What type of heater is needed for a loan?

March 22, 2018 By Ryan Lundquist

Excerpt: A guy wants to sell, but his central system is broken, so he has space heaters in each room. Does that work? Is it going to fly for a loan? What’s an appraiser going to be looking for when it comes to a heat source? Let’s consider some thoughts from Fannie Mae, HUD, local code, and different lenders.

Very well written, comprehensive and worth reading at:

My comment: I appraise a lot of Victorians, built when they were heated by fireplaces. Many added a floor heater on the first floor with no other heating source, including no heating on the second floor. The easiest way is to put baseboard electric heaters in the bedrooms, assuming electrical has been upgraded. I regularly get asked by local real estate agents about lender requirements. Now I know what to tell them!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at covidscienceblog.com

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To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on , weird decor, hidden factors that affect value, mortgage origination stats, Covid tips for appraisers, etc.


New FHFA report says AMCs are not much different than direct lender appraisals – value added??

From the March 2018 paper (“Are Appraisal Management Companies Value-Adding? – Stylized Facts from AMC and Non-AMC Appraisals”:

“In this paper, we study whether there are any systematic quality differences between appraisals associated and unassociated with appraisal management companies (AMCs). We find that compared to non-AMC appraisals, AMC appraisals on average share a similar degree of overvaluation despite being more prone to contract price confirmation and super overvaluation.
“AMC appraisals also share a similar propensity for mistakes, despite employing a greater number of comparable properties. Our evaluation employs relatively simple statistical comparisons, but the results indicate no clear evidence of any systematic quality differences between appraisals associated and unassociated with AMCs.”

Note: FHFA is the Federal Housing Finance Agency, established by the Housing and Economic Recovery Act of 2008 (HERA) and is responsible for the effective supervision, regulation, and housing mission oversight of Fannie Mae, Freddie Mac (the Enterprises) and the Federal Home Loan Bank System, which includes the 11 Federal Home Loan Banks (FHLBanks) and the Office of Finance. Since 2008, FHFA has also served as conservator of Fannie Mae and Freddie Mac.

Read appraiser comments here:

Link to the report. Worth reading… or skimming ;>


Top 5 ‘Hidden’ Factors That Influence Home Value

Excerpts: HouseCanary examined five “hidden” factors that can have an impact on home value:
View angle from backyard
Frontage length
Backyard exposure to neighbors
Privacy score
Backyard slope

We controlled for other value influencers, such as location, lot size, gross living area (square footage), and more, so we could isolate the effect of these hidden factors. And we found that the relative importance of these factors can vary widely according to where the home is located.

The degree to which each factor influences a home’s value varies widely according to the region, county, or neighborhood where the home is located.

Interesting and worth reading.

Lender changes in appraisal requirements

By Rob Chrisman March 28 newsletter
Discusses changes in requirements from specific lenders, including Wells Fargo, Flagstaff, Banc of California and others including sinkholes in Utah. See if any of your clients are listed. Also, info on purchase of Class Appraisal AMC by investors.

Scroll down to: “Appraisal & valuation, & M&A”
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In the April 2018  issue of the paid Appraisal Today

Available April 2, 2018
Quick Start – how to get non-lender work ASAP – Part 1 
Fed up with AMC hassles and low fees? 
Not sure what type of non-lender work is best for you, or if you should try non-lender work? 
– Mom, Dad,when I grow up, I want to be an appraiser! By Barry Bates Interesting and humorous commentary, starting when he was 9 years old, 22 jobs in 40 years, first appraisal job (the salary was good), Army intelligence in Berlin etc. and how they related to his appraisal career !
– What will happen to residential mortgage lending in 2018?  
What affects the volume of mortgage loans? (and appraisals)? How can you tell when it is changing? Do you watch Treasury 10 year bond yields?

To read the articles, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

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Time capsule homes

Just for Fun!!

