NOTE: This information is changing on a daily, and often hourly, basis. The amount of information is almost overwhelming. What you read today may change tomorrow. Most of the info below is summary with more details in the monthly newsletter next week. Also, lots more on personal COVID-19 such as data availability, safety, etc. I am spending 10+ hours per day trying to keep track of it so I can let you know.

Per Fannie, this is a “fluid event”. There are many questions about health and safety for the appraiser and the borrower (and their contacts if infected) when doing interior inspections.

There is lots of appraisal misinformation online. It is not a good source unless it includes a link to the correct information or the source that can be located online. I only use email chat groups that I have used for many years, such as National Appraisers Forum To read more, click here

SIGNIFICANT CHANGES TO FANNIE MAE APPRAISALS. START NOW TO LEARN THEM!!!
Go now to www.fanniemae.com/appraisers. THESE REQUIREMENTS STARTED MARCH 23, 2020 AND ARE IN EFFECT UNTIL MAY 15, 2020.

Many, including Fannie are saying that appraisals will shift from full appraisals to drivebys and desktops. Too risky for the appraisers, borrowers and everyone they come into contact.

The effect of COVID-19 on appraisers is the big issue, even if you don’t do lender appraisals. Most of the information is for residential lender appraisals – significant changes to forms, etc.

Interior inspections is a very big topic whatever type of appraisals you do.

Whether or not appraisers are “Essential Services”, if your state orders don’t reference appraisers directly, is not defined in any federal regulations. But, it only applies to lender appraisals.

No information on FHA or VA as of 3/29/19. Per Bill Garber of the Appraisal Institute it is “expected by the end of the week” I will let you know when anything is available. VA sent out a circular on it.

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FANNIE’S NEW APPRAISAL REQUIREMENTS
RESOURCES

This week I listened to 4 appraisal webinars. I will have more detail in my monthly newsletter next week. 

  • May 23. Appraisal Institute – COVID-19 – Rapid Response and Latest Developments – 2 hours https://www.appraisalinstitute.org/news/coronavirus/
  • COVID-19 Direct link to webinar (youtube is best): To see video, click here
  • May 24. Peter Christensen – Legal and Risk Issues for Appraisers Stemming from the COVID-19 Crisis – 1 hour Listen to this!! https://www.valuationlegal.com/blog/
  • May 25. McKissock – Fannie Mae Update. Not available but I listened to it and included some of the information below. It was great with a Fannie representative! Hope someone does one that is available for later to all appraisers.
  • May 26. Appraiser eLearning – The Appraisal Report Webinar: Looking for the Rainbow Appraising in the midst of a pandemic– 1 hour. The moderator, Bryan Reynolds has COVID-19 for about 8 days and was not there. Speaker was Diana Jacob a long time appraisal teacher and writer. Listen to this!!

To watch video, click here Listen to this!!

Comments

  • Appraisal Institute. 2 hours. This focuses on commercial appraisers but has some useful information in the beginning from Stephanie Coleman, starting at 5:50 minutes. Slides available so you can see what you want to listen to. More details later
  • Peter Christensen – 1 hour. Lots of good info including COVID-19 recommended appraisal language, keep on market conditions, etc. Slides available.
  • McKissock. Not available. Maybe someone will do a Fannie webinar with a Fannie representative, recorded and available to all!!
  • Appraiser eLearning – very casual and friendly with some humor plus practical tips on inspection, market analysis, etc. Listen to This

Links for more information on appraisal issues

  • Appraisal Institute – Changes regularly. Most current info on states: Governors’ Stay at Home Orders, alphabetically by state (March 23, 2020). AI says this will be kept current. To read more on this, click here
  • Fannie Mae – www.fanniemae.com/appraisers This will be updated with any changes. Will update FAQs regularly.
  • Appraisal Foundation. USPAP Q&A 3-17-20. Interior Inspections during a National Health Emergency. Read it – short. Inspections plus other comments. To read more, click here
  • Appraisal Foundation Coronavirus and Appraisers: Your Questions Answered To read more, click here Worth reading. Easy to read.

