Appraisal News and Business Tips

1-18-18 Newz//Hybrid Appraisal Rejected, Scope Creeping, UsPaP False Assumptions

Scope Creep – Head’em Off at the Pass!

By George Dell
Excerpt: Why do we have scope creep?
Possible answers include:
– The reviewer or clerk has to justify their existence;
– There is genuine concern about something;
– The work should’ve been there in the first place;

It’s important to remember that our entire system of appraisal production and review is belief-based.  It must be “worthy of belief.”  We have no objective standards.  Your work must be subjectively “credible” in the mind of the reader.

Read this short, interesting blog post at:

My comment: George Dell writes regularly for Appraisal Today. His articles are much longer than his blog posts, often expanding on a blog post.

UsPaP – A few of the more obvious false assumptions

By Barry Bates

Excerpt from blog post

The appraisal client is always the intended user.

A lovely concept out in the ether somewhere, but hardly ever the case in practice. The client (who engages the appraiser) is a lending technician or AMC drone; the intended user is an underwriter, servicer or portfolio manager. (This assumes the fact that only about 10% of appraisals are ever done for anybody other than a mortgage company.)

To read the full post, click here

Homeowner Rejects Hybrid Appraisal

Appraiser Alert: Don’t Mess with a 4′ 10″ Senior Citizen!

Excerpt: Last week I called a borrower to schedule the appraisal appointment. She asked me some very odd questions; “Are you a licensed appraiser? What is your license number? How can I verify this information?” Well I had never been asked any of these questions in my entire career, but I answered as there really wasn’t anything I was hiding.

It was 19 degrees outside when I arrived at the property and this senior citizen, not more than 4 feet 10 inches tall, was sitting on the porch. I proceeded up the porch and introduced myself, handed her a business card and put out my hand as I always do. She did not shake my hand, but instead she asked if I had identification. I showed her my driver’s license. Then she asked, “what about a copy of your license?” Well after a struggle to get the thing out of my wallet, I showed her my wallet license card. At this point, she said, ok let’s go inside where it is warm.

Read the interesting article plus the comments (and the great foto) at:

My comment: Next month’s paid Appraisal Today will have an article discussing hybrid appraisal liability: “New liability issues: Hybrid appraisals, appraiser identity fraud, etc.” IMHO, doing hybrid appraisals is a business decision. There are some liability issues to watch out for.

Housing Demands are Changing, Builders Slow to Follow

Excerpts: Builders are building more houses, but a survey conducted by the National Association of Home Builders (NAHB) found they are essentially building the same ones.  The survey, released during the (recent) association’s International Builders’ Show…, found the size and configuration of homes built in 2017 changed little from the previous year, even though builders increased their output by 9 percent.

NAHB says there appears to be a market for less ambitious homes – even for “tiny houses.”  They found that 53 percent of homebuyers might consider purchasing a home of 600 SF or less at some point in their lives.  Younger buyers were more receptive to that idea than were baby boomers and seniors.

My comment: Here in the Bay Area, after World War II, tens of thousands of new homes were built as the population significantly increased. Most were small, under 1,500 sq.ft., and affordable. These small detached homes have not been built for quite a while. New homes are not affordable for most buyers. Why? Limited availability of land, and high prices for development. Plus, of course, builders make more money on larger homes.

Appraiser Independence: Fact or Fiction

By Tony Pistilli

Excerpt: Appraisal Independence or non-independence is alive and rampant, despite the very clear rules. There is a trend of some lenders to create their “own panels” comprised of loan production recommendations. There are also some AMC’s that will accommodate “internal panels” from loan officer and mortgage broker referrals of appraisers. Some lenders are establishing what appears to be a compliant ordering process utilizing appraisal ordering platforms to create a “round-robin” of the loan officers favorite appraisers.

These types of appraisal ordering processes are clearly prohibited by Appraisal Independence Requirements. The issue here is, there is little, if any, enforcement by the regulators to stop this practice from occurring. It doesn’t do any good to have laws that aren’t enforced.

Read this somewhat controversial article (mostly regarding fees), plus almost 30 comments at:
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How to connect with appraisers online. What’s the best way for you?

Excerpts: Why connect with other appraisers online? There are many reasons, especially since many appraisers work solo: get and give advice, see if other appraisers are busy or slow, AMC/client issues, USPAP, Fannie, UAD, etc. You can do it any time, at your convenience. You can spend just a little time or lots of time.

