Valuation Is Not A Guessing Game, It’s a Development Process
Excerpts: If you’ve ever had an appraisal of your home completed, perhaps you can relate to the following scenario. Appraiser values are developed and are not guesses.
The appraiser arrives at your home. You know that they have probably done a little research on what potentially comparable sales in the neighborhood are selling for.
The appraiser views each room in your home, taking photos and notes as they go. The appraiser asks you about any improvements you have made to your home in recent years.
At the end of the inspection, you assume that the appraiser has to have some idea about what the value is likely to be. You ask the appraiser, “Well…What do ya think?” What you’re probably really wanting to know is what the appraiser thinks your home is worth. At this point the appraiser is likely to give an evasive reply that doesn’t answer your question. Why?
To read more and see the funny animated fotos and gifs click here
My comment: written for homeowners, but some good ideas for appraisers. You can use for ideas for speaking to real estate agents, for example. Or, can give (or send) the owner a link to this article.
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Are McMansions Making Everyone Unhappy?
By one estimate, each newly built house had an average of 507 square feet per resident in 1973, and nearly twice that—971 square feet—four decades later.
But according to a recent paper, Americans aren’t getting any happier with their ever bigger homes. “Despite a major upscaling of single-family houses since 1980,” writes Clément Bellet, a postdoctoral fellow at the European business school INSTEAD, “house satisfaction has remained steady in American suburbs.”
This finding, Bellet reasons, has to do with how people compare their houses with others in their neighborhood—particularly the biggest ones…
To read more, click here
My comment: Very Interesting!!
FHA is increasing lending to riskier borrowers
Excerpt: Citing rising risks among the mortgages it is backing, the Federal Housing Administration earlier this year announced that it was changing some of its lending rules to increase the prevalence of manual underwriting.
The idea behind the change is to look more closely at the FHA loans that are being originated in the market to try to lessen the risk facing the FHA’s flagship insurance fund.
Worth reading with data and graphs click here
My comment: How will this affect appraisals? Unknown.
Course Title: NEW
FHA Appraisal Training – Jacksonville AR
Wednesday, July 10, 2019, 8:30 AM to 4:30 PM (Central)
Check-in begins 30 minutes before the start of the session.
Jacksonville Community Center
5 Municipal Drive
Jacksonville, AR 72076
Denver Homeownership Center
This free, on-site training will cover FHA appraisal requirements, including FHA appraisal protocol and updates to FHA appraisal policy as outlined in FHA’s 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.
This training is intended primarily for appraisers; however, other industry professionals may also benefit from attending. Priority will be given to appraisers.
Advance registration is required by July 2, 2019; seating is limited and is available on a first-come, first-served basis.
For additional information, contact Deborah Byers via email at: firstname.lastname@example.org or by phone at 1-800-225-5342.
Course Title: NEW
FHA Appraisal Training – Philadelphia PA
Tuesday, July 16, 2019, 1:30 PM to 4:30 PM (Eastern)
Check-in begins 30 minutes before the start of the session.
U. S. Department of Housing and Urban Development
Philadelphia Regional Office
The Wanamaker Building
100 Penn Square East
Room 10A/B (10th Floor)
Philadelphia, PA 19107
Philadelphia Homeownership Center
This free, half-day, on-site training will cover FHA appraisal requirements, including appraisal protocol and updates to FHA appraisal policy as outlined in FHA’s Single Family Housing Policy Handbook 4000.1. Discussions include policy changes and clarifications and updates on other topics including: property acceptability criteria; underwriting the appraisal; minimum property requirements; property defects; enhanced appraiser and underwriter responsibilities and requirements; programs and products (i.e., 203(k)); and much more.
This training is intended primarily for appraisers and underwriters; however, other industry professionals — including mortgage loan professionals, loan officers, and property inspectors — may also benefit from attending.
Advance registration is required by July 10, 2019; seating is limited and is available on a first-come, first-served basis. Registrants must include their complete email address.
For additional information, contact PHOCevents@hud.gov.
