AMC Mergers and Acquisition – Someone has a positive view of residential lender appraising!
Nationwide Property & Appraisal Services purchased by investment firm Arcapita Group Holdings
Excerpts: The deal gives Arcapita an AMC that serves mortgage lenders in all 50 states, has a network of over 15,000 licensed appraisers, and grossed $144 million in revenue in 2021.
“We were attracted by Nationwide’s highly cash generative business, experienced management team, and strong base of clients across the country,” Arcapita CEO Atif Abdulmalik said in a statement. “Close to 50% of Nationwide’s customers have maintained their relationship with the company for over six years, highlighting the longevity of its customer relationships, and the company benefits from a free cash flow conversion rate of over 99%.”
The AMC has acquired five other companies since Corridor bought a stake in Nationwide in 2016. In June, Nationwide acquired Portland, Oregon-based First Choice Appraisal Management, expanding its reach into the Pacific Northwest.
Other large financial firms are also putting money into the appraisal management space, which is highly fractured.
In October, private holding group StoicLane acquired control of the appraisal management company Lender’s Valuation Services (LVS).
To read more, click here
Class Valuation purchases Metro-West
Excerpt: In a press statement, Class Valuation said Metro-West, founded in 1987, is the largest independent residential appraisal firm in the country, with staff appraisers in over 80 U.S. metros.
Class Valuation, which itself is owned by private equity firm Gridiron Capital, said the acquisition of Metro-West would fit into its larger strategy of fusing tech tools such as automation and 3D measurements to help clear the well-documented capacity issues in appraisal.
“One area of focus for us has been the growth of a staff appraiser network and building out a nation-wide trainee program,” John Fraas, CEO of Class Valuation, said in a statement.
This is the fifth acquisition Class Valuation has made in the last 12 months, and the seventh in recent years. In September, Class Valuation acquired Kansas City, Missouri-based Pendo Management for an undisclosed sum.
There’s been a surge in private equity investment in the U.S. appraisal space over the last two years.
To read more, click here
My comments: The investors see money to be made in appraisals. What will they think when it inevitably crashes again, like it always does. I wish I had an AMC I could sell to investors ;>
If you work for any of these AMCs, keep close track of your billings, so they don’t get lost in any accounting mergers. No one knows, of course, if their appraisal management will change.
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To read more of this long blog post with many topics, click Read More Below!!
NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, ANSI, Waivers, Cell phone full, mortgage origination stats, etc.
Spitzhäuschen Bernkastel-Kues, Germany
This 600-year-old home seems to defy physics.
Excerpt: Built in 1416, this distinctive building has been described as “the most photographed building in Bernkastel-Kues,” and with good reason.
The base of the house is extremely narrow, with the upper floors jettied out wider, making this 600-year-old home look like it is about to come crashing down at any minute.
The home was originally built this way to allow for wagons to travel through the narrow alley running alongside the building. As well, tax payments in many cities in Germany were based on the area of the foundation of the building, which explains why “jettied” buildings were a common occurrence in medieval Germany, as taxes were not charged on wider upper levels.
To read more and see more photos, click here
My comment: I couldn’t find any interior photos online, but the building and its story are very interesting! Wine bar on the first floor.
The Mailbox is Full and Cannot Accept Any Messages at this Time. Goodbye.
By Paul Ryll
Excerpt: I don’t have enough space in my voicemail anymore. I’ll clean it out and delete everything, but by the end of 1.5 days, it’s full again. My mother told me today that she called last night and was greeted with, ‘The mailbox is full and cannot accept any messages at this time. Goodbye.’ I get a few telemarketers’ messages.
Rarely is there a message from a friend or family member. I would say about 90% of the voicemails that I receive are from an irate homeowner worried about a rate lock or a stressed out realtor wondering if they are going to close on time.
To read more, click here
My comments: Check out the comments! I have never used my cell phone for appraisal business phone calls. Of course, I have never worked for AMCs. I started my business in 1986 with no cell phones. I had a car phone – very expensive calls. If I were using my cell phone for business, I would have a separate phone for my personal use.
