Appraisal News and Business Tips

12-6-18 Newz// Threshold Proposed Increases, Ancient Cave Homes

Proposed appraisal threshold increases keep coming – both residential and commercial !!

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House Republicans Push to Ease Property Appraisal Rules Before Giving Democrats Control
Verification of Real Estate Values Would Drop by More Than Half Under Proposal
Source: Costar

Excerpts:

Republicans in Congress and U.S. financial regulators are proposing to ease appraisal rules for real estate sales financed by credit unions, prompting critics to warn the move could recreate some conditions that fueled the financial crisis more than a decade ago.

The proposals are part of a larger push by the Republican leadership in the House, which will hand over control to the Democrats next month, to roll back financial industry regulations while the GOP is still in charge in that chamber. The National Credit Union Administration is accepting comments until midnight on Monday on its plan to increase the threshold for nonresidential sales to $1 million, which it said would boost the portion of sales not requiring an appraisal to two-thirds of all transactions from 27 percent. About 210,000 commercial property transactions were valued at $1 million or less in 2017, according to CoStar data.

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18 Appraisal Groups send letter opposing credit union new commercial threshold

Excerpt: The letter noted that the federal banking regulatory agencies – the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve Board – earlier this year approved increasing the commercial appraisal threshold from $250,000 to $500,000

“We are deeply concerned the NCUA proposal, if finalized at $1 million for commercial real estate transactions, will result in a regulatory ‘arms race’ between the Agencies and the NCUA,” the letter said. “This would result in the NCUA – the agency with the least direct experience in overseeing business and commercial real estate lending – effectively driving the appraisal policies for the entire financial regulatory system.”

The letter also noted that legislation adopted this year by the U.S. House (and awaiting action by the Senate) would link commercial appraisal threshold levels for two of the U.S. Small Administration’s most popular loan programs to those established by the federal banking regulatory agencies. “This (NCUA) proposal will likely impact not just credit unions and banks, but SBA lenders and risks associated with SBA loans,” the letter said.
The NCUA did not propose changes to the appraisal threshold for residential loans. “We support the NCUA’s proposal to maintain the $250,000 threshold level for residential real estate transactions,” the letter said.
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Sign the Petition!! (residential)

Written by Ryan Lundquist and Jonathan Miller
Almost 3,000 have signed the petition as of yesterday!!

Excerpt:

While the current administration clearly believes in deregulation, this doesn’t sound like a move to protect the American consumer and the United States housing market. As recent experience tells us, it’s going to cost us.

Please sign the petition to send a message to federal regulators that exposing the consumer and taxpayer to unnecessary mortgage risk is not supposed to be their role.
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More comments on residential thresholds

Remember liar loans of a decade ago? Those same people want to do away with appraisers.
by Jonathan Miller
Excerpt: One group not explicitly mentioned in the petition but impacted down the road are real estate agents and brokers. Currently, 12% of mortgages that flow through the GSE (Fannie Mae and Freddie Mac account for 78% of residential mortgages right now) will have their appraisals waived. Those are “PiW” loans or have a “Property Inspection Waiver.” My good friend and appraiser colleague Phil Crawford says on his radio show “Voice of Appraisal” says the acronym stands for “Pissing In Wind” which is more accurate. If the buyer realizes they overpaid for the property, the agents are now the professionals with the bullseye on their back. Liability insurers are already talking about a new target when things go south.
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Sorry, home appraisers, bots are coming for your jobs

Federal regulators are looking to change appraisal rules to allow for more automated appraisals
Excerpt: Such a change could prove lucrative for upstart property valuation companies that use algorithms, artificial intelligence and drones to value homes. If these rule changes had been in effect last year, roughly 214,000 additional home sales, or some $68 billion worth, could have traded hands without an appraiser.
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Plan to Reduce Human Appraisals May Lead to ‘Wildly Inaccurate’ Estimates 
From NAR: 
Excerpt: Automated home evaluations likely would take the place of in-person appraisals for qualifying properties-a move appraisers warn could lead to inaccurate estimates and more sellers who are unrealistic about home value.
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What are you doing for year end tax planning? 

 
In the December issue of the paid Appraisal Today

Excerpt: There have been some significant changes for 2018 due to the new tax act: Tax Cuts and Jobs Act (TCJA), that amended the Internal Revenue Code of 1986. (AKA the Full Employment Act for Accountants) There are a lot of issues now, with more coming, as income taxes are due April 15, 2019, which is not very far away.

For example, If you take the 20% business income deduction, you will probably be paying lower taxes in 2019. To reduce taxes even more you would pay as many expenses as you can in 2018 and defer receiving income until 2019 whenever possible.
I have been writing this article every year since 1992. This year it was very difficult due to the new tax law, with lots of uncertainty as Congress has not passed a bill to help straighten out all the confusion. The IRS has been slow to provide guidance also.

Subscribe to Appraisal Today and get a tax writeoff!!

 To read the full article, plus 2+ years of previous issues. 
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Eski-Kermen Cave City

One of the cave cities of Crimea, built by the Goths in the sixth century.

