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Fannie Wants Desktop Appraisals with Floor Plans
Fannie Mae and Freddie Mac to launch remote desktop appraisals in 2022
Desktop appraisals with floor plans
Beginning March 19, 2022, Fannie Mae and Freddie Mac will accept remote desktop appraisals nationwide on eligible transactions without the appraiser ever stepping foot on the subject property, the Federal Housing Finance Agency (FHFA) announced.
Link to FHFA announcement 10/18/21 with more information,click here
My comments: When they submit loan applications, lenders receive a list of appraisal types available for their loans, including waivers. Lenders did not widely choose the desktop Covid appraisals. They preferred full appraisals.
I ran an ad for Cubicasa (floor plan app) on Tuesday this week and got some appraiser complaints. I will be testing it soon and hopefully will be able to use it in my appraisals.
Many anticipate that lender adoption will be slow, including Lyle Radke from Fannie and a group email posting from an appraiser who recently attended a state Mortgage Bankers’ meeting. He said:
“I was on a 4 appraiser panel with +/-60 LO’s representing 20 different lenders. I asked for a show of hands-on how many would be offering Desktop or Hybrid appraisals on March 19… There was not a single hand raised. “
“When we discussed the Desktop and Hybrids, most had no idea about the differences in the two products… All 4 of us thought that the turn time “might” be reduced by 1-2 business days. So, based on a small sample, this may not be as much of a problem as some appraisers think. “
The Armour-Stiner Octagon House Irvington, New York
Excerpts: This fancifully decorated Victorian home in New York’s Hudson Valley is the only known fully domed octagonal residence in the United States.
Once structurally sound, the home was brought back to its extravagant, 19th-century, polychromatic glory under the management of Joseph’s son Michael Hall Lombardi.
Paint analysis helped determine original paint colors for the interior spaces and the exterior of the house. Rooms were extensively researched and meticulously restored to the Neo-Roman style applied by Stiner in the late 1800s. The third-floor Egyptian Revival music room, which breaks from the style of the rest of the house, is said to be the only domestic room of its kind still in existence.
Stiner’s original furnishings were found at an auction and returned to the room where they now sit under a star-emblazoned ceiling and walls encircled by Egyptian scenes.
Excerpts: Over the next five years, we will witness the transformation of the appraiser’s notes, sketches, and photos into a cloud-based, all-digital twin of the property. This is the digital transformation of the appraiser’s inspection data. And appraisers can thank self-driving cars for this change.
The technologies that make self-driving cars possible are the same technologies that make the digital transformation of appraisal data possible. Here are three worth noting:
5G transmission speeds
We are probably five years out before this scenario becomes common, but with the introduction of floor plan requirements by the GSEs, the introduction of low-cost LiDAR by Apple, the emergence of video for use in virtual inspections and the advances in computer vision we are definitely on a path to seeing a digital transformation of the appraiser’s data.
The next five years will be filled with opportunities for appraisers that embrace change and for those who don’t care for it too much, it’s good to remember Amara’s Law about technology: “We tend to overestimate the effect of a technology in the short term and underestimate the effect in the long term.” Translation: Change is coming, but not as fast as you might fear.
To read more, including about 5G, LiDar, and AI. click here
My comments: Read this Article!! I have known Jeff Bradford, who owns Bradford Software (Clickforms), for over 30 years and heard him speak many times. He is very tech savvy. His company is about 15 miles from me, so I purchased his forms software almost 30 years ago. I like local vendors, so I can go into the company if I have a complaint ;>
New Weekly Clubhouse Club: Real Estate Appraisal Questions
Moderators: Julie Friess and Ann O’Rourke
I have not done any speaking, live or online, for over 10 years. I got burned out on both traveling and speaking. For unknown reasons, I love doing Clubhouse with Julie. We discuss appraisal topics, sometimes with differing opinions ;> Meetups last about an hour.
