FHA Handbook 4000.1 Appraisal Changes

By Dan Bradley

Excerpts: On January 18, 2023, HUD issued an announcement regarding revisions made to Handbook 4000.1. According to the announcement, the revisions included “enhancements and revisions to existing guidelines and various technical edits.”

The most significant of these revisions was the elimination of the requirement to include the 1004MC form as an attachment to the appraisal report.

Changes to the Handbook also include several other minor, but nevertheless meaningful, edits and clarifications to FHA appraisal requirements, including:

Under “Attic Observation Requirements,” a clarification was made regarding the appraiser’s obligation to “safely” access the attic. The language requiring a minimum “head and shoulders” access into the attic was deleted.

Under “Crawl Space Observation Requirements,” significant revisions were made, including removal of a bullet point list of MPR/MPS criteria for the crawl space. Also, language requiring a minimum “head and shoulders” access into the crawl space was deleted.

The changes outlined in the Handbook may be implemented immediately but must be implemented for FHA cases assigned on or after April 18, 2023.

To read more, click here

My comments: Many thanks to McKissock for telling us what we need to know. Includes a link to the “redline” version of 4000.1 so you can skip over most of it. Scroll down to “Updates, Revisions, Notifications” to get the redline versions.


Revised FHA Handbook 4000.1 effective 9/14/15. Are you ready for the changes? Get the facts!!

Appraisal Business Tips 

Humor for Appraisers

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, mortgage origination stats, etc.

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10 homes built between 1682 and 1780

The oldest home (Photo above)

1. 12 Barrell Lane Ext, York, ME

Price: $3,900,000

Year built: 1682

York Harbor: This spacious Dutch gambrel offers waterfront views of a private peninsula.

6 bedrooms, 4 baths, 4,321 square feet, 0.46acre lot

The six-bedroom home boasts 4,321 square feet of updated space. Historic details include three fireplaces, restored hardwood floors, a staircase, and built-in cabinetry. The modern kitchen features wide-board pine floors and lots of windows to soak in the natural light. Enjoy scenic vistas from the front porch or back decks.

To see all 10 homes, click here

My comments: I’m sort of envious of East Coast appraisers with so many old homes. Click on the address at the top of each short description to go to the MLS with many photos and sometimes a video.

“One of the most quoted experts on housing markets, Jonathan Miller of real estate appraisal company Miller Samuel, won an unusually large 30-way bidding war for a Connecticut house built in 1755.” To read about How the ‘real estate whisperer’ won a 30-way bidding war and landed his dream house, Click here

I have read Jonathan’s weekly Housing Notes for many years. To subscribe, click here


City National Bank To Pay $31M To Settle Redlining Claims

January 16, 2023

Excerpts: DOJ says settlement with LA-based bank is largest in department’s history.

Key Takeaways

City National is the largest bank headquartered in Los Angeles and among the 50 largest U.S. banks.

From 2017 through at least 2020, City National avoided marketing and underwriting mortgages in majority-Black and Hispanic neighborhoods.

Other banks in the county received more than six times as many applications in majority-Black and Hispanic neighborhoods.

City National opened only one branch in a majority-Black and Hispanic neighborhood in the past 20 years.

To read more, click here

My comments: I have yet to see this widely quoted in the news. Quite a contrast to all the references to appraisal “bias” in the news. Hmmm… Banks give a lot of money for political contributions. How much do appraisers contribute? How much extra money do appraisers make for “bias”???


More layoffs at Reno-based Clear Capital AMC amid ‘seismic shift’ in housing market

Excerpts: Latest news comes after last year’s restructuring when Clear Capital laid off more than a quarter of its global workforce.

In addition to its Reno headquarters, the company also has offices in California and Minnesota.