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USPAP issues 

  • DO NOT USE “EXTRAORDINARY ASSUMPTION” in the COVID-19 statement on your appraisal. Ok to use for inspection.
  • Marketing time is not required and not recommended unless client requires it. Exposure time is required.
  • USPAP does not require an inspection, inside or outside.
  • Read the short Appraisal Foundation FAQs.
  • You must disclose what you did, in detail.
  • You may be using other person’s photos, such as the owner or real estate agent. Disclose they are a party to the loan. Normally not permitted, of course.
  • Sources: Appraisal Foundation Q&A webinar, Stephanie Coleman, AI webinar (and worth listening to starting at 5:50 minutes. Plus comments from others.

Are appraisers “Essential Services ” – not subject to shelter in place?

You may have many closed businesses in your state. If not, you have seen them on tv.

There are a few states, as of today, that specifically include appraisers, as of a few days ago: IL, IN, DE, OH, NV. If yours includes “appraisers”, you should already know by now. If not, read your state, county or city Order.

Many appraisers are quoting federal regulations such as Gramm, Leach, Wiley or Homeland Security regulations.

Almost all appraisers, lenders, etc. are assuming that appraisers in all states are essential Services.

However, if “appraiser” is not in the order, it is an opinion, per Bill Garber.

Get your state order changed. He suggests working with your AI chapter chapters or national. Or, work with your state coalition. Peter Christensen’s opinion, in his webinar, is that appraisers are exempt

What if you don’t do any lender work?

There is very little information on any changes non-lender work except market conditions.

Shelter in place

For shelter in place Essential Services only applies to lender work. I assume you can only do desktop appraisals, if you are subject to shelter in place. You are only allowed to leave your home for groceries, getting gas or auto repairs, etc.

Or, postpone the appraisal until the shelter in place expires.

If you are not subject to shelter in place, there are no changes except for changing your letter of transmittal, COVID-19 statement, be very careful about market analysis, etc.

In my state, California, it is a misdemeanor to violate shelter in place.

What about commercial lender appraisals?

Watch the Appraisal Institute webinar – link above. If doing non-lender work, you are not an essential service and cannot leave your home if subject to shelter in place.

Error in description last week of Peter Christensen’s Inspection Comments

I am NOT 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 left out NOT last week!!

Market conditions

There are many ways to do this without comps. Many appraisers missed the meltdown around 2008 because they only used closed sales. Some of them were sued.

I will discuss them next week.

Lots of advice on inspections

I will have more info next week.

  • What to say to borrowers at the home or before coming.
  • What is best from public health experts. You decide what to use for you.

What if you want to continue doing interior inspections?

You will probably have a lot of work. But, remember the higher your age, the greater the risk for dying if you get the virus. Plus health and safety issues. Of course, if the property is a new vacant home it’s ok. Or, a vacant warehouse.

Another option is to do fewer now as Fannie and others are moving to not doing interior inspections due to owner and appraiser health and safety issues.

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ASSUME THAT EVERYONE IS INFECTED, INCLUDING YOURSELF unless they have been tested and have the results available to you, are positive, and have obvious symptoms.

How much money is your health worth? And the health of those you could infect if you are infected. Special FREE edition of the April paid newsletter

My April newsletter will include a lot of information and analysis for you, both business and personal. It will be sent by April 1 or maybe a few days later if there is late breaking news. Of course, it keeps changing on a daily (or hourly) basis.

This newsletter will be much longer (12+ pages in 3 column format and 25 pages in word) with lots and lots of detail, analysis and recommendations.

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Fannie changes

Sorry, no room to put much in this newsletter. Next week’s newsletter will have a lot more. Go to www.fanniemae.com/appraisers FAQs will be updated regularly.

Link to main information

Lender Letter (LL-2020-04) Mar. 23, 2020

To: All Fannie Mae Single-Family Sellers

Impact of COVID-19 on Appraisals

Dated March 23,2020. EFFECTIVE IMMEDIATELY

Includes tables for determining what type of appraisal is required.

USE THIS LINK FIRST

Click Here

1004 for drivebys and desktops.

  • – Go to www.fanniemae.com/appraisers for instructions
  • – Type of report to be entered in Map Code box. Desktop or Driveby. Nothing is required if doing traditional appraisal.

1004 must be used as driveby form does not have UAD.

USPAP has never required an inspection.

What about portfolio lenders and those who don’t sell to Fannie

They can do what they want, but very likely the industry will follow Fannie.