Excerpt: Eski-Kermen is one of the earliest inhabited of the various cave towns that are scattered throughout the area. Sitting atop one side of a double mesa separated by a 500-foot-wide valley, Eski-Kermen began life as a Byzantine boundary fortress in the 6th century, manned by the Goths. They built extensive fortifications, including a town gate carved right into the bedrock, a siege wall, tunnels, hidden staircases, grain storage pits, and an underground gallery where water was gathered from a natural spring.
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How Matera Went From Ancient Civilization to Slum to a Hidden Gem

Once the “shame of Italy,” the ancient warren of natural caves in Matera may be Europe’s most dramatic story of rebirth
Excerpt: First occupied in the Paleolithic Age, the myriad natural caves were gradually burrowed deeper and expanded into living spaces by peasants and artisans throughout the classical and medieval eras. Today, these underground residences are being reinhabited by Italians, and staying in one of the Sassi’s cave hotels has become one of Europe’s most exotic new experiences.
My comments: Fascinating!! Check out the photos. Matera will a UNESCO World Heritage Site in 2019. The residents were required to move out of the caves in the 1950s. Now, many are totally redone and popular tourist site. Not many changes to the Crimea city.
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Forget Aspen! 10 Great U.S. Ski Towns Where Folks Can Actually Afford to Buy a Home

Just For Fun!!

Here are a few:
1. Iron River, MI Median list price: $59,800
4. Biwabik, MN Median list price: $99,500
8. Kellogg, ID Median list price: $138,500
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Course Title: NEW
FHA Appraisal Training
Date/Time:
Wednesday, January 23, 2019, 8:30 AM to 4:30 PM (Mountain)
Check-in begins 30 minutes before the start of the session.
Event Location:
U.S. Department of Housing and Urban Development
1670 Broadway
25th Floor
Denver, CO 80202
Jurisdictional Host:
Denver Homeownership Center
Registration Link:
Description:
This free, on-site training will cover FHA appraisal requirements, including appraisal protocols and updates to appraisal policy as outlined in the Single Family Housing Policy Handbook 4000.1. This training also takes an in-depth look at a variety of appraisal-related topics including: property acceptability criteria; minimum property requirements; property defects; appraiser responsibilities and requirements; and much more.
Audience:
This training is targeted primarily to appraisers; however, other industry professionals, including underwriters and processors, may also benefit from attending.
This appraisal training is approved for seven hours of Continuing Education Units (CEUs) for licensed appraisers in state where it is applicable, and accreditation is required.
Special Instructions:
Advance registration is required by January 16, 2019. Seating is limited and available on a first-come, first-served basis. Priority will be given to appraisers. Registrants must include their complete email address.
This training is being held in a secure facility; registrants’ names must be on the registration list to attend. Proper identification (i.e., driver’s license) is required at check-in at the 25th Floor reception desk.
For more information, contact Deborah Byers via email at: Deborah.A.Byers@hud.gov, or by phone at 1-800-225-5342.

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Course Title: NEW
FHA Appraisal Training
Date/Time:
Wednesday, January 16, 2019, 8:30 AM to 4:30 PM (Mountain)
Check-in begins 30 minutes before the start of the session.
Event Location:
U.S. Department of Housing and Urban Development
1670 Broadway
25th Floor
Denver, CO 80202
Jurisdictional Host:
Denver Homeownership Center
Registration Link:
Description:
This free, on-site training will cover FHA appraisal requirements, including appraisal protocols and updates to appraisal policy as outlined in the Single Family Housing Policy Handbook 4000.1. This training also takes an in-depth look at a variety of appraisal-related topics including: property acceptability criteria; minimum property requirements; property defects; appraiser responsibilities and requirements; and much more.
Audience:
This training is targeted primarily to appraisers; however, other industry professionals, including underwriters and processors, may also benefit from attending.
This appraisal training is approved for seven hours of Continuing Education Units (CEUs) for licensed appraisers in state where it is applicable, and accreditation is required.
Special Instructions:
Advance registration is required by January 9, 2019. Seating is limited and available on a first-come, first-served basis. Priority will be given to appraisers. Registrants must include their complete email address.
This training is being held in a secure facility; registrants’ names must be on the registration list to attend. Proper identification (i.e., driver’s license) is required at check-in at the 25th Floor reception desk.
For more information, contact Deborah Byers via email at: Deborah.A.Byers@hud.gov, or by phone at 1-800-225-5342.
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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 2.0 percent from one week earlier

WASHINGTON, D.C. (December 5, 2018) – Mortgage applications increased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 30, 2018. The results for the week ending November 23, 2018, included an adjustment for the Thanksgiving holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 42 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 36 percent compared with the previous week and was 0.2 percent higher than the same week one year ago.

“Treasury rates continued to slide last week, driven mainly by concerns over slowing global economic growth and U.S. and China trade uncertainty. The 30-year fixed-rate fell for the third week in a row to 5.08 percent and has declined a total of nine basis points over this span,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Application activity increased over the week for both purchase and refinance loans, and were 10 percent and 7 percent higher, respectively, than the week before the Thanksgiving holiday. Additionally, we saw a decrease in the average loan size for purchase applications to the lowest since December 2017 ($298,000 from $313,000). This is perhaps an indication that there are fewer jumbo borrowers, or maybe first-time buyers are having better success reaching the market as we close out the year.”

The refinance share of mortgage activity increased to 40.4 percent of total applications from 37.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.4 percent of total applications.

The FHA share of total applications increased to 10.2 percent from 9.6 percent the week prior. The VA share of total applications increased to 10.0 percent from 9.9 percent the week prior. The USDA share of total applications decreased to 0.6 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) decreased to 5.08 percent from 5.12 percent, with points decreasing to 0.44 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 4.89 percent from 4.88 percent, with points decreasing to 0.30 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 5.05 percent from 5.11 percent, with points decreasing to 0.62 from 0.63 (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 4.50 percent from 4.53 percent, with points increasing to 0.60 from 0.51 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 5/1 ARMs increased to 4.33 percent from 4.29 percent, with points decreasing to 0.21 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased 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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