March 20, 2020
There are many, many issues which seems to be changing on a daily basis. I wrote this yesterday. There have already been changes I am sure. I am including links to relevant information below
The big refi boom is causing lots of desperate lenders and AMCs trying to find appraisers.
You don’t need more info on keeping safe as it is available all over. What I discuss today is shift from interior inspections to drivebys, forms, what lenders are saying, what real estate agents are doing, the market changes (maybe), liability, etc.
What are lenders and AMCs doing?
Some direct lenders, such as Citibank, are sending out emails about what they recommend. On the other side AMCs are acting like nothing has happened and sending out email blast low fee appraisal request. FYI, it is a lot easier for one lender to change. AMCs work for many lenders.
Info on what Citibank is recommending from VaCAP:
Many are fearful exterior only appraisals will be the end of the traditional appraisal as we know it. Right or wrong, exterior only appraisals are a possibility that may be acceptable in certain situations. VaCAP does not believe it will end traditional appraisals with interior inspections. The profession has been down this road before. It will not fly long term, especially if the market turns downward.
Some lenders are establishing COVID-19 protocols to follow and some have remained quiet on the subject. There are rumors that one lender has instructed appraisers not to inquire as the health of the occupants of the home due to privacy laws. Others like Citibank have developed their own protocol on how appraisers should handle COVID-19 concerns. There is great flexibility to the appraiser. See Citibank’s protocol below:
Worth reading. To read more, click here
Covid-19 Residential Appraisers Tips on Staying Safe
For Covid Updates, go to my Covid Science blog at covidscienceblog.com
Appraiser Recovers From COVID-19
To read more of this long blog post, click Read More Below!!
NOTE: Please scroll down to read the other sections of this long blog post on Covid status, mortgage origination stats, etc.
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25 Animal-Shaped Buildings from Around the World
Just For Fun. We need it!!
A KINDERGARTEN SHAPED LIKE A cat, a skyscraper shaped like an elephant, a hotel shaped like a crocodile — these are just a few of the forms that animal-shaped architecture has taken. Whether to reflect the role of the building, like a fisheries department shaped like a fish, or just for the sheer whimsy of it, like roadside attractions shaped like dinosaurs and whales, this “zoomorphic” style appears all over.
Here are a few:
- LUCY THE ELEPHANT
- WHALE BUILDING
- GIANT KOALA
- BLUE WHALE
To read more, click here
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What about California and “shelter in place”?
If you are not in California, this may be coming to you any day.
Shelter in place means not going out of your house except for going to grocery stores, pharmacies, etc. Very strict regulations. As of last night all counties (40 million people) are sheltering in place.
It started tuesday with my county (and others nearby – keeps getting more counties added)
There are “essential businesses” such as Banks, plumbers, Laundromats.
When appraisers are doing appraisals for banks (and I assume AMCs, their agents) most are saying you are an essential busness. If you don’t do lender work, it appears that you are not an essential business and must stop leaving your house.
I have shut down my office, per the directive. My assistant is now working at home and has remote access to main computer now. I have remote access also.
Link to Alameda County health Dept. directive (all counties are the same.)
To read more, click
www.acgov.org/documents/Final-Order-to-Shelter-In-Place.pdf
For unknown reasons this link was not working correctly on my computer yesterday.
Google Alameda County final order to shelter in place PDF document.
===========================================
THE WORST THAT CAN HAPPEN TO YOU IS GIVING COVID-19 TO SOMEONE ELSE WHO DIES BECAUSE YOU WERE NOT CAREFUL. You will feel guilty the rest of your life. Don’t take a chance, even if you think it is just “media hype”.
Face masks should be worn by everyone, but not enough are available even for health care workers and people who know they are infected. They come first. Anyone can be a carrier as few of us can get tested. Assume that you have it. We all know what we are supposed to do by now. A large percent of those who infected others did not know they were infected. Looking at past mistakes lets us know not to let it happen again. Try not to get trapped in the Blame Game.
Many people are just not aware of how to reduce spreading the virus. I just had a repair person come to my house and tried to shake hands. I waved instead and advised him not to shake hands with anyone. He had not been trained. I mentioned it to his boss. It left a bad impression for his business. I developed this habit over doing it for decades. Went shopping yesterday at CVS and noticed it was very close to the cashier. Wish she would have had gloves and a face mask, like at my local 7-11.
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What’s the difference between the Appraisal Today free weekly email newsletters in this blog and the paid monthly newsletter?
If you are a paid subscriber and did not get the March 2020 issue, emailed Monday, March 2, 2020 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.
===========================================
FREE webinar “Legal and Risk Issues for Appraisals” Stemming from the COVID-19 Crisis” by Peter Christensen
Next Tuesday, March 24 at 9:30 AM Pacific time.
