing FHA in 1986 – too much work as compared with conventional lending. It’s your choice do FHA appraisals.
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In the Paid Appraisal Today

The Shape Shifting Appraiser. What are the 2027 options for appraisers?
By Barry Bates

Excerpt: This is the fourth and last article in a series examining the probability, causationand collateral damage (play on words intended) resulting from a dramatic decline
in the quantity of full appraisals that will be ordered by mortgage lenders over the next 5-10 years.


The prediction (my own) is predicated on the likelihood that recent improvements in artificial intelligence and data quality/quantity will enable the implementation of one or more automated valuation models that can produce estimates that are superior on average to “organic” appraisals. As in the 90s, the GSEs are working on them quietly and will gradually roll them into their respective underwriting systems. The current GSE trend toward appraisal waivers, especially in new or tweaked mortgage products, plus the silent elimination in 2015 of the full appraisal requirement for every new first mortgage, support the theory that full reports are on the way out, at
least until the next zombie apocalypse.

The argument is that in terms of minimizing collateral-related payment defaults suffered by investors in mortgage instruments, more accurate market valuations will help keep the default rate squarely under 5%, the rule of thumb
since the Battle of Hastings.) No amount of bellyaching will defeat the AVM on steroids if comparison stats show that of 1,000,000 first mortgages, those made with AVMs suffered a lower default rate than those written by human appraisers
after all other variables are swept clear.

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Hybrid appraisal survey

From Dave Towne
About 1.5 weeks ago, I asked Washington State appraisers to respond to a survey I designed, having to do with HYBRID appraisals.

Of the surveys distributed to nearly 400 appraisers, the response was better than other types of market surveys, meaning the results are statistically acceptable…and could be transferred ‘by inference’ to the appraiser population across the US.

(A HYBRID appraisal is a ‘desktop assignment’ where the subject property inspection and photos is done by a non-appraiser, and that info/data is turned over to the appraiser, who completes a comp grid, makes adjustments if needed, and provides a value in a report sent back to the client.  Usually at a low $$ fee.)
The questions I asked, and the ‘quick’ results are these:
I currently complete Hybrid Appraisals  4.29%
I have considered doing Hybrid Appraisals, but have not done any yet   7.14%

I CURRENTLY DO NOT DO, and WILL NOT DO Hybrid Appraisals at any time in the future   88.57%

Based on these results… and if trends are similar across the US… it means the lenders and their AMC’s are having to work very hard to find appraisers who want to do HYBRID Appraisals. It may be that they will come to realize that a huge majority of appraisers are just not interested in working for minimal dollars per report.  If that’s the case, the use of these kinds of reports will diminish.

Click here to see graphs, more info, comments and add your own comment

My comment: Be sure to check with your E&O company to see if hybrid appraisals are covered. Not all insurers cover them. Washington State has some of the highest appraiser fees in the U.S, and longest turn times, so these results may be different on a national survey. As always, appraisers say the fees are too low. Remember, USPAP does not require an inspection of the subject (or the comps) by the appraiser. That is a client requirement.

AMC Reviewer violating Virginia state laws

Excerpt: The following was sent to VaCAP (Virginia Coalition of Appraisal Professionals) from a member. We thought it was important to share as it demonstrates how important it is for each appraiser to be knowledgeable of the statutes and regulations we all must follow. It may help make your interactions go a little more smoothly.

“I completed an appraisal for a purchase transaction in a rural area and the opinion of value was below the contract price. The report included five comparable sales, three of which were within 2 miles and had equivalent gross living area. The other two sales were larger and bracketed other amenities. A list of sales the agent gave indicating how the list price was established was also included; none of which supported the list price or contract price. Each sale provided by the agent was addressed as to why they were not comparable. The report was completed and uploaded to the AMC.

Several hours later, a revision request was received asking to compare another sale to the subject. This sale sold $21,000 higher than the opinion of value. The request had the reviewer’s name and direct phone number should there be any questions.

Well I took this opportunity to call the reviewer. Here is how the conversation went:

Click here to read the back and forth between the appraiser and reviewer.

What do I think? Time to cut down or eliminate lender appraisals!!

The October issue of the Paid Appraisal Today had an article this month on Estate/trust appraisals. The November issue will have a much longer article. Also coming is an article on How to get started doing non-lender work. I have been writing about this topic since 1992, when I started my newsletter, and have always done non-lender appraisals. I did lender appraisals until 2005. I quit because of the volatility of business – too many severe ups and downs in volume, before AMCs took over residential lender appraising.
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 
Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample issue go to or send an email to . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

Mortgage applications decreased 2.1 percent from one week earlier

WASHINGTON, D.C. (October 11, 2017) – Mortgage applications decreased 2.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 6, 2017.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 0.1 percent compared with the previous week and was 7 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 49.0 percent of total applications from 50.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.6 percent of total applications.

The FHA share of total applications increased to 10.3 percent from 10.0 percent the week prior. The VA share of total applications increased to 10.6 percent from 10.0 percent the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.16 percent from 4.12 percent, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.11 percent from 4.09 percent, with points increasing to 0.31 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.00 percent from 3.99 percent, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.44 percent from 3.42 percent, with points decreasing to 0.36 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.33 percent from 3.30 percent, with points remaining unchanged at 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

If you would like to purchase a subscription of MBA’s Weekly Applications Survey, please, contact or click here.

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.

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