Appraisal News and Business Tips

11-8-19 Newz: Zestimates – Fee Transparency – Science and Appraising

National Appraisers Forum

By Dave Towne

Excerpt: Appraisers, if you would like to learn from highly qualified peers (other than me! :), post questions, or offer your own comments, consider joining the FREE group, National Appraisers Forum (NAF). Use this link.

This is one of the best appraiser groups as all commentary is respectful. While not everyone always agrees with certain points, the discussions are not demeaning. There is a wealth of info participants share freely on a wide number of topics. The group has several moderators who monitor the posting activity.

One key point, NAF participants are not anonymous. You must use your name (at a bare minimum) when participating, which is required when signing up… Moderators are asking that anyone who wants to join should give their name as licensed, the state they are in, and their license number.

To read more, click here

My comments: This is my favorite appraiser online group! I get many emails from various sources for this newsletter and have been a member of many online communication places. Before the internet was widely available, I hosted live chats on aol and compuserve. Since then I have watched many online places. Unfortunately, just like any other topic, sometimes the groups end up doing lots of “flaming” (attacking another participants, etc.), negative comments, off topic, politics, etc. I quit going to these places.

Of all the groups I have subscribed to, National Appraisers Forum is the best for me. I have been a member since it started, or soon after. No complaining about AMCs, off topic, trolling and flaming, etc. The founder, Steve Smith, and the moderators keep it this way. Regular contributors are “high end” appraisers with many years of experience. Hot topics are often discussed.

There are well managed appraisal groups on Facebook, but it is too hard to for me to follow the threads, so I don’t go there very often. But, it may work for you.

Another major factor is that you must use your real name, so we know who is commenting. Allowing anonymous postings can easily decay into a mess.

I will be updating my article ” How to connect with other appraisers online. What’s the best group for you? ” in a future issue of the paid Appraisal Today discussing other email chat groups, how to find other groups or start your own, Facebook, etc.

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Fee Transparency, Pivotal Point for Appraisers

Excerpts: H.R.3619, the Appraisal Fee Transparency Act of 2019, is a new piece of legislation that has already passed the House of Representatives and is currently being reviewed by the Committee on Banking, Housing, and Urban Affairs in the United States Senate…

Each of H.R.3619’s provisions is significant in its own way, but perhaps none affects real estate appraisers more than its Section 4: Requirement to Disclose Appraiser Fees…

Check out the comments. To read more, click here

My comment: Well written, comprehensive, with links to relevant information. Of course, no one knows what the Senate will do…

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Red dart arrow hitting in the target center of dartboard

When sellers care too much about the Zestimate

By Ryan Lundquist

Excerpt: Three things about sellers caring too much about Zillow:

1) Some buyers need education: Some buyers do get hung up on Zillow, but these buyers are very likely the minority. Frankly, a buyer putting more weight on Zillow than actual comps or neighborhood trends is simply coming to the market as misinformed.

2) Obsession means more:…

To read more, click here

My comment: this article is written for real estate agents and property owners, as it should be for marketing Ryan’s appraisal business. But, it applies to almost anyone who owns a home, including borrowers doing a refi. Who does not check what Zillow says?

Some appraisers include Zillow’s zestimate, and estimates from other popular sources. They explain why, or why not, their value is different from Zillow. Sounds like a good idea maybe.

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A Cultural Historian Explores an Old Mental Hospital, and Why They Scare Us

They are haunted, but not by ghosts.

Excerpt: Rising 200 feet out of the hills of rural West Virginia, a clock tower looms over a vast and empty collection of buildings that once housed thousands of people diagnosed with mental illness. After being shuttered for more than 20 years, since 2007 the Weston State Hospital has been open for business again under its original name—the Trans-Allegheny Lunatic Asylum—and caters to tourists interested in some combination of history and the paranormal.

To read more, click here

My comment: In my small city, one of the places with (maybe) ghosts is an old abandoned asylum. Creepee!! I don’t know if this is true and never could find it, but it is a great story and is all over the internet ;> Google for more info/tales/etc.

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What is Fannie doing now and what are their future plans? UAD, Forms, Bifurcated

Excerpts:

Why test Bifurcated first, before UAD and forms?

The 1004p, an older Fannie form, can be run through Desktop Underwriter, so a new appraisal form is not needed.

Who is testing Bifurcated inspections (PDC)?

A small group of providers is participating in the test. Fannie is working on standardized Property Data Collection (PDC). For now, the data to be collected is not standardized. Fannie is working on this.

