VA Approves Desktops and Exterior-Only Appraisals
Excerpts from the Summary: On August 1, 2022, the Veterans Affairs released Circular 26-22-13 announcing new procedures for alternative valuation methods, effective immediately.
“The use of a Desktop Appraisal may allow an appraiser from outside the market area, but with appropriate credentials for the jurisdiction of the property, to complete the assignment when no local VA fee panel appraiser is available.”
“Appraisal Assignment Waterfall. With consideration for the high demand for appraisal services and limited availability of appraisers in certain local market areas, VA is providing lenders, servicers, and appraisers with a procedural waterfall that clarifies acceptable valuation methods when certain conditions exist. Lenders and appraisers can also refer to Exhibit A for more information. VA continues to explore opportunities for expanding the use of Exterior-only Appraisals and Desktop Appraisals and will update this procedural waterfall, as appropriate.”
To read the full blog post, click here
The summary and Circular are in the blog post.
To read more about the May 2022 proposal to eliminate the fee panel, click here
I wrote about the VA in my July 8 email newsletter. To read it, click here
My comments: The big push to cut down on appraisal turn times because of the appraisal shortage is Very Old News since mortgage volume has plummeted. I always recommend VA as the best lender client for appraisers. I wrote about it in the past and interviewed VA employees, appraisers on the VA panel, and appraisers who did not want to do VA appraisals in my paid monthly newsletter.
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NOTE: Please scroll down to read the other topics in this long blog post on non-lender appraisals, real estate market, unusual homes, mortgage origination stats, etc.
House with trees growing inside! – $3,800,000 in Pismo Beach, CA.
This home has gone viral on Twitter! Link to Twitter below with lots of comments and photos.
Excerpts from Zillow listing:
9 bedrooms, 8 baths, 5,000 sq ft, 6.69 acre lot
Canyon retreat in the City of Pismo Beach. Pismo Beach is less than a mile away. Five different dwelling units that include an actual one bedroom, one bath tree house, a large museum with a studio and one bedroom apartment, a carriage house with a two bedroom apartment, a studio apartment with two car garage, the main house with two bedrooms, one and a quarter baths with rock fireplace and wrap around decking, a shed/studio with full bath-each one with private views.
Each home has wooded settings and private yards and decks set in a private coastal canyon. The Zen yoga platform is situated next to a seasonal creek that is tucked into the wooded hillside. 60-foot-deep man-made cave, perfect for storing wine. This property is an existing, non-conforming property that was built in the 1960’s and is grandfathered by the City of Pismo Beach. The property has been held in the same family for decades.
To read the Zillow listing and see more photos, click here Don’t miss the last photo – a very strange “cave-like” dwelling!
To read the Twitter post, click here
To read comments and photos from a former tenant about the strange and “scary” property, click here
My comments: I have seen many homes where a large tree was planted too close to the house when it was very small, where the trunk is now too close to the house, and/or the branches are too close. One of my neighbors has a palm tree that keeps getting wider and wider, and the palm fronds drop on my roof and backyard. Never plant a palm tree!!
Fannie: Learn how valuation modernization is changing collateral underwriting – Video, 1 hour, 23 minutes
Excerpt from emailed notice: “Valuation Modernization: New perspectives on collateral underwriting” is a must-see for underwriters and appraisal reviewers. This webcast, now available for on-demand viewing, features insights on how modernizing the valuation process is driving efficiency and providing new solutions to industry challenges. Plus, you’ll get tips for underwriting different valuation types and hear the latest valuation policy updates.
- New CU Undervaluation Risk Flag – lots of time on this topic
- Turn-time savings example: 1004 vs. 1004 Hybrid
- Trainee quality analysis (Fannie allows trainees)
To watch the video and read the slide deck (link in the upper right), click here
My comments: Targeted to underwriters and reviewers, but can help appraisers see what the “other side” does especially undervaluation risk flags. If you don’t have time to watch the video, download the presentation slides and scroll through to see if there is anything you want to know about. That’s what I did. Then I scrolled through the video to watch the video sections I wanted to watch.
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Click here for the list of 4 ways plus information on why I take ads, etc. Comparison of lender and non-lender appraisals
Comparison of lender and non-lender appraisals
Business is down, and many appraisers are thinking about doing non-lender work. If you are doing them now, this article has ideas for expanding into other types of non-lender appraising. I have been doing many types of non-lender appraisals since I started my appraisal business in 1986.
Working for lenders is very different from working for non-lenders. A few of the differences:
- Requirements: Lenders have many that keep changing. N on-lenders have more reasonable requirements, if any.
- Fees: Lender – very competitive. Non-lender – higher fees than lenders, much less competition, if any.
- Marketing: Lender: get on AMC and lender lists. Non-lender: marketing in person and online.
(The article includes) lists of the pluses and minuses of lender vs. non-lender appraisals. I also include a list of many different types of non-lender appraisals with pluses and minuses for each one.
