Dancing and Crooked Houses for Appraisers

Excerpt: A huge effort is underway to Modernize the Appraisal Process and is being driven by FHFA, Fannie Mae and Freddie Mac’s regulator. Modernization is a good thing. I have no doubt many appraisers would love to automate areas of the process that are redundant, manual, or should simply just be excised from the process altogether.

Be sure to check out the 31 comments (as of yesterday morning) at the end…

My comment: Fannie is testing who does the best inspections now. I will be writing about it next month’s paid Appraisal Today. Lots of more possible changes and, more important, what it means for you!!

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Excerpts: Effects of raising the threshold for requiring manual appraisals from $250,000 to $400,000:

According to Collateral Analytics, around 19.4% based on MLS (multiple listing service) sale transactions and about 14.6% based on public records would be impacted by the new proposed guideline. Collateral’s study suggests this slight move to eliminate traditional appraisals, from even a modest subset of residential mortgages, is a baby step toward modernizing the regulation and underwriting process for homebuyers. Without traditional appraisals, automated valuation models (AVM) would still be necessary during the underwriting process, performing the same tasks as humans but processing more data. However, AVMs may not reach the target price lenders may be pressured to achieve.

Most lenders still use traditional evaluation processes, even though 68% of all homes are under $312,500 the typical threshold for a $250,000 mortgage, and eligible for automated appraisal methods combined with inspections on property condition. Eliminating the traditional evaluation will require a fresh look at this issue.

Real estate agents are sales people and understand about marketing. For them, every person who owns, or wants to own, real estate is a potential client.

WASHINGTON, D.C. (May 15, 2019) – Mortgage applications decreased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 10, 2019.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 7 percent higher than the same week one year ago.

“Purchase applications declined slightly last week but still remained almost 7 percent higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite the third straight decline in mortgage rates, refinance applications decreased for the fifth time in six weeks, albeit by less than 1 percent.”

Added Kan, “It’s worth watching if ongoing global trade disputes lead to increased anxiety about the economy, which could cause some potential homebuyers to put off their home search until the uncertainty is resolved.”

The refinance share of mortgage activity remained unchanged from the previous week at 37.9 percent of total applications. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications.

The FHA share of total applications increased to 10.1 percent from 9.5 percent the week prior. The VA share of total applications decreased to 10.6 percent from 11.1 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.40 percent from 4.41 percent, with points decreasing to 0.40 from 0.47 (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 $484,350) decreased to 4.24 percent from 4.27 percent, with points increasing to 0.27 from 0.23 (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 4.32 percent from 4.44 percent, with points decreasing to 0.49 from 0.56 (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 3.78 percent from 3.81 percent, with points increasing to 0.43 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 5/1 ARMs decreased to 3.82 percent from 3.88 percent, with points increasing to 0.44 from 0.26 (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.