My comments: He will be discussing the topics below (and maybe more) for about 45 minutes. The information in this newsletter is changing every day. Take this webinar for an update. Appraiser social media posts and emails are not always reliable and often conflict.
Excerpt: “I am deeply concerned about the impact that the COVID-19 crisis will have on my valuation clients and on valuation professionals and businesses in general. While health and safety are certainly the foremost concerns, I have scheduled on short notice a free webinar to address some of the many legal and risk questions that I am receiving from appraisers, firms and AMCs in relation to COVID-19.”
“In this webinar, I’ll cover COVID-19 related legal and risk issues:”
- “Appraisal inspections (particularly in light of “shelter-in-place” orders).
- Suggested language to consider including in appraisal reports.
- Insurance issues and potential insurance coverage for business losses.
- Concerns about future liability in relation to appraisal work.
- And, the relevance of California’s AB 5 – yes, it’s relevant.”
To register: click here
===========================================
What about Fannie, FHA, etc.?
Appraisal Institute Seeks Guidance from Policy Makers
My comment: Lots of rumors on this. The AI is the most reliable as it has a staffed office in Washington, DC with good contacts on policy issues.
From the Appraisal Institute Appraisal News Online Newsletter dated May 18.
Excerpts: The Appraisal Institute announced March 18 that it is aggressively engaging all primary appraisal policy makers to help guide appraisers during the coronavirus pandemic. AI expects some guidance to be released as early as this week about exterior-only and/or desktop appraisals for loans sold to Fannie Mae and Freddie Mac.
Representatives of the Appraisal Institute have raised appraisers’ concerns regarding property inspections and appraisal waivers and exemptions, seeking a measured or balanced approach to risk mitigation.
The government-sponsored enterprises appear to be evaluating allowances for exterior-only inspection appraisals. The Appraisal Institute also expects that appraisal waivers will be suggested by some users of appraisal services, particularly in refinance applications where there is previous information on file and reduced risk to the loan.
The Appraisal Institute also is working with the Federal Housing Administration and the Department of Veterans Affairs on similar concerns. The federal financial institution regulatory agencies – the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve – have a host of policy options at their disposal, including advisories on issues such as property inspections and disaster declarations.
Commercial appraisal questions abound as well, including similar inspection concerns. Several major banks recently have released polices to provide options to appraisers and customers relating to property inspection processes.
To read more, click here
========================================
VA guidance for appraisals COVID-19
On March 16th, 2020, the Department of Veterans Affairs (VA) issued Circular 26-20-7 which includes guidance for appraisers regarding COVID-19.
Many government entities have advised that all non-essential businesses should close at this time, in order to avoid spreading the virus. Large numbers of appraisers have been asking, “Are we essential or non-essential?” For purposes of VA, appraisers are essential and should continue to work.
To read more, click here
========================================
COVID-19 and Appraisers. What are lenders doing? Should you do interior inspections? Read what Citibank is recommending
There are many, many issues which seems to be changing on a daily basis. I wrote this yesterday. There have already been changes I am sure. I am including links to relevant information
The big refi boom is causing lots of desperate lenders and AMCs trying to find appraisers.
You don’t need more info on keeping safe as it is available all over. What I discuss today is shift from interior inspections to drivebys, forms, what lenders are saying, what real estate agents are doing, the market changes (maybe), liability, etc.
Excerpt:
Some direct lenders, such as Citibank, are sending out emails about what they recommend. On the other side AMCs are acting like nothing has happened and sending out email blast low fee appraisal request. FYI, it is a lot easier for one lender to change. AMCs work for many lenders.
Info on what Citibank is recommending from VaCAP:
Many are fearful exterior only appraisals will be the end of the traditional appraisal as we know it. Right or wrong, exterior only appraisals are a possibility that may be acceptable in certain situations. VaCAP does not believe it will end traditional appraisals with interior inspections. The profession has been down this road before. It will not fly long term, especially if the market turns downward.
Some lenders are establishing COVID-19 protocols to follow and some have remained quiet on the subject. There are rumors that one lender has instructed appraisers not to inquire as the health of the occupants of the home due to privacy laws. Others like Citibank have developed their own protocol on how appraisers should handle COVID-19 concerns. There is great flexibility to the appraiser. See Citibank’s protocol below:
Worth reading. Click here to read
========================================
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 8.4 percent from one week earlier,
WASHINGTON, D.C. (March 18, 2020) – Mortgage applications decreased 8.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 13, 2020.
The Market Composite Index, a measure of mortgage loan application volume, decreased 8.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 8 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week and was 402 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index remained unchanged compared with the previous week and was 11 percent higher than the same week one year ago.
