10-12-17 Newz//FHA-Appraisers responsible for water quality reporting?, Hybrid appraisal survey

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?

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.

——————————————————

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.

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 visitmba.org/WeeklyApps, contact mbaresearch@mba.org 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.