NOTES TO READERS: To read my April 3 newsletter: Covid 19 Data Comps and-Values, with lots of science info relating to the pandemic, such as pandemics in the past, stages of a pandemic, personal tips, etc. go to www.appraisaltoday.com/coronavirus
For the previous two weeks I sent out two newsletters a week. Got too burned out. Only one newsletter this week, so it is long.
Seven things to watch in real estate during a pandemic
April 14, 2020 By Ryan Lundquist
1) Listings: We often think about listings increasing as a way to see the market changing, but right now many markets across the country are seeing fewer new listings. So at times change is best seen with less of something rather than more. It’s not a surprise to see fewer new properties during a pandemic, right?…
7) Prices: In real estate we are so obsessed with prices, but that’s really the last place to look to see the market. What I mean is change happens first in the areas above before showing up in sales stats a couple months down the road. In short, for now the slower pandemic trend hasn’t infiltrated sales price figures as of yet in Sacramento. This doesn’t mean the market is stable in every price range and location. All I’m saying is regional and county stats don’t show price declines right now. Normally I pull monthly price data, but I’ve switched to weekly in order to see the trend sooner rather than later.
To see the other 4 factors plus lotsa graphs and many appraiser comments , click here
Regulators to allow deferral of appraisals for up to 120 days after transaction closes,
dated April 14. Interim Final Rule will take effect upon its publication in the Federal Register.
The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) announced their issuance of an Interim Final Rule allowing for their regulated institutions to defer obtaining an appraisal or evaluation in connection with a real estate related financial transaction (as defined in Title XI of FIRREA) for up to 120 days after a transaction closes.
Appraisals or evaluations performed under this deferral option would still be based around the original closing date, and not the subsequent date on which the appraisal or evaluation is actually performed. The agencies also expect regulated entities to implement risk mitigation policies in the event that a deferred appraisal or evaluation shows the value of the collateral to be less than entity’s “prudent underwriting estimation of the collateral value”.
The Interim Final Rule will take effect upon its publication in the Federal Register, and apply to all lending activities defined as a “federally-related transaction” by the bank regulatory agencies. To read the full text of the Interim Final Rule and other documents, click here
Appraisal Institute New Facebook video on the new Interim Rule
The new rule temporarily defers the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of a transaction for certain residential and commercial real estate transactions.
Hear Doug Potts, MAI, AI-GRS; Melanie Sieger, MAI, AI-GRS; Justin Slack, MAI, SRA, AI-GRS, AI-RRS; and Bill Garber, AI’s director of Government and External Affairs, share their initial perspectives on the rule.
A few notes from Appraisal Institute Facebook video (about 1 hour):
This does not apply to GSEs, FHA, VA, USDA which is 90% of residential loans. It applies to commercial loans, maybe to help small businesses. And residential portfolio loans.
REAA table above
Where to get tables and links for requirements of GSEs, FHA, VA and RHS
The Appraisal Institute has a more detailed table, but is very hard to read due to the tiny type. To download, click hereFannie News – Map Reference problems, new FAQs
FANNIE IS HAVING PROBLEMS WITH APPRAISERS NOT FILLING OUT THE MAP REFERENCE FIELD CORRECTLY FOR DRIVEBYS AND DESKTOPS. YOU HAVE ONLY TWO CHOICES: external or desktop (in small case, no caps) THEIR SYSTEM IS SET UP TO RECOGNIZE THOSE TWO WORDS AND SEND THE APPRAISAL TO THE APPROPRIATE PLACE.
Fannie new guidance on virtual inspections
Fannie Mae and Freddie Mac issued updated guidance surrounding the usability of virtual inspections (having a home’s occupant provide a video walkthrough, e.g.) in connection with desktop, exterior-only, and interior inspection appraisals.
In the guidance, Fannie Mae’s statement reads:
Appraisers may use virtual inspection methods to augment the data and imagery that is used for either a desktop appraisal or an exterior-only appraisal. All traditional appraisals require the appraiser to perform a complete onsite interior and exterior inspection of the property. A virtual inspection cannot be used as a substitute for the onsite interior and exterior inspection for a traditional appraisal.
To read Fannie Mae’s updated Lender Letter 2020-04 click here
Changes are indicated in blue.
Similarly, Freddie Mac says the following:
Appraisers may use virtual inspection methods to augment the data and imagery that is used for either a desktop appraisal or an exterior-only inspection appraisal. All interior and exterior inspection appraisals require the appraiser to perform a complete onsite interior and exterior inspection of the property. A virtual inspection is not a substitute for an on-site interior and exterior inspection.
To read Freddie Mac’s updated Bulletin 2020-11,click here
Go to Appraisal flexibilities (link highlighted in blue)
On both fronts, the GSEs have reinforced their previous statements that interior inspections still require the appraiser to physically set foot into the subject property.
To read the ASA’s Update click here
Fannie Appraisal Report Instructions for COVID-19 Flexibilities – Videos
Fannie Mae has been receiving some ineligible appraisals due to confusion between desktop and exterior-only appraisals and the forms they can be completed on. As a result, they just released two short videos to assist in clearing up confusion when completing appraisals with the COVID-19 flexibilities.