My previous cell phone was an iPhone 6 with 64 GB that kept getting full of podcasts and photos. A few months ago, I purchased an iPhone 12 Pro with 512 GB. I should have done it a long time ago! I have never used a cell phone for email because I get way too many news-related emails for these newsletters.
The February Issue of Appraisal Today Has Lots of Information on ANSI Z765
Excerpts: Stairs are included in finished square footage on both levels
Staircases are included in the GLA of the floor area from which they descend. Source: Fannie Fact Sheet
The area of the staircase is counted in the finished square footage on the
first and second levels. With two floors, stairs are counted as square footage on both levels, regardless of what is below the staircase on the first level (half-bath, closet, or no access). Source: Hamp Thomas Book.
An excellent short video by Hamp Thomas: Search Youtube for How to
Measure Stairs in Square Footage Per ANSI Per Hamp, the information in this video has not changed for 2021.
How to visualize stairs
Good explanation from Renée Healion, SRA, ASA in an appraiser email
discussion group. “Many people struggle with the staircase and level question. The way I picture the stair/level matter is this, working from the uppermost story: Imagine a staircase as a flap, hinged at the top, not attached at the bottom. Spring-loaded, if it helps.
Next, imagine the flap rising to the closed position. The stairs close the gap in the floor from which they descend (in this standard). Count it there. The floor area directly below the staircase/closed flap is exposed as a part of its level’s floor area. Count that there. A staircase from the first floor to the basement “closes” to the first floor, not the basement.”
Per Hamp Thomas by email: If finished stairs descend into an unfinished basement, they are included in the square footage of the unfinished (or finished) basement.
2021 ANSI change: Finished stairs suitable for year round use ascending to an unfinished upper area are included in the square footage calculation. For example, finished stairs from a finished second floor to an unfinished attic. The stairs are included in the finished area for the second and third floors. The sketch of the third floor would show only the stairs as square footage. Source: Hamp Thomas
First floor: 1,200 sq.ft.
Second floor: 1,200 sq.ft.
Third floor (part of unfinished attic): 300 sq. ft.
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GSE Prevalence of Appraisal Waivers (November 2021)
Excerpts (from downloaded PDF) Key Points:
• The share of appraisal waivers for both GSEs combined for November 2021 stood at 39%, down 11 ppts from its series’ peak in March 2021. This decline is largely due to share shift away from refinance loans, when waiver usage is more prevalent.
• Purchase waivers continued to climb, setting a series’ share high of 14%. The share of Cash Out and No Cash Out refis declined 1% and 2% respectively from their series’ high last month.
• Waivers are granted using a data based analysis of the reasonableness of the applicant’s self valuation. The data measure whether an appraisal waiver was used, not only granted, on the loan.
• Despite the salutary effect of waivers, the GSEs and FHFA need to be alert as there is evidence of potential gaming.
• While waivers generally provide lower valuations than human appraisals, there are clear spikes at certain LTV anchor points with waivers (not shown) and at these points waivers valuations are close to or above human appraisals (chart 3 for No Cash Out refinances).
To download the full report, with lots of information, historic trends, AVM valuation issues, etc. click here
My comment: This report comes out every month from Ed Pinto at AEI (American Enterprise Institute). This report was sent on December 17, 2021. Waivers are a hot topic for appraisers!
Futuristic Desert Oasis near Palm Desert CA Sells for $42M
Excerpts: The property is set on nearly 8 acres. Between the main house, the separate office, and the large guesthouse, it has more than 32,000 square feet of indoor living space, including seven bedrooms and 12 bathrooms.
Features include an exterior lined with panther slate from India, as well as retractable glass walls lined in bronze. One of the most dazzling features is the enclosed hallway leading to the dining room, lined with aquariums filled with colorful exotic fish on each side, and with the shark tank overhead.
To read more and see some great photos, click here
My comment: WoW!!
