Appraisal News and Business Tips

8-9-19 Newz: Evaluations and USPAP – Zoning Codes – Inspection Standards?

9 Very Funny Quotes for the Self-Employed Appraiser

Just For Fun!!

Some great, very funny, animated gifs ;>

Here are a few comments:

“The crappy thing about being self-employed is I never believe myself when I call in sick.”

“Things people say: ‘It’s Friday!’ Things self-employed people say: ‘It’s Friday?’”

To read more, click here

My comment: We all need some appraiser humor! Something for everyone in this blog post!! Unfortunately, animated gifs usually don’t work well in these email newsletters. You Just Gotta See Them!!

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Lots of evaluation issues – USPAP, state regulators, type of reports, etc. The newest hot topic in residential appraising!

Appraisal Standards Board Considering Creating Standards for Evaluations

ASB to Issue Concept Paper and Hold Public Hearing

Excerpts: The Appraisal Standards Board (ASB), an independent board of The Appraisal Foundation, announced today that it intends to examine the concept of creating standards for evaluations, which are alternatives to appraisals used by financial institutions. Currently, there are no uniform standards for appraisers to follow when conducting an evaluation, which leads to greater risk to the safety and soundness of the real estate transaction and diminished protections for consumers. The ASB intends to issue the concept paper around Labor Day, and will follow up with a public hearing with panels of constituents on October 18, 2019 in Washington, DC. As with all public meetings of the ASB, the public hearing will be broadcast via livestream.

Currently, the Interagency Appraisal and Evaluation Guidelines for federally regulated financial institutions provide guidance on evaluations, but that guidance is directed at lenders, not appraisers. Furthermore, the courts have found such guidance to be unenforceable. “This puts appraisers in a difficult, untenable position,” said John Brenan, vice president of appraisal issues at the Appraisal Foundation. “Appraisers often struggle when asked to perform evaluations, since most are mandated to comply with the Uniform Standards of Professional Appraisal Practice. It’s almost a Catch-22 situation.”

To read more, click here

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Evaluations interview with David Bunton, President of The Appraisal Foundation

Excerpt: We want appraisers to be able conduct a valuation assignment, whether it is an appraisal or an evaluation, which is in accordance with USPAP. We don’t want an appraiser to have to choose between following the law versus having a business. No appraiser should have to make that choice. Appraisers should be fulfilling their critical mission which is to provide an objective, independent opinion of value in the real estate transaction that protects both the lender and consumer. By completing that appraisal and/or evaluation in accordance to USPAP, they are ensuring the public trust in valuation and their opinion is subject to oversight by a publicly accountable board.

To read more, click here

My comments: I am working on an article on this tough topic for the next month’s issue of the paid Appraisal Today. Factors include USPAP uncertainty, state boards differences, etc. . Of course, evals have been around since FIRREA in 1989 and are widely used in commercial lender valuation for refis. Now they are being proposed for residential loans. Another way to get rid of those pesky appraisers that slow down, and mess up, lender loans!

I AM LOOKING FOR RESIDENTIAL EVALUATION SAMPLES. IF YOU HAVE ONE, PLEASE SEND IT TO ME!! HIT THE REPLY BUTTON TO SEND OR COMMENT. You can be anonymous, or I will give you a big credit in the next free email newsletters. All can find online is promos for Corelogic, etc. but no sample evaluations.

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Zoning Codes: how zoning laws work, how these ordinances shape your city and neighborhood, and why we fight over them.

Excerpts: In 1908, Los Angeles adopted the country’s first municipal zoning ordinance, creating residential districts prohibiting “nuisance” uses such as laundries and separate industrial districts…

In 1926, the U.S. Supreme Court heard the case Village of Euclid v. Ambler Realty Co. and decided in favor of Euclid, Ohio’s power to dictate land use. This affirmed that municipalities had the constitutional authority to regulate which uses could go on which parcels and other aspects of buildings on private property.

To read more, click here

My comment: Fascinating, especially the history! Includes a glossary of zoning terms.

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An Industry Standard for Property Inspection?

By George Dell

Excerpt: What we have today is left entirely up to the appraiser. The only general tests we have under Appraisal Foundation standards (USPAP Standard 1) is: “correctly complete research” [whatever ‘correctly” is…]. Rule 1-1 there explains how to do “correctly”: …

Rule 1-2 goes on:…

… These suggested modifications are not difficult to rewrite in USPAP. They would place the burden of risk determination and scope credibility on the client, and remove the liability from the appraiser. Appraisal speed might be increased, and appraisal cost might be reduced to even less than 1/10th of one percent of average transaction amounts….