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Fannie’s Big Changes: New Forms, Revised UAD and Bifurcated Appraisals. What does this mean for you?
• The Good (revised forms) The Bad (Bifurcated appraisals)
• What is Fannie’s “Modernization” plan?
• What is the timeline for the changes?
• Why is Fannie making these changes?
• What does “dynamic” form filling look like?
• What do appraisers, and other stakeholders, say they want?
• Fannie is testing who is the best for doing inspections
• Will anything really happen?
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My Google Calendar went down Tuesday. Very Scary!!
Fortunately, I had a printout for June and the calendar was on my iphone. But, my office assistant could not update or check anything on our office computers!!
It was very scary, reminding me of how dependent we are on the internet. If google can go down, what about the other software we depend on, including MLS, online backups, forms software data, Quickbooks online, etc.?
Excerpt from the Verge: “Google Calendar’s issues come in the same month as another massive Google outage which saw YouTube, Gmail, and Snapchat taken offline because of problems with the company’s overall Cloud service. At the time, Google blamed “high levels of network congestion in the eastern USA” for the issues.”
“The outage also came just over an hour after Google’s G Suite twitter account sent out a tweet promoting Google Calendar’s ability to making scheduling simpler.”
For more info on google calendar hack, click here
A few months ago, my gmail account for my primary email address, firstname.lastname@example.org was hacked.
I could not send or receive from that account. I use gmail to store messages but do not use the gmail interface as I prefer my desktop software, Thunderbird.
My tech service fixed it within 24 hours and warned me that the email address I use for a lot of web sites had been used. i changed the address. They strongly recommended using unique passwords saved through Last Pass on another method. Fortunately the hackers were not very sophisticated.
Next month’s paid newsletter will have an article, “Appraisers and Cyber Security”, with more recommendations.
I read a lot of apocalyptic novels, primarily an EMP attack where the internet is gone (plus electrical grid, etc.). I mostly try not to think about how easy it would be for it to happen as our country is not prepared for it at all.
Recently the Sacramento CA MLS was hacked
Here is the message from the MLS: “The MetroList computer network that supports Prospector MLS is down as a result of a cyber-attack…”
“The cyber-attack we are experiencing is very similar to those that have impacted thousands of other businesses and governments across the country. All MetroList data is backed up and our team is working through the various issues to get the systems up and running. ”
Per Inman News: ” (Sacramento) MetroList allegedly paid $10K ransom after being compromised by hackers, leaving more than 20K subscribers without a functioning system for nearly 2 days.”
US House Financial Services Committee Hearing on Appraisals “What’s Your Home Worth? A Review of the Appraisal Industry”. June 20 2019.
Link to recorded hearing – 1 hour and approximately 50 minutes. Worth listening to some of the sections. Easy to scroll through.
Single-panel hearing with the following witnesses:
* David S. Bunton, President, The Appraisal Foundation
* Stephen S. Wagner Senior Appraiser, Terzo & Bologna, Inc., on behalf of the Appraisal Institute
* Jeff Dickstein, Chief Compliance Office, Pro Teck Valuation Services, on behalf of the Real Estate Valuation Advocacy Association
* Andre Perry, David M. Rubenstein Fellow, Metropolitan Policy Program, the Brookings Institute
* Joan N. Trice, Founder, Collateral Risk Network
My comments on witnesses None of them are practicing,working in the field, residential appraisers. Joan Trice did residential appraisals in the past. Jeff Dickstein is certified residential and is the president of REVAA, an AMC advocacy group. Stephen S. Wagner is a commercial appraiser and is president of the Appraisal Institute. Andre Perry’s research focuses on race and structural inequality, education, and economic inclusion.
Many appraisers sent letters requesting that Jonathan Miller, a practicing residential appraiser, be added, but he was not selected.
My comments on what was discussed at the hearing
I watched the full hearing. Witnesses and many of the committee members in attendance said that human appraisers were best. The appraiser witnesses discussed the usual appraisal issues of trainees, few appraisers, AMCs, etc. Joan Trice spoke at the last appraisal hearing in 2016 and repeated that the appraisal regulatory system was a mess, waving her “spaghetti” organization/regulatory chart several times. There was very little, if any, discussion of appraisal modernization or technology.