Terminology Clarification for Bifurcated

Three overall terms: Bifurcated, Hybrid, and Alternative Scope of Work have been used. Personally, I prefer Bifurcated as then it is clear what is happening – Inspection (PDC) and Appraisal can be done by different people.

  • PDC – Property Data Collection (new term). When someone goes to the property and does the inspection.
  • PIW – Property Inspection Waiver (old term for for current waivers). A better term for Bifurcated is Appraisal Waiver, as there will be no inspection or appraisal.

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Can science be unscientific? Why do we care?

By George Dell

In USPAP (Uniform Standards of Professional Appraisal Practice), the word science is not used. Not once! The word scientific is used only in Advisory Opinion 9, where it refers to “scientific aspects” of environmental contamination.

In The Appraisal of Real Estate, 14th ed. the word is used in two contexts: “science parks” as a property type, and “architecture … the science and art of designing and building structures.”

It appears appraisal may not be scientific. Must be art. Like painting a picture or singing or dancing.

Good news! Both sources agree that appraisal is “the act or process of developing an opinion of value” of an asset. An opinion. How do you get an opinion?

For more info, click here

My comments: I was hooked on science in my sophomore year high school biology class. After college I worked in various labs for 7 years before I started appraising. I have always approached appraising from the scientific method. Anything is possible, how do you analyze and approve or disprove it? But, I also like the “art” side of appraising, as there not always enough data to “prove” your hypothesis. For example, location on a specific busy street affects value.

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Fannie Mae, Freddie Mac unveil new mortgage application form

Excerpt: According to the GSEs, they are releasing a static version of the URLA form to give the mortgage industry time to “scope additional work needed to implement the redesigned form.”

To read more, click here

My comment: The GSE’s appraisal modernization initiative includes dynamic “forms”. I have been watching the progress of the URLA to see if they will use dynamic forms (Similar to filling out turbotax where the software skips non-relevant sections). The URLA is much, much easier than an appraisal form to make dynamic. I saw a live demo of how it worked. Looks like they are postponing adopting the dynamic version.

For lots more info on what Fannie and Freddie are doing now, and timeline changes, read my two articles on the topic. This months’ paid newsletter includes ” What is Fannie doing now and what is the future plan? UAD, Forms, Bifurcated” The June newsletter had a long article on the topic, ” Fannie’s big changes: New Forms, Revised UAD and Bifurcated (Hybrid) Appraisals”

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FHFA Releases 2019 Strategic Plan and 2020 Scorecard for GSEs

Excerpt: “Our nation’s mortgage finance system is in urgent need of reform,” said FHFA Director Mark Calabria. “The vision for reform articulated in the Strategic Plan and advanced in the Scorecard will serve borrowers and renters by preserving mortgage credit availability, protect taxpayers by ensuring Fannie Mae and Freddie Mac can withstand an economic downturn, and support a strong and resilient secondary mortgage market.”

Includes links to Plan and Scorecard To read more, click here

My comment: I searched the documents for “appraisal”. No results.

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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 decreased 0.1 percent from one week earlier

WASHINGTON, D.C. (November 6, 2019) – Mortgage applications decreased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 1, 2019.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.1 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 increased 2 percent from the previous week and was 144 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 7 percent higher than the same week one year ago.

“U.S. Treasury yields once again exhibited some intraweek volatility before declining sharply toward the end of the week. As a result, mortgage rates decreased, with the 30-year fixed rate falling below 4 percent again,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting. “In response to the lower rates, refinance applications climbed 2 percent, as homeowners with larger loan balances helped to keep the average refinance loan size elevated. Purchase applications fell slightly last week but remained almost 7 percent higher than a year ago.” 

Added Kan, “Amidst persistent supply constraints in the entry-level price range, there’s evidence that high-end homebuyers are more active this fall. The average loan size for purchase applications increased to its highest level since May.” 

The refinance share of mortgage activity increased to 59.5 percent of total applications from 58.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.2 percent of total applications.

The FHA share of total applications decreased to 11.8 percent from 12.0 percent the week prior. The VA share of total applications increased to 12.0 percent from 11.8 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 3.98 percent from 4.05 percent, with points remaining unchanged at 0.37 (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 3.97 percent from 4.01 percent, with points decreasing to 0.24 from 0.30 (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 3.79 percent from 3.83 percent, with points decreasing to 0.21 from 0.28 (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 3.38 percent from 3.40 percent, with points decreasing to 0.31 from 0.36 (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 remained unchanged at 3.43 percent, with points decreasing to 0.21 from 0.23 (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

Email  ann@appraisaltoday.com

www.appraisaltoday.com

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