Have You Seen the Crazy Decor in This Detroit Home? Here’s the Inside Scoop

Excerpt: From the immaculate white and silver formal living room to the crocheted ceilings in the breakfast nook and den, this house was obviously put together with a very specific vision. In fact, the home has been so painstakingly curated and cared for over the decades, the homeowner couldn’t bear to separate his vision from the home itself, so he’s throwing everything into the purchase price.

Lots of fotos at:

For more time capsule homes, click here:

My comment: At a recent weekly local open house tour I saw a time capsule to the 1960s. The exterior was a one story home with attractive classic design built around 1910-1920, in a neighborhood with many old large classic homes. The interior had been completely remodeled in the 1960s with all interior wood trim removed, formica countertop, drywall, shag carpets, etc. Looked just like a tract home. The finished attic looked the same. Fortunately the interior had not been changed. In this neighborhood of expensive homes, some were remodeled in the 1950s/1960s to look like modern style homes. Now it has a negative affect on value.

Ripple effect of Tax Cuts and Jobs Act

Good analysis on the factors affecting home prices, mortgage rates, economy etc. are affected. Written by Ralph DeFranco, the Global Chief Economist of the Mortgage Group Arch Capital Services Inc

Last minute tax tips – health insurance fines and 401k/IRA contributions

I keep getting 2017 and 2018 confused ;>
April 15, 2018 tax return is for the calendar year 2017.
April 15, 2019 tax return is for the calendar year 2018.

Retirement account contributions by 4/15/18
Assuming that appraisers will be eligible for the 20% deduction from net income in 2018, consider making a contribution to your retirement account – IRA, 401k, etc. I am making a large contribution this year. The contributions can be made by April 15, 2017. My 2018 taxes will be lower, so it is more valuable this year. If you don’t have a retirement account, I advise calling Vanguard and setting one up. Vanguard has low fees and good returns on your money.
Note: Whether or not appraisers will be eligible for the 20% deduction (personal service businesses) is still unclear but I don’t hear anything yet as Congress does not appear to have started making it clearer. The IRS is probably working on it but I have not heard anything. I also have not seen a big rush of people switching from employee to independent contractors to get the deduction.

Health insurance fines – effective until 2019
Advice from Liability Insurance Administrators.
From Liability Insurance Administrators
Our resident health insurance expert, Paul Porter, has recently been getting calls from a number of appraisers who don’t fully understand the repeal of the Individual Mandate of the Affordable Care Act.
     Since many appraisers are small business owners, this could have a big impact as the fees for violation could be hefty (a per person penalty of $695 per adult and $347.50 per child with a maximum penalty of $2,085 or 2.5% of household income).  Many thought the repeal was immediate but it actually doesn’t become effective until 2019.

For lots more info, go to:


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 paid monthly 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 7AM to noon, Pacific time.
Mortgage applications increased 4.8 percent from one week earlier
My comment: Rush to refi before rates go up more??

WASHINGTON, D.C. (March 28, 2018) – Mortgage applications increased 4.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 23, 2018.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5 percent compared with the previous week. The Refinance Index increased 7 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 8 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 39.4 percent of total applications from 38.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.0 percent of total applications.

The FHA share of total applications decreased to 9.9 percent from 10.3 percent the week prior. The VA share of total applications decreased to 10.3 percent from 10.7 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.69 percent from 4.68 percent, with points decreasing to 0.43 from 0.46 (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 $453,100) increased to 4.60 percent from 4.55 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 30-year fixed-rate mortgages backed by the FHA increased to 4.75 percent from 4.69 percent, with points decreasing to 0.56 from 0.81 (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 decreased to 4.09 percent from 4.12 percent, with points decreasing to 0.46 from 0.51 (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 3.92 percent from 3.83 percent, with points decreasing to 0.46 from 0.68 (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.

Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
2033 Clement Ave. Suite 105
Alameda, CA 94501 Phone 510-865-8041
Fax 510-523-1138
Email   ann@appraisaltoday.com

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