Sins of the Past Are Back to Haunt Appraisers

Fannie Mae Takes A Closer Look at Appraisals

By Richard Hagar, SRA




In the recent past, when appraisers were swamped

Even with the Collateral Underwriter program review, appraisers were overwhelmed. Every lender and AMC were seeking and hiring review appraisers in order to keep up with demand. Due to the shortage of review appraisers (exacerbated by low fees and time pressures), tens of thousands of poorly created appraisals were accepted without receiving adequate review.

Unfortunately, because many appraisals were rarely rejected or required corrections, appraisers developed the false notion that poorly crafted appraisals were okay to turn in. Many appraisers were bragging about their ability to fill out two or three appraisal forms a day and receive no call-backs from lenders.

However, time and time again we’d review appraisals, that were accepted by lenders, but had failures such as:

• No highest and best use analysis (as if vacant and improved).

• Failure to make appropriate time/market adjustments (positive or negative).

• Using only a single approach to value.

• Incorrect land values.

• Square footage costs and depreciation based more on opinion than reality.

• Unsupported adjustments (adjustments based on “my 30 years in the business” instead of facts).

• Failures to personally inspect and photograph comparables.

What’s happening now

FNMA indicates that their 2022 lending volume is down 47% from 2021 and is expected to drop by another 50% in 2023. So, it’s pretty safe to state that the “appraiser shortage” of yesteryear is over, and reviewers now have more time on their hands.

Which appraisers are going to survive when the loan volume is down 75-85% and the poor appraisals of the past are catching up with the appraiser today? Well, for the most part, it’s based on the quality of the appraisals delivered to lenders over the past five years.

Do you believe that the quality of your work ranks you as a tier 1 appraiser or do you have a little concern about your rating? Tier 1 appraisers have little to fear but tier 2 and 3 appraisers…

What you can do today

Today, you likely have more time on your hands, so slow down and take more time improving the quality of your work. Superior quality appraisals can set you free.

Learn how to accurately determine adjustments. Follow the ANSI standard when measuring the subject (even if you disagree with the method — it’s the requirement). Take more classes! Don’t stop taking classes just because you have enough CE credit to meet your next renewal; that mentality is for the bottom tier of appraisers.

I typically obtain double the CE credit hours necessary to renew my certificate…double! Why? Because I want to do things better, obtain higher fees, and survive the purge that is coming. Lenders have more choices, and you need a way to stand out from the bottom tier and low fee appraisers.

To read more, click here

My comments: Worth reading. Hagar is one of the best residential appraisal instructors. I have known him for over 30 years and have taken many of his classes. Richard can be a bit negative but states what is really happening and what you need to do. Many thanks to Ryan Lundquist’s 2020 blog post for the very appropriate image above!

I also think that now is the time to increase your appraisal skills by taking classes and seminars. I also have always had more CE hours than I need.

I am an appraiser because it is challenging and never boring. I quit working in labs because it was boring after 7 years but have never been bored appraising. I want to be the best appraiser I can be. (I have always been an over-achiever).

Consider doing non-lender appraisals. I have been doing them since 1986 and writing about them in my monthly newsletter since 1992. No CU, UAD, reviews, many pages of differing AMC requirements etc. Your requirements are in USPAP.


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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 State board complaints, non-lender appraisals, mortgage forecast, real estate market changes,  unusual homes, mortgage origination stats, etc


12 of the strangest buildings in the world
Shaped like baskets, carpets, and fish, you won’t believe these buildings are real

Excerpts: There are lot of beautiful buildings in the world. There are just as many ugly ones. In between, you’ve got the mediocre, boring, or unoriginal, and then, in a realm all of their own, are the downright weird ones—the ones you have to see to believe.

In this category, you find the properties that represent the whimsical side of the design and prove there is no idea too out there when it comes to constructing a building. Like their unusual facades, many of these structures also have unexpected histories and backgrounds that make their existence that much more alluring.

2. Longaberger basket building in Newark, Ohio (photo above)

… This building, sometimes called the Big Basket, used to be the headquarters for the The Longaberger Company, a basket manufacturer and distributor. The company moved in 2016 and the building was sold to Steve Coon, a developer in the state, who had plans to turn it into a luxury hotel, though now it’s back on the market for $6.5 million.

To scroll down the page and see photos and brief descriptions of all 12, click here 

For lots more info on the history plus interior photos, click here 

My comments: Over the years, I have included most of these in this newsletter. Fortunately, this article includes many of them in one place.