Our next meetup: Thursday, March 10 at 1 pm Pacific Time. How to connect with appraisers online? What’s the best way for you? Facebook, email discussion groups, appraisersblogs, clubhouse, appraisersforum, Twitter, etc. They are all very different. Plus blogs, podcasts, etc.
The value of smells! Is there a way to determine this? March 3, 2022 Note: Julie had a connection problem. Skip past the first minute. Skip the very short recording before it. We restarted the meeting.
ANSI Standards, what does it mean for you? 4/1 is coming! February 25, 2022
Both meetups were recorded so you can listen and see what they are like.
How to Join Clubhouse and our Group
Download the Clubhouse app – iOS and Android. When you’re set-up, search for “Real Estate Appraisal Questions”.
Clubhouse is an audio-based social media app. In the past, it was invite-only. Now it is open to anyone.
A few Clubhouse set-up tips:
Enter your user name. Take a selfie, and it will be automatically uploaded. You can use another image, but your photo is more personal (I did like a cat photo I saw ;>) Or, use your initials (default). Next, write a description of yourself and answer some other questions. The photo and the information can be changed at any time.
How Clubhouse works: There are moderator(s) at the top. You can see their photos. Under them are the photos or images of the attendees. You can raise your hand to speak, or a moderator can ask if you want to speak.
Another active Real Estate Appraiser group is Real Estate AppraisalTalk, which has been around for a while and has three rooms per week. Check out the recordings.
ANSI and Appraisers, Real Estate Agents and MLS – what it means By Hamp Thomas
Excerpt: This is a gift to appraisers
I’ve been begging for this to happen for almost two decades, so those who know me or have read much of my work know that I am ecstatic with this news.
It doesn’t automatically solve square footage problems and may even make things worse for a little while.
But, if we take this seriously and look at it professionally, we have been offered a Christmas Gift on a silver platter. It’s up to us if we choose to open the package and enjoy the gift or stick it back in the box and complain it doesn’t fit.
I never imagined Fannie Mae would be the one with the foresight and courage to take this step. I always imagined the Appraisal Standards Board or Appraisal Foundation leading the way. But, I’ll take it from any source and celebrate this giant leap forward in our professionalism and consumer protection.
Our industry has needed this step a long time, and with all the press on
appraisals lately, this comes at a good time when we need to establish some trust in our ranks. This helps us catch up with the rest of the standardized world.
Note: Hamp Thomas is the author of the only textbook on ANSI: “Measuring Square Footage with ANSI 2021: Home Measurement” $29.95 paperback on Amazon. Search for the book name.
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Will Appraisal Bias Finally finish lenders needing human appraisals?
Is it part of a lender conspiracy to accomplish their goal?
Remember the Enron scandal that made CPAs look unreliable and even participate in fraud?
Enron was one of the fastest-growing and supposedly innovative companies in the United States in the 1990s. However, the entire edifice was based on massive accounting and corporate fraud that eventually came to light and resulted in Enron declaring bankruptcy in December 2001—the biggest corporate bankruptcy in the world at that time.
Of course, no one talks much about lender and real estate agent bias. Heavy contributors to politicians? Appraisers were taught to discriminate in classes and textbooks until the 1960s: Redlining. The effects are still where I live after decades of bias—differences in value in the same homes in the same city of over 100%. But, appraisers were taught about Fair Lending starting in the 1970s.
Bias does not help appraisers make money. It can be very lucrative for lenders and agents.
Recent appraisal bias story – the MAI who can’t spell (or use a spell checker).
The MAI’s email to Maxine Waters Chairwoman of the House Committee on Financial Services is all over the news
Excerpt: “Email sent to Dr. Elizabeth Korver-Glenn, one of our nation’s foremost experts on bias and discrimination in the housing appraisal industry. In his email, the appraiser characterizes “minority” children as “illigitimant” [sic] and “poorly educated” and refers to the names of Black people as “obserd” [sic].”
