11-30-17 Newz// My Client the FBI, 50 Lane Traffic Jam,Third Party Inspections

Excerpts: Thousands of motorists found themselves stranded on Tuesday in what looks from above like a 50-lane parking lot on the G4 Beijing-Hong Kong-Macau Expressway, one of the country’s busiest roads. Some are dubbing the traffic jam a “carpocalypse,” while others are calling it “carmageddon.”:

China is no stranger to these ridiculous traffic jams, especially on national highways. In 2010, gridlock spanning more than 74 miles on the stretch between the Inner Mongolia Autonomous Region and Beijing left drivers with nowhere to go for a staggering 12 days. That time blame fell on everything from road construction to broken down cars and fender-benders.

My comment: Check out the photos. Wow! One of my nightmares is getting stuck in a big traffic jam, but I never thought about one as bad as this…

Excerpt: On Monday, I distributed a photo (see below), which was taken by a western US appraiser at the subject property, and asked if anyone could accurately describe what this device is:

The property owner was not at the property when the appraiser was there, and the appraiser was frankly stumped as to what this ‘thing’ is.

By late afternoon Monday, the appraiser was able to talk with the property owner, and was told about this contraption. Meanwhile, dozens of appraisers wrote back with suggestions or positive “it’s a” statements.

My comment: There was a fun email thread on this topic. To sign up for Dave Towne’s emails, send an email to dtowne@fidalgo.net He has been writing a lot recently about hybrid appraisals (non-appraiser does the site inspection). Very controversial. I am working on an article for this topic in the paid Appraisal Today newsletter.

By Ernie Durbin

Excerpts: Today, appraisers are presented with many opportunities to produce “alternative” valuation reports. For appraisers, a positive shift has occurred in the valuation marketplace. Valuation consumers in capital markets, loan servicing, and home equity are migrating away from the wholesale use of broker price opinions (BPOs) and evaluations to valuations produced by appraisers. This new appreciation for professional appraisers has given rise to a fresh generation of appraisal reports with a different Scope of Work than traditional GSE appraisal products (1004 etc.).

Most alternative valuation products do not involve a full site inspection by the appraiser. Some involve a drive-by inspection, but many are based on an analysis by the appraiser without viewing the property. In these assignments, the appraiser provides a desktop appraisal relying on an inspection provided by a real estate agent or professional property inspector. The appraiser utilizes Extraordinary Assumptions when using the content provided by the third-party inspector. These are similar to the Extraordinary Assumptions that would be applied to a drive-by assignment performed by the appraiser (for instance assumptions about the interior of the property).

Last Wednesday, (yah, bad on me!), I sent out a message asking appraisers who have done, or are doing, the new ‘hybrid’, ‘alternative’, ‘bifurcated’ or “easy squeezie” desktop reports promoted by some AMC’s and others, what the actual process is concerning WHO actually fills in the subject info in ‘hybrid reports’.

A number of appraisers took time to answer via email that afternoon. Among the responses, I actually CALLED and talked to 4 appraisers who are from different areas in the US, and who had different experiences with these reports. I really appreciate the time they took to explain the process they have witnessed.

What I learned, and I think I’m the only one who has done this on a national scale and reported findings, is that there is massive confusion about the Scope of Work actually performed by two separate individuals (and perhaps other unknown contributors) in these reports. I have learned that some of these new-fangled reports actually do allow an appraiser to be in compliance with USPAP, while others can be considered serious contenders for non-compliance if an appraiser completes them.

Does that mean an appraiser should not say anything about the third-party inspector, if his/her data was relied upon?  I don’t believe that is a good appraisal practice either.  USPAP is clear that an appraiser should not be misleading.  Therefore, it would be best, in my opinion, to indicate where the data came from and make an assumption that it is true and correct; just don’t do it on the certification page.

A simple statement like the following might suffice:

“This appraisal report is based on information obtained from a third-party inspector who completed a drive-by and took photos from the public road.  I am relying on this information (in addition to other data as outlined) to discern information about the subject property for such features as quality, condition, and any amenities that may be revealed from this third-party inspector.  I am making an assumption that my conclusions from this data are true and correct.”

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Excerpt: How did a vibrant profession of experts in property value begin to disappear?  Who’s at fault?  Is it the appraisers?  The Standards?  The “appraisal process”?  The regulators?  Or could it be even the users and clients?

Inertia does not come easy.  Change is even more difficult. Inertia requires defending the old way of doing things.  It requires avoidance, a conscious avoidance or unconscious avoidance – and denial.

My comment: I love George Dell’s blog posts. Very creative titles!! George writes longer articles regularly for the paid Appraisal Today newsletter.

WASHINGTON, D.C. (November 29, 2017) – Mortgage applications decreased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 24, 2017. This week’s results include an adjustment for the Thanksgiving holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 34 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week to its lowest level since January 2017. The seasonally adjusted Purchase Index increased 2 percent from one week earlier to its highest level since September 2017. The unadjusted Purchase Index decreased 32 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 48.7 percent of total applications from 49.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.2 percent of total applications.

The FHA share of total applications increased to 10.8 percent from 10.6 percent the week prior. The VA share of total applications increased to 11.0 percent from 10.7 percent the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged from the week prior at 4.20 percent, with points decreasing to 0.34 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 $424,100) decreased to 4.14 percent from 4.16 percent, with points decreasing to 0.27 from 0.30 (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 4.07 percent from 4.08 percent, with points decreasing to 0.37 from 0.42 (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 3.57 percent from 3.56 percent, with points decreasing to 0.40 from 0.42 (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 3.42 percent from 3.31 percent, with points increasing to 0.58 from 0.38 (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.