How to Avoid and Respond to Appraisal Board Complaints

By McKissock November 15, 2022

Excerpts: Disciplinary complaints against appraisers are becoming more and more common. From accusations of bias or discrimination to failure to disclose significant real property appraisal assistance, it can be really alarming if a licensing board reaches out and notifies you of a complaint.

However, there are steps you can take to protect yourself against becoming the subject of a lawsuit or disciplinary action. Here, we answer frequently asked questions about how to prevent and respond to appraisal board complaints.

What should you do and not do in the first 24-48 hours after receiving a complaint?

Stop. Take a breath. You don’t want to do anything rash or respond out of anger, as this will likely make things more difficult down the line. Sometimes what you do in that first 24-48 hours will set the tone for the entire rest of the process…

How can you prevent appraisal board complaints?

Strengthen your workfile, and strengthen the language in your report. These two things can help you avoid getting appraisal board complaints in the first place, as well as strengthen your ability to respond to any complaints that may come in…

What are some common types of appraisal board complaints?

Accusations of appraisal bias and discrimination are becoming more common these days. In addition, some common violations that may lead to complaints include:

  • Use of inappropriate sales in the sales comparison approach
  • Use of unsupported site value in the cost approach
  • Failure to analyze the sales history of the subject property
  • Failure to analyze the current pending purchase agreement
  • Failure to disclose significant real property appraisal assistance

To read more, click here

My comments: As we all know, anyone can file a complaint for any reason. Fortunately, some state boards, such as California, reject most complaints, and they never go anywhere. You don’t even know about them. Other states are different.

Tim Andersen, MAI, the Appraisers Advocate, can help. He is a regular contributor to the monthly Appraisal Today and has regular podcasts. Tim regularly discusses state boards. Tim also reviews reports of appraisers and helps them write better reports. www.theappraisersadvocate.comGetting too many ad-only emails?


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Want to do non-lender appraisals but not sure how to get started, including marketing?

•   FREE Google Business Profile – how to get on the top of searches for appraisers in your area. A website is not required!!

•   Estate and Trust, Part 1 and 2 – the most popular non–lender appraisals

•   Estate/Trust liability advice from Peter Christensen

•   Comparison of lender and non-lender appraisals

•   Pluses and minuses of lender appraisals and the different types of non–lender appraisals

•   Communicating with non-lender clients: Very different from lenders

•   How to get referrals from real estate agents, your best source of non-lender appraisals

•   Get started in attorney work by doing divorce appraisals – much higher fees than AMCs/lenders

•   Expert witness testimony – very high fees, little competition for residential properties

I am getting a lot of emails and phone calls from appraisers about doing non-lender work. I could spend weeks discussing it with them on the phone. I suggest subscribing to my paid newsletter first. Then, call me with any questions after they decide what types of appraisals they want to do.

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If you have any comments or info on any topics, please hit the reply button!! I’m always looking for something new ;>If you are a paid subscriber and did not get the November 2022 issue emailed on Monday, November 1, 2022, please email, and we will send it to you!! Or hit the reply button. Be sure to put in a comment requesting it.


What to Expect in 2023 from the Mortgage Industry – MBA Annual Recap

By Jim Morrison November 14, 2022

Excerpts: While the attendance and show were great, the mood of attendees was a bit down and the market stats we heard could be the reason. There was a lot going on with the appraisal side of the process as well. There was great information and stats that appraisers need to be made aware of so they can prepare for what’s coming.

While I think most appraisers are feeling the slowdown, there are some interesting numbers that can help quantify just what was going on in the industry.

Mike Fratatoni, Chief Economist and Senior Vice President of Research and Industry Technology of MBA, mentioned that in 2021 there were over 13.5 million new home loan originations. This year, they are projecting to end the year at just under 6 million, and next year they are forecasting less than 5 million. It’s quite a big drop off. Another area of drop-offs is obviously in the drop in refinance loans which are down 85% according to Bob Broeksmit, President & CEO of MBA.

While the volume has dropped off, there are some measurements that are positive. Joel Kan, Vice President and Deputy Chief Economist of MBA, mentioned that the loan amounts are larger than anything we have seen previously.

Marina Walsh, Vice President of Industry Analysis, Research, and Economics of MBA, also mentioned that the foreclosure rate is under 1.9%, which is less than half of the 20-year average.

Joel also mentioned that they still see the average home price to raise by 1% in 2022. They do project a small decrease in 2023 for home prices.

To read more, click here

My comments: Short and worth reading. I’m so glad Jim Morrison attended and wrote this for us. This is definitely not a repeat of 2008.