“The ongoing situation around the coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February and led to a 10 percent decrease in refinance applications. However, refinance activity remains very high. Excluding the spike two weeks ago, the index remained at its highest level since October 2012, and refinancing accounted for almost 75 percent of all applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The Federal Reserve’s rate cut and other monetary policy measures to help the economy should help to bring down mortgage rates in the coming weeks, spurring more refinancing. Amidst these challenging times, the savings that households can gain from refinancing will help bolster their own financial circumstances and support the broader economy.”
Added Kan, “Purchase activity was flat but remained over 10 percent higher than a year ago. The purchase market was on firm footing to start the year and has so far held steady through the current uncertainty. Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates.”
The refinance share of mortgage activity decreased to 74.5 percent of total applications from 76.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications.
The FHA share of total applications increased to 7.3 percent from 6.9 percent the week prior. The VA share of total applications increased to 14.5 percent from 13.1 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.74 percent from 3.47 percent, with points increasing to 0.37 from 0.27 (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 $510,400) increased to 3.77 percent from 3.58 percent, with points increasing to 0.32 from 0.20 (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 3.71 percent from 3.57 percent, with points increasing to 0.28 from 0.25 (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 increased to 3.10 percent from 2.90 percent, with points increasing to 0.37 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 5/1 ARMs increased to 3.19 percent from 3.02 percent, with points decreasing to 0.19 from 0.25 (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.
========================================
Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave., Suite 203, Alameda, CA 94501
Phone 510-865-8041
Email ann@appraisaltoday.com
www.appraisaltoday.com
What about California and “shelter in place”?
If you are not in California, this may be coming to you any day.
Shelter in place means not going out of your house except for going to grocery stores, pharmacies, etc. Very strict regulations. As of last night all counties (40 million people) are sheltering in place.
It started tuesday with my county (and others nearby – keeps getting more counties added)
There are “essential businesses” such as Banks, plumbers, Laundromats.
When appraisers are doing appraisals for banks (and I assume AMCs, their agents) most are saying you are an essential busness. If you don’t do lender work, it appears that you are not an essential business and must stop leaving your house.
I have shut down my office, per the directive. My assistant is now working at home and has remote access to main computer now. I have remote access also.
Link to Alameda County health Dept. directive (all counties are the same.)
To read more, click
www.acgov.org/documents/Final-Order-to-Shelter-In-Place.pdf
For unknown reasons this link was not working correctly on my computer yesterday.
Google Alameda County final order to shelter in place PDF document.
THE WORST THAT CAN HAPPEN TO YOU IS GIVING COVID-19 TO SOMEONE ELSE WHO DIES BECAUSE YOU WERE NOT CAREFUL. You will feel guilty the rest of your life. Don’t take a chance, even if you think it is just “media hype”.
Face masks should be worn by everyone, but not enough are available even for health care workers and people who know they are infected. They come first. Anyone can be a carrier as few of us can get tested. Assume that you have it. We all know what we are supposed to do by now. A large percent of those who infected others did not know they were infected. Looking at past mistakes lets us know not to let it happen again. Try not to get trapped in the Blame Game.
Many people are just not aware of how to reduce spreading the virus. I just had a repair person come to my house and tried to shake hands. I waved instead and advised him not to shake hands with anyone. He had not been trained. I mentioned it to his boss. It left a bad impression for his business. I developed this habit over doing it for decades. Went shopping yesterday at CVS and noticed it was very close to the cashier. Wish she would have had gloves and a face mask, like at my local 7-11.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’s the difference between the Appraisal Today free weekly email newsletters in this blog and the paid monthly newsletter?
Click here for more info!If you are a paid subscriber and did not get the March 2020 issue, emailed Monday, February 2, 2020 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.
Inspection comments from Peter Christensen
Excerpts from emailed comments from Peter:
I am encouraging appraisers to perform inspections in the shelter-in-place counties or encouraging anyone to defy orders – just trying to share a realistic legal view (which is only relevant for this moment…) and about the legitimate question about whether banks and lenders completing in process loans is essential.
I think the question about whether appraisers can do inspections will be a momentary issue (a few weeks at most) because there may be specific directions on inspections from GSEs/bank regulators, etc. shortly and/or new lending may start shutting down or changing drastically if lenders worry about the economic impact/collateral values.
Here in California, I’ve been asked by lenders and AMCs about the “shelter-in-place” orders that are in effect in a growing list of California counties. Specifically, I’ve been asked about lenders inquiring if current assignments can be completed. At the same time, I’ve also heard that even in areas affected by the orders, a significant number of appraisers are still offering to complete inspections for assignments.