To read more, click here

My comment: Clarification of inspection in USPAP is definitely needed!!

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Getting too many ad-only emails?

4 ways to get only the FREE email newsletters 

and NOT the ad-only emails

Click here for the list of 4 ways plus information on why I take ads, etc. What about the business side of appraising? Do you have any AMCs you are thinking about dumping, want to cut costs, etc.?

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New in the August 2019 issue of the paid Appraisal Today

  • Most appraisers focus on completing appraisals, not the business side of their companies, and make less money
  • Who’s on your Approved Client list and why? Don’t work for low fees with lots of hassles!!
  • Client Rating Grid
  • Appraisal report corrections & responses – suggested protocol by Dave Towne
  • The Valuation of Condominiums, Cooperatives and PUDs – Book Review

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

If this article gave you one appraisal, it is worth the subscription price!!

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Click here for more info!If you are a paid subscriber and did not get the August 2019 issue, emailed Thursday August 1 2019, please send an email to info@appraisaltoday.com and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it.

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Appraisal Reform or System Reform?

Excerpt: The Appraisal Foundation was “Authorized by Congress as the Source of Appraisal Standards and Appraiser Qualifications.” The intent of USPAP is to promote and maintain a high level of public trust. Given the worst real economic turndown (ten years ago) since the great depression, it appears this experiment failed. Homeowners and consumers suffered. Some perpetrators gained immensely, with the artificial playing field allowing them to game the system for their own gain. Few of them suffered repercussion or penalty.

What is missing, I believe, are some simple underlying truths and needed policy: …

For more info, click here

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Economists warn of dangers trade war escalation poses to housing and economy

Excerpt: But, mortgage rates aren’t the only thing that drives the housing market. You can’t get a mortgage if you don’t have a job, Lawrence Yun, chief economist of the National Association of Realtors, pointed out.

“Mortgage rates this week will reach fresh lows, but for the wrong reasons,” Yun said. “If there is a job-cutting recession, which often occurs with delayed lag after a stock market correction, then low interest rates will not help home sales nor home prices.”

To read more, click here

My comment: Guess it will be hard to blame AVMs, BPOs, and evaluations done by non-appraisers if there is a crash… If I knew what was going to happen with the tariffs, I would be Very Rich and retired and travel among my many fancy homes ;> All of them will have a pickleball court, of course…

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FHA moves to limit cash-out refinances

Lowers LTV requirements from 85% to 80%

Excerpt: In effect, the new rule will limit the number of people who qualify for a refinance to extract some of their home equity in cash. The FHA said the change will mitigate its risk and preserve the housing wealth of FHA borrowers.

The agency also said the change, which will be effective for loans with case numbers assigned on or after September 1, 2019, aligns the FHA’s max LTV rules with those upheld by Fannie Mae and Freddie Mac.

This is the first time in a decade that the agency has moved to alter LTV requirements for FHA cash-outs.

To read more, click here

My comment: Fewer FHA appraisals??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.

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Mortgage applications increased 5.3 percent from one week earlier

WASHINGTON, D.C. (August 7, 2019) – Mortgage applications increased 5.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 2, 2019.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.3 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 12 percent from the previous week and was 116 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 7 percent higher than the same week one year ago.

“The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the beginning of a trade war with China. The result was a sharp drop in mortgage rates, which will likely draw many refinance borrowers into the market in the coming weeks,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The 30-year fixed rate mortgage fell to its lowest level since November 2016, and the drop resulted in an almost 12 percent increase in refinance application volume, bringing the index to a reading over 2,000 – its highest over the same time period. We fully expect that refinance volume will jump even higher this week given the further drop in rates.”

Added Fratantoni, “Lower mortgage rates did not pull more homebuyers into the market, as purchase volume slipped a bit last week, but still remains around 7 percent ahead of last year’s pace.”

The refinance share of mortgage activity increased to 53.9 percent of total applications from 50.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.7 percent of total applications.

The FHA share of total applications decreased to 11.0 percent from 11.3 percent the week prior. The VA share of total applications increased to 12.8 percent from 12.6 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 4.01 percent from 4.08 percent, with points increasing to 0.37 from 0.34 (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 3.96 percent from 4.04 percent, with points increasing to 0.26 from 0.22 (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 3.86 percent from 3.94 percent, with points increasing to 0.38 from 0.29 (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 3.37 percent from 3.48 percent, with points increasing to 0.37 from 0.26 (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 3.36 percent from 3.52 percent, with points increasing to 0.36 from 0.31 (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.

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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

www.appraisaltoday.com

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