ANSI Z765-2021 Resources Web Page at www.appraisaltoday.com/ANSI
Every week I write about new classes, Webinars, and videos. I am putting them on this web page now. Plus, removing old information, such as a class that has changed the dates it is offered.
My comments: There is a very wide variety of appraiser opinions on ANSI, from “I’m retiring. Or, I hate it vs. I have been using it since 1996 and like it. Or ” I think we need a measurement standard and I will learn how to use it.” If you have been doing nothing so far, you are not alone. However, if you do residential lender appraisals you will have to learn it. Fannie will be checking what you do. Underwriters and reviewers will be calling or emailing with questions.
Free ANSI Q&As
Last Thursday, I attended the appraiser learning Live Virtual CE 4-hour live streaming CE $99.95 “Measuring with ANSI & the 2021 ANSI Update”. Hamp Thomas was the instructor.
All attendees got copies of the 354 slides and Q&As. I posted the Q&As on my Website with permission. To read them, click here
To sign up for the class, go to www.appraiserelearning.com and click on the link at the top of the page “Live Virtual CE”.
I will be attending McKissock’s 4-hour Virtual CE on ANSI next Monday.
Free Webinar: Fannie Mae Answers your Questions About ANSI
February 28, 2022. Lyle Radke Senior Director of Collateral Policy at Fannie Mae.
The first 13 minutes are an introduction plus slides by Lyle. After that, it is more conversational with some interesting remarks by Lyle, such as upcoming FAQs from Fannie by April 1. Another topic: when multiple appraisers measure the same property, two out of 5 use the assessor’s square footage measurement, and 20% of the time there was more than a 10% disagreement in value.
Fannie met with Cubicasa and Inside Maps, who agreed to make their software conform to ANSI. Cubicasa is $34.90 per use. After 45 years of appraising, I have realized that I don’t like measuring houses outside – too many rose bushes, stuff underneath un-mowed lawns, etc. Or trying to get a target for my Disto. Of course, I will walk around the outside and take exterior photos.
To watch, go to www.youtube.com and search for appraiser learning. Over 2,200 views.
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 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 email@example.com . Or call 800-839-0227, MTW 7AM to noon, Pacific time.
My comments: When rates are expected to go up, there is usually a big rush to refi. Make money while the market is hot!!
Mortgage applications increased 12.0 percent from one week earlier
WASHINGTON, D.C. (February 2, 2022) – Mortgage applications increased 12.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 28, 2022.
The Market Composite Index, a measure of mortgage loan application volume, increased 12.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 15 percent compared with the previous week. The Refinance Index increased 18 percent from the previous week and was 50 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 12 percent compared with the previous week and was 7 percent lower than the same week one year ago.
“Most mortgage rates in MBA’s survey continued to rise, with the 30-year fixed rate reaching its highest level since March 2020 at 3.78 percent. Despite the increase in rates, refinance applications were up 18 percent, driven mainly by a 22 percent jump in conventional applications. There has likely been some recent volatility in application counts due to holiday-impacted weeks, as well as from borrowers trying to secure a refinance before rates go even higher,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications also increased in the final full week of January but remained 7 percent lower than a year ago. The average purchase loan size hit a new survey high once again at $441,100. Stubbornly low inventory levels and swift home-price growth continue to push average loan sizes higher.”
The refinance share of mortgage activity increased to 57.3 percent of total applications from 55.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.5 percent of total applications.
The FHA share of total applications decreased to 7.7 percent from 8.6 percent the week prior. The VA share of total applications decreased to 9.1 percent from 9.9 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.78 percent from 3.72 percent, with points decreasing to 0.41 from 0.43 (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 $647,200) increased to 3.59 percent from 3.56 percent, with points decreasing to 0.31 from 0.38 (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 3.86 percent from 3.69 percent, with points decreasing to 0.55 from 0.61 (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 3.01 percent from 3.00 percent, with points increasing to 0.41 from 0.39 (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 3.09 percent from 3.18 percent, with points increasing to 0.35 from 0.33 (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.
Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave. Suite 203 Alameda, CA 94501