Changes to forms – use text

When you modify your new required Fannie changes, use text NOT an image. Too hard to read.

Certification 10 was removed

If necessary, photos or videos taken by borrower or agent can be used, even though they are not interested parties.

Lenders decide which option to choose

  • – You must communicate with your client and negotiate.
  • – Check Fannie’s grid on what type of appraisal is required. Only cash ou require full appraisals.

What if all my lenders want full appraisals?

More and more appraisers are turning them down. They will figure out they are not always required. Fannie says they are changing fast. They want to make loans.

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Sample COVID-19 appraisal statements (for now)

from Peter Christensen:

This appraisal was performed following public awareness that COVID-19 was affecting residents in the United States. At the time of the appraisal, COVID-19 was beginning to have widespread health and economic impacts. The effects of COVID-19 on the real estate market in the area of the subject property were not

yet measurable based on reliable data. The analyses and value opinion in this appraisal are based on the data available to the appraiser at the time of the assignment and apply only as of the effective date indicated. No analyses or opinions contained in this appraisal should be construed as predictions of future

market conditions or value.

Sample from Liability insurance administrators https://www.liability.com/covid-19/Market conditions

There are many ways to do this without comps. Many appraisers missed the meltdown around 2008 because they only used closed sales. Some of them were sued.

I will discuss them next week.

Lots of advice on inspections

I will have more info next week.

  • What to say to borrowers at the home or before coming.
  • What is best from public health experts. You decide what to use for you.

What if you want to continue doing interior inspections?

You will probably have a lot of work. But, remember the higher your age, the greater the risk for dying if you get the virus.

What about fees for drivebys and desktops?

RAISE YOUR FEES FOR ALL APPRAISALS!! Did you give a discount for drivebys in the past? Some appraisers do and some don’t

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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 29.4 percent from one week earlier,

WASHINGTON, D.C. (March 25, 2020) – Mortgage applications decreased 29.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 20, 2020.

The Market Composite Index, a measure of mortgage loan application volume, decreased 29.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 29 percent compared with the previous week. The Refinance Index decreased 34 percent from the previous week and was 195 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 15 percent from one week earlier. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 11 percent lower than the same week one year ago.

“The 30-year fixed mortgage rate reached its highest level since mid-January last week, even as Treasury yields remained at relatively low levels. Several factors pushed rates higher, including increased secondary market volatility, lenders grappling with capacity issues and backlogs in their pipelines, and remote work staffing challenges,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With these higher rates, refinance activity fell 34 percent, and both the conventional and government indices dropped to their lowest level in a month. Looking ahead, this week’s additional actions taken by the Federal Reserve to restore liquidity and stabilize the mortgage-backed securities market could put downward pressure on mortgage rates, allowing more homeowners the opportunity to refinance.”

Added Kan, “Home purchase applications were notably impacted by rising rates and the widespread economic disruption and uncertainty over household employment and incomes. Last week’s purchase index fell 15 percent to its lowest level since August 2019. Compared to a year ago, purchase applications were down 11 percent – the first year-over-year decline in over three months. Potential homebuyers might continue to hold off on buying until there is a slowdown in the spread of the coronavirus and more clarity on the economic outlook.”

As an early look into the coronavirus-related impact at the state level, below are results showing the not seasonally adjusted, weekly percent change in the number of purchase applications from California, New York, and Washington:

CA NY WA

3/13/20     3%  -3%  3%

3/20/20  -23% -17% -15%

The refinance share of mortgage activity decreased to 69.3 percent of total applications from 74.5 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 8.4 percent from 7.3 percent the week prior. The VA share of total applications decreased to 12.5 percent from 14.5 percent the week prior. The USDA share of total applications remained unchanged from 0.4 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 3.82 percent from 3.74 percent, with points decreasing to 0.35 from 0.37 (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 3.84 percent from 3.77 percent, with points increasing to 0.35 from 0.32 (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 decreased to 3.69 percent from 3.71 percent, with points increasing to 0.43 from 0.28 (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 3.28 percent from 3.10 percent, with points increasing to 0.38 from 0.37 (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 3.38 percent from 3.19 percent, with points increasing to 0.26 from 0.19 (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.

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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

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