The housing market will figure it out

By Ryan Lundquist November 16, 2022

Excerpts: The housing market has really changed, and it’s not an easy time to work in real estate. I know people in all parts of the profession who are having a hard time and wondering how to make things work. So, I wanted to share some perspective to hopefully bring encouragement. This post is sort of a combination of market trends and mindset.

The reality is we are in the midst of change and there is pain ahead. But the market will figure this out. Bottom line. And we can’t control what the market does, but we can control our response to the market.

Write a “dear downturn” letter

I know, this sound cheesy. I heard this idea from someone (Tom Ferry?). I’ve written a letter to myself called “Dear Downturn.”

In my letter I lay out a plan for how I’m going to succeed in a down market. If this might work for you, go for it. Be as practical as possible about what you’ll do to position yourself for success. My letter includes things like write one weekly post, eat clean, get back to my goal weight, be a daily resource on social media, speak somewhere once a week, make a few longboards, get my turn-time down to X number of days…

Market cycles and worry

Often when the market declines it’s a good five or six years of decline. That might sound daunting, but it takes time for a cycle to adjust. The verdict is still out on how long the market will correct, so we’re not locked into any timeline.

Of course, it feels like a game hosted by the Fed right now, so we’ll see what they do. I bring this up because if I’m lucky enough to live for thirty more years, and we have two more downward cycles within these decades, it’s possible prices could decline for more than a decade of my life ahead.

To read more, click here

My comments: Written for real estate agents but relevant for appraisers as we report on the market. Why do I include Ryan’s blog posts about his local market mostly? You can read about how a very savvy appraiser analyzes his local market and becomes locally “famous”. He does not do any residential lender appraising now.

The primary purpose of an appraisal blog is to market to real estate agents, your best referral source for non-lender appraisals.

More important, you speak regularly with local agents so you know what is happening way beyond the comps. How often do you speak with local real estate agents? I speak with them regularly. This week I had a long conversation with a local agent about an insurance office converted to a home near where I live. I had been driving by it for 40 years. It was in a 100% residential area and was definitely misplaced. She told me about the hassles of the conversion and how she converted it. This type of conversion is very unusual here. But homes are more valuable than offices, retail, etc. here and have been that way for a very long time, at least 40 years.


Clark Farm Silos in Kalispell, Montana

Excerpts: Affectionately referred to as our “big ol soup cans”. Each working grain silo was strategically placed and reconstructed on our three generation family farm. Every detail of the newly constructed interior was carefully thought out to maintain the unique cylindrical structure while adding a modern, minimalistic feel. Light and airy while cozy and comfortable at the same time.

Our thoughtfully designed, unique metal structures are equipped with a fully functional kitchenette, private bathroom and spacious loft bedroom with gorgeous mountain views.

This listing is for Clark Farm Silo #2. There are a total of five silos on over five acres to choose from.

Located on the owners’ 20 acre family farm with groomed walking trails.

To read more and see lots of photos, click here

My comments: Airbnb is $110 per night. Silos will never be the same for me again! I will remember this silo conversion and others I have seen online.


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  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 go to Or call 510-865-8041, MTW 7 AM 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 2.7 percent from one week earlier

Mortgage applications increased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 11, 2022. This week’s results include an adjustment for the observance of Veterans Day.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week and was 88 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 decreased 10 percent compared with the previous week and was 46 percent lower than the same week one year ago.

“Mortgage rates decreased last week as signs of slower inflation pushed Treasury yields lower. The 30-year fixed rate saw the largest single-week decline since July 2022, dropping to 6.9 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Application activity, adjusted to account for the Veterans Day holiday, increased in response to the drop in rates – driven by a 4 percent rise in home purchase applications. Purchase applications increased for all loan types, and the average purchase loan dipped to its smallest amount since January 2021. Refinance activity remained depressed, down 88 percent over the year. There is very little refinance incentive with rates so much higher than last year.”  

The refinance share of mortgage activity decreased to 27.6 percent of total applications from 28.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 10.6 percent of total applications.

The FHA share of total applications increased to 13.5 percent from 13.3 percent the week prior. The VA share of total applications increased to 10.6 percent from 10.3 percent the week prior. The USDA share of total applications increased to 0.6 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) decreased to 6.90 percent from 7.14 percent, with points decreasing to 0.56 from0.77 (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)increased to 6.51 percent from 6.50 percent, with points decreasing to 0.64 from 0.78 (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 increased to 6.93 percent from 6.86 percent, with points decreasing to 0.99 from 1.37 (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 6.27 percent from 6.40 percent, with points decreasing to 0.73 from 1.13 (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 5.73 percent from 5.87 percent, with points decreasing to 0.65 from 0.92 (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

Phone 510-865-8041


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