Video Fannie Appraisal Report Instructions for COVID-19 Flexibilities to listen click here
Video Top 6 Tips for Appraisers on Using COVID-19 Flexibilities To watch click here
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Significant changes for Fannie – what you need to know!
I research and analyze the changes including what they mean for you. I attend many webinars (3-4 a week), watch videos, speak with “insiders” and read extensively about the issues.
I can help you understand what is happening and, more important, decide what is best.
NOTE: These email newsletters are too short to write much. I can only do links and brief descriptions, so my paid newsletter will have lots more info on the changes in Fannie, mortgage finance predictions, and other important topics for appraisers.
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UPDATE SBA and Unemployment assistance for self employed
Updated from my 4-8-20 newsletter. Hard to believe there have been so many changes in the past week!!
SBA and $10,000 grant – significant changes
The CARES act stated that small businesses could get a $10,000 grant for FREE when they applied for an Economic Injury Disaster Loan (EIDL).
However, as a result of the limited number of businesses that could benefit, the SBA has issued new rules and imposed an additional limitation that now allow up to $1000 per employee up to a total of $10,000 in order to benefit more businesses.
Thus, if you are a sole proprietor and have no employees, you will only benefit to the tune of $1000 from these EIDL loans, which is still better than a stick in the eye… But it is not how any of us interpreted the legislation. The SBA has some latitude in these things and unfortunately it is what it is.
My comment: I decided not to apply for this as I am doing okay and there are so many businesses that are shut down.
The $349 billion Paycheck Protection Program to boost small businesses during the coronavirus economic crisis has run out of money after two weeks. April 16
Had to be done through a bank or credit union, which were swamped with people trying to get them. Most, including my bank, were only accepting current customers, preferably with a loan from the bank.
Pandemic Unemployment Insurance for self-employed
As part of the federal CARES Act, the new Pandemic Unemployment Assistance (PUA) program helps unemployed Californians who are business owners, self-employed, independent contractors, have limited work history, and others not usually eligible for regular state UI benefits who are out of business or services are significantly reduced as a direct result of the pandemic
This link is for California, where it starts April 28. Check your state as it may be different. Unemployment insurance is run by the states and varies widely. To read more, click here
My comment: The states are trying to get this set up. Check your state.
I am trying to get my house cleaner to apply for this. She has lost all her customers. I am still paying $200 per month. She has never applied for unemployment and is reluctant to do it. Fortunately, her girlfriend has a good job that pays well and works for an essential business (environmental monitoring).P
Pandemic personal tips
For lots more info, including the science behind the current pandemic, see my newsletter, sent out March 6, go to www.appraisaltoday.com/coronavirus
Contact other people
Humans are social animals. We must have contacts.
Call or email friends and relatives, including those you have not contacted for quite a while. I have been doing this. Very rewarding!
Do you have relatives or neighbors living alone, especially older people who are not going out much? Maybe a neighbor needs someone to get groceries or drop off a dinner or lunch from you? Just leave on their front porch.
Set up a lunch or dinner in your rear yard or deck. For example, your sister and brother in law on one side of the deck and you and your family on the other side. Put food in the middle using your own utensils. Works great!!
I love zoooom!!
Very, very easy to use. Skype is still horrible, of course.
So far, I have used zoom to jam with my bandmates, have a group chat with pickleball players, do a virtual lunch for my weekly Friday lunch with a local appraiser friend. It keeps expanding every week.
If you’re worried about safety etc read “Zoom safe to use if properly configured”
To read the article, click here
Good Basic Q and A’s from Time magazine
- If I get COVID-19 and recover, am I immune and safe to be around/help out older family and neighbors?
- I’ve been social distancing for two weeks. When is it safe for me to go see family?
- Can my dog or cat get COVID-19?
- How long does the COVID-19 virus survive on surfaces?
- Is there any risk of the COVID-19 virus living on mail & packages?
To read more, click here
YOUR GREATEST RISK IS FROM AIRBORNE PARTICLES, ESPECIALLY THOSE THAT CAN TRAVEL MUCH FARTHER THAN 6 FT. IF SOMEONE COUGHS OR SNEEZES!!
People wearing masks are everywhere now, including borrowers in their homes when someone comes inside.
You wear masks to protect other people. The non-medical masks available do not provide much protection for you.
Because of this, I strongly recommend that you require all people in the home to wear masks when you are doing an interior inspection. Take extras with you to give to them, or to the borrower coming into the home “just to let you know about the deck”, for example.
Gloves are good, but you can always sanitize your hands after the inspection.
I feel much safer during my weekly grocery shopping on Sunday mornings. I have been going to the same grocery at the same date and time for quite awhile. Two weeks ago, about 30% of employees and people had face masks. Last Sunday, almost everyone did!
Masks also have social aspects, such as “We are all in this together to defeat the coronavirus.” or “We are all keeping each other safe”. I also noticed that those who wore masks were also much more likely to keep a 6 ft. distance, before (almost) all of us started wearing masks.