The next two newsletters will include articles on Appraisals for Estates and Trusts: the most popular non-lender appraisals for residential appraisers.
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The housing market is cooling-off. Is it headed for a crash like in 2008? Find out why not.
By Reena Agrawal, PhD, Research Economist
Excerpts: Lending was not very prudent prior to the crash of 2008 as suggested by the trend in the median credit score (FICO), a measure for credit worthiness; for newly originated first-time purchase mortgages the median FICO score was 686 in Q1 2006 versus 740 in Q4 2020. According to the New York Fed, “there was $859 billion in newly originated mortgage debt in Q1 2022, with 68% of it originated to borrowers with credit scores over 760. Two percent of newly originated mortgages were originated to subprime borrowers, a sharp contrast to the 12% average seen between 2003-2007.”
As housing demand wanes due to rising mortgage rates and high home prices, the housing market has likely started to balance out. While some buyers cannot afford the higher mortgage payments, other are choosing to stay on the sidelines in the face of heightened uncertainty in the stock market and the economy in general.
Lower demand does not mean that prices will crash; it’s just that the frenzied rise in the prices that was observed over the past two years will slow down considerably. It is possible that some markets might even experience a slight decline in prices.
The market is shifting from a sellers’ paradise to one where buyers can now start making a few demands of their own.
For more details and graphs, click here
My comments: Short and understandable. I have heard this opinion many times and agree with it. The 2008 crash was caused by fraudulent mortgage loans to unqualified buyers. Appraisers kept complaining about mortgage broker pressure for higher appraisals. Very, very different than today.
The Tide is Turning – July Newsletter from DW Slater Appraisal Blog (Dallas Ft. Worth and Rural North Texas)
Excerpt: We’ve been watching our markets and seeing signs of a slowdown, but in this past month, the signs are getting stronger. We are not seeing a crash. We are not going off a cliff, just a turn of the tide.
More Signs of Slowing – A Peek at July Data
All of these charts are from the June data. Here is a glimpse into what is currently happening in July. You can clearly see that inventory is increasing as the number of active listings is growing, and we are not finished with July.
To read more, click here
My comments: I finally found another excellent market trends blog post from an appraiser. I have subscribed to the monthly DW Slater Blog posts for a while. This post has some tables, very good graphs, and explanations. Check it out. Maybe you can use some of the graphs and tables in your reports. Much easier to understand by looking at a graph or table than only reading text explanations for market changes. If you know of another similar appraiser blog, just hit the reply button.
Saved From Demolition, Colorado’s Rock House Finds a Buyer With Plans for a Renaissance
Excerpts: 4782 Forest Hill Rd, Evergreen, CO 80439
$250,000 List price Pending. 2 Bedrooms, 2 baths, 1,529 square feet, 1.18-acre lot
This Colorado house has a unique and natural design element in several rooms. Boulders pierce the living spaces, and the residence is filled with rocks.
“It has a giant rock in it. The rock is the bedrock, and it’s huge—almost floor-to-ceiling and the full width of the family room. It really provides some unique design elements to integrate into the living space,” says listing agent Bob Maiocco.
To read more and see photos, click here
My comments: I have seen photos of homes built next to, and between, rocks but never one with big rocks inside!
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 firstname.lastname@example.org . Or call 800-839-0227, MTW 7AM to noon, Pacific time.
My comments: Rates are going up. Some appraisers are very busy and others have little work. Varies widely around the country.
Mortgage applications increased 1.2 percent from one week earlier
Mortgage applications increased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 29, 2022.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.2 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 2 percent from the previous week and was 82 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 16 percent lower than the same week one year ago.
“Mortgage rates declined last week following another announcement of tighter monetary policy from the Federal Reserve, with the likelihood of more rate hikes to come. Treasury yields dropped as a result, as investors continue to expect a weaker macroeconomic environment in the coming months. The 30-year fixed rate saw the largest weekly decline since 2020, falling 31 basis points to 5.43 percent,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The drop in rates led to increases in both refinance and purchase applications, but compared to a year ago, activity is still depressed. Lower mortgage rates, combined with signs of more inventory coming to the market, could lead to a rebound in purchase activity.”
The refinance share of mortgage activity increased to 30.8 percent of total applications from 30.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.4 percent of total applications.
The FHA share of total applications decreased to 11.9 percent from 12.1 percent the week prior. The VA share of total applications increased to 10.8 percent from 10.6 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.43 percent from 5.74 percent, with points increasing to 0.65 from 0.61 (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 $647,200) decreased to 5.06 percent from 5.32 percent, with points decreasing to 0.36 from 0.43 (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 5.39 percent from 5.54 percent, with points increasing to 1.03 from 0.85 (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 decreased to 4.74 percent from 4.95 percent, with points decreasing to 0.65 from 0.67 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 4.55 percent from 4.67 percent, with points decreasing to 0.69 from 0.76 (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