To read the appraiser’s email (scroll down the page) and the 50+ appraiser comments, click here
My comments: The email was posted on social media and took off like a rocket ship! Be careful what you write in your emails and to whom you send them. I have seen much worse posts on appraiser social media. I always, always, always let an even mildly controversial email “sit” overnight before sending. I will never forget a V.P. at a company I worked at who sent “all” instead of just the person. She was fired.
Of course, the appraiser’s name, address, email, etc are now available online.
First Discrimination Lawsuit: What it Means for Appraisers
by Isaac Peck
Excerpts: The lawsuit was filed by a Black family in Marin County, California and alleges that Miller, a white appraiser, undervalued the plaintiff’s home by nearly $500,000, that race was a motivating factor in her appraisal, and that she committed multiple violations of the Fair Housing Act.
As the first formal lawsuit filed alleging discrimination, this case fleshes out some of the key accusations that are being leveled against appraisers and how these charges are interpreted by the courts will no doubt have far-reaching implications and have a critical role in how this issue continues to play out on a national level.
In their lawsuit and in their comments to the press, the Austins have strongly suggested that Miller herself may have been consciously or unconsciously biased, but their legal arguments go well beyond simply attacking Miller as an individual appraiser. The core of the Austin’s lawsuit raises key allegations against long established techniques and practices of the appraisal profession today—such as defining neighborhoods boundaries and the use of the sales comparison approach.
The CFPB is reviewing bias in Automatic Valuation Models (AVMs). The proposed rules are a joint effort by the Consumer Financial Protection Bureau, the Office of the Controller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Housing Finance Agency.
These agencies are concerned AVMS may reflect bias is design and function. The mathematical models rely on biased data resulting in inaccurate valuations. Basically the agencies are stating historical data going back to redlining is built into these models and do not reflect current market data. Remember markets are not static and are always changing.
The CFPB’s options will strengthen oversight of these models. Specifically, the CFPB, along with its federal partners, intends to:
Ensure a high level of confidence in the estimates produced by automated valuation models;
Protect against the manipulation of data;
Seek to avoid conflicts of interest;
Require random sample testing and reviews; and
Account for any other such factor that the agencies determine to be appropriate.
My comment: Maybe lenders won’t be able to replace human appraisers with AVMs! I will never forget a primary reason for the 2008 mortgage crash: they did not use data from the Great Depression in the 1930s. That was the only previous time where home values dropped everywhere in the U.S. Previous price declines were local or regional.
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
My comments: Rates are going down. Make money while you can!
Mortgage applications decreased 0.7 percent from one week earlier
Mortgage applications decreased 0.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 25, 2022.
The Market Composite Index, a measure of mortgage loan application volume, decreased 0.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week and was 56 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 9 percent lower than the same week one year ago.
“Mortgage rates last week reached multi-year highs, putting a damper on applications activity. The 30-year fixed rate reached its highest level since 2019 at 4.15 percent, and the refinance share of applications dipped below 50 percent. Although there was an increase in government refinance applications, higher rates continue to push potential refinance borrowers out of the market,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase activity remained weak, but the average loan size increased again, which indicates that home-price growth remains strong, and a greater share of the activity is occurring at the higher end of the market.” Added Kan, “We will continue to assess the potential impact on mortgage demand from the sharp drop in interest rates this week due to the invasion of Ukraine.”
The refinance share of mortgage activity decreased to 49.9 percent of total applications from 50.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.3 percent of total applications.
The FHA share of total applications decreased to 8.6 percent from 8.7 percent the week prior. The VA share of total applications increased to 10.2 percent from 9.9 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.15 percent from 4.06 percent, with points decreasing to 0.44 from 0.48 (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 3.88 percent from 3.84 percent, with points decreasing to 0.40 from 0.45 (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 4.15 percent from 4.09 percent, with points increasing to 0.74 from 0.56 (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 3.47 percent from 3.42 percent, with points increasing to 0.47 from 0.45 (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 3.44 percent from 3.26 percent, with points increasing to 0.35 from 0.34 (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.