For lots more info on masks, well written and understandable, click here
More Personal Tips
Remember, your greatest risk is from airborne particles!!
What to look for:
- Go to stores where almost everyone wears a mask.
- Use a pencil with an eraser (or your gloves) to push buttons for credit card payment. Do not use cash.
- Go to the same store so you can move fast to find what you need quickly.
- Go during “senior” hours with fewer people
- Must have “sneeze guards” at checkout stand. Went to my local post office that had very small sneeze guards. The employees set up plastic sheeting, dropping from the ceiling, with holes cut in it to pay for stamps, package shipping, etc.
- Stores that limit the number of people. My local Trader Joe’s started this the second week of our lockdown. 6 ft. markers on waiting lines.
- Look for “one way” aisles. This is the biggest distance problem at grocery stores. Or shop at a newer store with wide aisles.
I quit going to my local 7-11 (3 blocks from my house) because it is small, often crowded, and impossible to keep 6 ft. distance. For snacks, I go to my regular gas station which has a small store, very good sneeze guard, few people in the store who keep 6 ft. distance. My usual grocery store does not have a lot of shoppers, but the aisles are about 7 ft wide so I try to move fast and go into an aisle with no one in it. Last Sunday I bought my first toilet paper since our shelter in place order 4 weeks ago – 4 rolls, so I guess that is loosening up.
3 ft., 6 ft. or 13++ feet??
It just keeps getting wider! 3 ft. is from studies done around World War II, using volunteers, by intentionally infecting people with colds.
Excerpts: CDC bases its recommendation on the idea that most large droplets that people expel when they cough or sneeze will fall to the ground within six feet.
No scientists are suggesting a wholesale change in behavior, or proposing that some other length for separation from another human, like seven, or nine feet, is actually the right one.
For more info and to check out the sneeze demo in the article below To read more, click here:
I wanna get an antibody test to see if I am immune!!
They are needed to relax social distancing and to start opening up our economy. Persons who are immune can go back to work.
Yes, I know they are not reliable yet. I was very sick during the week of March 17, with bad diarrhea and a high temperature. (I very seldom have diarrhea, except doing colonoscopy prep) Maybe I had the virus and am immune.
Fortunately, here in the Bay Area, there are companies testing antibody methods. Anyone can come and get the blood tested. Essential workers exposed to sick people are given top priority. Stanford University is one of the universities.
I am fanatisizing about personal contacts visiting friends, relatives or anyone. Playing pickleball with other “immunes”. All the stuff I did before March 16. It is kinda hard to remember them…
Stanford made COVID-19 tests available for health care workers. Now, it’s considering wider distribution. To read more, click here
I live 20 miles from Stanford!!
HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to www.mbaa.org
Mortgage applications increased 7.3 percent from one week earlier
WASHINGTON, D.C. (April 15, 2020) – Mortgage applications increased 7.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 10, 2020.
The Market Composite Index, a measure of mortgage loan application volume, increased 7.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7 percent compared with the previous week. The Refinance Index increased 10 percent from the previous week and was 192 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 1 percent compared with the previous week and was 35 percent lower than the same week one year ago.
“The 30-year fixed mortgage rate decreased last week to the lowest level in MBA’s survey at 3.45 percent. The decline in rates – despite Treasury yields rising – is a sign that the mortgage-backed securities (MBS) market is stabilizing and lenders are successfully working through their lending pipelines,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinance activity has experienced a volatile four-week period, but did increase 10 percent last week. Refinancing will continue to be beneficial for the many borrowers able to lower their monthly payments during this time of economic distress.”
Added Kan, “Purchase applications decreased less than 2 percent last week – the fifth straight weekly decline. Compared to the first week of March, the purchase index was down around 35 percent, as the economic downturn and nationwide mitigation practices to slow the spread of COVID-19 have disrupted the spring homebuying season. The purchase market is still expected to rebound, as long as the public health measures to reduce the pandemic’s spread are successful and result in a broader recovery.”
The refinance share of mortgage activity increased to 76.2 percent of total applications from 74.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.7 percent of total applications.
Looking at the impact at the state level, here are results showing the non-seasonally adjusted, week-over-week percent change in the number of purchase applications from Washington, California and New York:
<Graph not available>
The FHA share of total applications decreased to 9.5 percent from 10.6 percent the week prior. The VA share of total applications remained unchanged from 14.3 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) decreased to 3.45 percent from 3.49 percent, with points increasing to 0.29 from 0.28 (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 $510,400) decreased to 3.80 percent from 3.87 percent, with points decreasing to 0.23 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 30-year fixed-rate mortgages backed by the FHA decreased to 3.45 percent from 3.54 percent, with points remaining unchanged at 0.19 (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 remained unchanged at 3.04 percent, with points increasing to 0.27 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 5/1 ARMs decreased to 3.34 percent from 3.39 percent, with points increasing to 0.35 from -0.02 (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.
NOTE: NEW POSTAL ADDRESS
Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave. Suite 203 Alameda, CA 94501