Lenders and AMCs contacting me have wanted to know about the legality of inspections under the orders and potential liability exposures for conducting/allowing/asking for inspections to be completed. Regarding this issue, the orders (which are identical in the main text in each county) do have wording that says persons may leave their residences to perform services for “Essential Businesses,” and Essential Businesses do include “banks and related financial institutions.”
Will that include loans by banks and other institutions and apply to appraisals (with inspections) for those loans? There is no clarity about that issue, but given the vague wording in the orders themselves at this point and descriptions from counties about how the orders will be enforced in practice, I do not believe that there is a high risk for specific liability/prosecution/fines, etc. of appraisers or AMCs under the express wording of the orders. (One indirectly relevant issue: I’ve confirmed that county recorder offices in a sampling of the counties remain able to record mortgages and deeds filed with them electronically by title companies and by mail.) This certainly will change as counties/sheriffs become more clear about what activities they believe are permitted or not.
Whether conducting inspections is moral or ethical, I can’t judge that – I do know that appraisers currently doing inspections (when borrowers invite them) are often receiving big thank yous from the borrowers, because often loans are really needed.
My comment: for lender appraisals it is your decision if there is no another option to interior inspections. There are risks to you and your family and friends.
========================================================
FREE webinar “Legal and Risk Issues for Appraisals” Stemming from the COVID-19 Crisis” by Peter Christensen
Next Tuesday, March 24 at 9:30 AM Pacific time.
My comments: He will be discussing the topics below (and maybe more) for about 45 minutes. The information in this newsletter is changing every day. Take this webinar for an update. Appraiser social media posts and emails are not always reliable and often conflict.
Excerpt: “I am deeply concerned about the impact that the COVID-19 crisis will have on my valuation clients and on valuation professionals and businesses in general. While health and safety are certainly the foremost concerns, I have scheduled on short notice a free webinar to address some of the many legal and risk questions that I am receiving from appraisers, firms and AMCs in relation to COVID-19.”
“In this webinar, I’ll cover COVID-19 related legal and risk issues:”
- “Appraisal inspections (particularly in light of “shelter-in-place” orders).
- Suggested language to consider including in appraisal reports.
- Insurance issues and potential insurance coverage for business losses.
- Concerns about future liability in relation to appraisal work.
- And, the relevance of California’s AB 5 – yes, it’s relevant.”
To register: click here
=========================================
VA guidance for appraisals COVID-19
The Department of Veterans Affairs (VA) issued Circular 26-20-7 which includes guidance for appraisers regarding COVID-19.
Many government entities have advised that all non-essential businesses should close at this time, in order to avoid spreading the virus. Large numbers of appraisers have been asking, “Are we essential or non-essential?” For purposes of VA, appraisers are essential and should continue to work.
To read more, click here
============================================
Mortgage applications decreased 8.4 percent from one week earlier,
WASHINGTON, D.C. (March 18, 2020) – Mortgage applications decreased 8.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 13, 2020.
The Market Composite Index, a measure of mortgage loan application volume, decreased 8.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 8 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week and was 402 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index remained unchanged compared with the previous week and was 11 percent higher than the same week one year ago.
“The ongoing situation around the coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February and led to a 10 percent decrease in refinance applications. However, refinance activity remains very high. Excluding the spike two weeks ago, the index remained at its highest level since October 2012, and refinancing accounted for almost 75 percent of all applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The Federal Reserve’s rate cut and other monetary policy measures to help the economy should help to bring down mortgage rates in the coming weeks, spurring more refinancing. Amidst these challenging times, the savings that households can gain from refinancing will help bolster their own financial circumstances and support the broader economy.”
Added Kan, “Purchase activity was flat but remained over 10 percent higher than a year ago. The purchase market was on firm footing to start the year and has so far held steady through the current uncertainty. Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates.”
The refinance share of mortgage activity decreased to 74.5 percent of total applications from 76.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications.
The FHA share of total applications increased to 7.3 percent from 6.9 percent the week prior. The VA share of total applications increased to 14.5 percent from 13.1 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.74 percent from 3.47 percent, with points increasing to 0.37 from 0.27 (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 $510,400) increased to 3.77 percent from 3.58 percent, with points increasing to 0.32 from 0.20 (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 3.71 percent from 3.57 percent, with points increasing to 0.28 from 0.25 (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 increased to 3.10 percent from 2.90 percent, with points increasing to 0.37 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 5/1 ARMs increased to 3.19 percent from 3.02 percent, with points decreasing to 0.19 from 0.25 (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.
===========================================
Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave., Suite 203, Alameda, CA 94501
Phone 510-865-8041
Email ann@appraisaltoday.com
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