At the beginning of the hearing, Mr. Clay, the Chair, said the hearing was a followup from a previous hearing about racial discrimination in home ownership and wealth disparity. He said this hearing was about “inaccurate appraisals”.
The entire system of discrimination in home ownership was discussed – real estate agents, advertising, lenders, etc.
Andre M. Perry focused on the data surrounding lower values of properties in black neighborhoods, based on a report Mr. Perry co-authored (with two other people), distributed by the Brookings Institution. Link to Mr. Perry’s report:
There was some discussion about appraisers’ “low” appraisals for the same homes in neighorhoods with a large percent of blacks as compared with higher prices in white neighborhoods. However, when asked if anyone in the room thought that appraisers were responsible for the low values in these neighborhoods, only one person, Mr. Perry, raised a hand.
So far, almost all of the online appraiser chat has been negative about appraisers and racial discrimination. Watch the hearing and see what you think. Read the link above to Perry’s report also.
As we all know, appraisers participated in “red lining” in the past but have been very careful not to use racial based adjustments for decades, including photos of any persons in appraisals. I have included links to the redlining maps in this newsletter in the past. When I started appraising in Oakland CA in 1986, I was very surprised that home prices in neighborhoods with mostly minority home owners were dramatically lower than the same homes in primarily white neighborhoods.)
What I found most interesting in this hearing, and in the 2016 hearing, was what the committee members said. For example, a committee member suggested that maybe Cost could be used instead of Sales to get a better way for appraisers to value homes in minority neighborhoods. Her constituents are in Detroit, MI, in areas where home prices are low but appraisals can be too low for them to buy a home. Another committee member said his house in his state was worth 4 times more in Washington DC.
On the plus side, most or all of the the committee members seemed to know about mortgage loans and housing prices, as compared with the committee members that questioned Facebook and other tech companies who did not seem to know much at all about it ;>
House Financial Services Subcommittee Issues Hearing Memo on Home Appraisal
Background info and list of witnesses. Good short summary of the history of appraisal regulations, AMCs, appraiser shortage, etc.
A few of the letters sent to the committee:
From 28 state appraisal organizations
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 email@example.com . Or call 800-839-0227, MTW 7AM to noon, Pacific
Mortgage applications decreased 3.4 percent from one week earlier
WASHINGTON, D.C. (June 19, 2019) – Mortgage applications decreased 3.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 14, 2019.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 4 percent higher than the same week one year ago.
“After a six-week streak, mortgage rates for 30-year loans increased slightly, which led to a pullback in overall refinance activity,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Borrowers were sensitive to rising rates, but the refinance share of applications was still at its highest level since January 2018, and refinance activity was at its second highest level this year. Government refinances actually increased last week, led by a 17 percent jump in VA refinance applications, while conventional refinance applications decreased 7 percent.”
Added Kan, “Purchase applications decreased more than 3 percent last week, but were still up almost 4 percent from last year. Strong demand from first-time buyers and low unemployment continue to push this year’s purchase activity above a year ago.”
The refinance share of mortgage activity increased to 50.2 percent of total applications from 49.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent of total applications.
The FHA share of total applications increased to 9.4 percent from 8.9 percent the week prior. The VA share of total applications increased to 11.9 percent from 11.0 percent the week prior. The USDA share of total applications decreased to 0.5 percent 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) increased to 4.14 percent from 4.12 percent, with points increasing to 0.38 from 0.33 (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 $484,350) remained unchanged at 4.04 percent, with points increasing to 0.24 from 0.17 (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 4.12 percent from 4.09 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 average contract interest rate for 15-year fixed-rate mortgages decreased to 3.50 percent from 3.53 percent, with points increasing to 0.33 from 0.32 (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 3.45 percent from 3.43 percent, with points decreasing to 0.23 from 0.32 (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