Each online group is different. I started using them in the early 1990s on Compuserve and AOL. My first free emailed appraisal newsletter was in June, 1994. I wrote about them in 2014. Since then, there have been significant changes to almost all the groups. Facebook, Linkedin, blogs,  appraisersforum.com, email discussion groups, etc. I discuss each of them so you  can decide what works for you.

In the January 2918 issue of the paid Appraisal Today, available to paid subscribers.  
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New tax law – home equity loan interest not deductible – will this increase refis (and appraisals)?

The home equity loan interest deduction is dead. What does it mean for homeowners?

Excerpt: In the past, homeowners who took out home equity loans were able to deduct the loan’s interest up to $100,000 from their taxes. Under the new tax bill, this deduction is a thing of past. The change takes effect in 2018, meaning this is the last year that homeowners can write off the interest paid.

“There is no grandfathering,” points out Greg McBride, chief financial analyst at Bankrate.com. “A lot of people may think: ‘I’m glad I got mine already.’ Nuh-uh. You’re going to get hit by this just as much.”

How big is the home equity loan market?
According to the most recent numbers from the New York Fed on America’s debt, balance on home equity lines of credit came in at $448 billion at the beginning of this year.

Overall info on home equity loans:
———–
Black Knight: Tax Law Could Impact HELOC Borrowing
Excerpt: loan-to-value ratios below 80 percent, giving them nearly $5.4 trillion in “tappable” equity.  This is an increase of more than $3 trillion from the bottom of the market in early 2012.

Over half of the equity that could be cashed out by homeowner refinancing is in homes where the first lien mortgage has an interest rate below 4.0 percent, making a home equity line of credit (HELOC) an attractive option.  However, as Black Knight Data & Analytics Executive Vice President Ben Graboske explained, recent changes to the U.S. tax code may have implications for homeowner decisions about using that equity.
Click here to Read more plus stats and graphs at:
My comment: Home equity loans typically don’t need appraisals. Most refis need appraisals. No one really knows yet what will happen, but it seems reasonable to assume that some home owners will refi. I have been thinking about taking out a HELOC for a long time for use as a line of credit for emergencies. But, I will lose the tax deduction if I use it. Hmmm…

Most Common Errors and Requests For Appraisal Revisions

Excerpt: Over the years, as the Chief Appraiser for a national Appraisal Management Company (AMC), my team has seen many unique appraisal assignments and experienced many interesting requests for revisions. Of course, we’ve seen our fair share of requests to provide an additional supporting comp or two, or to address how the subject’s opinion of value that is over/under the indicated Predominant Value of the Neighborhood impacts value, too.

While we see those common requests for revision regularly, the most common requests for revision, are of the much simpler or generic variety. Additionally, those requests seem to be easily avoidable with just a little more patience by the client in the ordering process and from the Appraiser in their own report production and QC processes. Here is a list of our “Top 5” revision request items that we see on a regular basis:

1. Correct the spelling of the borrower and/or seller’s name.
Note: This error revision runs at a 50:50 pace. Half the time the error was initiated on the customer’s part when they placed the order while the other half is an Appraiser input error.

Read 4 more common requests plus almost 30 comments (somewhat controversial article) at:

My comment: I have to carefully check names on every one of my non-lender appraisals. For unknown reason I have typos on names. People don’t like it when their names are misspelled ;>
.
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 
 
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Mortgage applications increased 4.1 percent from one week earlier

WASHINGTON, D.C. (January 17, 2018) – Mortgage applications increased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 12, 2018.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 32 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 35 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 52.2 percent of total applications from 52.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.2 percent of total applications.

The FHA share of total applications increased to 11.7 percent from 11.1 percent the week prior. The VA share of total applications decreased to 10.7 percent from 11.4 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 ($453,100 or less) increased to its highest level since March 2017, 4.33 percent, from 4.23 percent, with points increasing to 0.54 from 0.35 (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 $453,100) increased to its highest level since March 2017, 4.25 percent, from 4.16 percent, with points increasing to 0.36 from 0.23 (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 its highest level since March 2017, 4.30 percent, from 4.16 percent, with points increasing to 0.65 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 15-year fixed-rate mortgages increased to its highest level since January 2014, 3.77 percent, from 3.66 percent, with points increasing to 0.44 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 its highest level since April 2011, 3.62 percent, from 3.50 percent, with points decreasing to 0.48 from 0.51 (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.

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