To read more, click here

My comments: Will more AMCs downsize? The article source above is the local newspaper Reno Gazette-Journal. Keep a very close watch on your unpaid billings! Don’t let an AMC fall behind on your payments. Call, email, text over and over so you get paid. If they go into bankruptcy, employees get paid first. Fee appraisers seldom get anything.


Thinking about non-lender appraisals but need more detailed information and advice?

I get many emails and calls from appraisers about this topic. I have been writing about non-lender work since I started my monthly newsletter in June 1992, and have done almost all the types of work I write about.

You will learn how lender and non-lender appraisals differ (there are significant differences). Popular topics include how to market to attorneys and get referrals from real estate agents.

Estate/trust appraisals, the most popular for residential appraisers, are included.

The most profitable appraisals are for divorces, where you testify as an expert witness at very high fees. I have done many of these and write about this in detail.

Also included are “niche” markets such as bail bonds, property tax appeals, and many more.

To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If this article helped you get one more non-lender appraisal, it is worth the subscription price!


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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 January 2023 issue emailed on Tuesday, January 3, please email info@appraisaltoday.com, and we will send it to you!! Or hit the reply button. Be sure to put in a comment requesting it.


Was This Home Overimproved or Underimproved?

By Jamie Owen

Excerpts: The Appraisal of Real Estate, fifteenth edition on page 352, states that “…the relationship between land and improvements and the relationship between a property and its environment must be in balance for a property to achieve its optimum market value. For example, a residential property with a one-car garage in a market that expects similar homes to have a two-car garage (known as an underimprovement) or too many expensive amenities for its location (known as an overimprovement or superadequacy) is out of balance.”

… Buyers who are looking for homes that are not electrified usually do not utilize more conventional forms of transportation such as automobiles. Most buyers interested in a home that has not been electrified also rely on horse and buggy as a common form of transportation. Therefore, having a stable and/or outbuilding might be more valuable than a more traditional garage to prospective buyers of properties that are not electrified.

To read more, click here

My comments: Worth reading. Written for homeowners but is a good “refresher” for appraisers with some unusual examples, such as non-electrified homes. Don’t miss the Fun Video at the end: “The Doodle House” by Mr. Doodle!


Appraisal Turn Times Show Improvement in 2022

Excerpts: Reggora, an appraisal management software company, has announced its first-ever Appraisal Performance Index, a study to index appraisal operations trends across the mortgage industry.

The year 2022 began with interest rates close to 3%, and then climbed to 7% before retreating in mid-December, and this increase in rates caused mortgage volumes to plummet, creating a unique scenario where the number of loan originations went from too many for appraisers to handle to a manageable number and a reasonable flow of work.

Observations of the Index revealed, the average appraisal fee slowly dropped throughout the 2022 calendar year. The year began with an average fee of $620 per appraisal, and peaked in March at $635, but fell to $592 by November.

To read more, click here

To read the full, detailed and interesting study, “Appraisal Performance Index: 2022 Insights” click here 

My comments: Worth reading. Good graphs on fees, turn time, and revision requests. Read the full report for much more information, including regions and states.


Gizmos Aplenty: Clever Berkshires Mansion Could Fetch $15.5M

Excerpts: The owners of an architectural marvel in New Marlborough, MA, are hoping to reel in $15.5 million for their extraordinary 300-acre estate. Known as Vergelegen, the 4,273-square-foot 10 bedroom main house built in 2014 has views of the Berkshire Hills and Taconic Mountains.

But the star attraction? That would be the home’s array of manual mechanisms that control some of its finest features.

The design of the 10-bedroom house is the brainchild of its art historian homeowners, along with U.S. architect Tom Kundig, British landscape architect Tom Stuart-Smith, and a Berkshires-based master builder.

Standout details of the industrial-style home include cantilevered decks and entire walls of glass that open up mechanically. While they might look difficult to operate, the hand-crank wheels are very easy to use.

Similar in design, there is a dumbwaiter from the ground floor to the upstairs spaces.

“There are walls of windows that operate on a cog-and-wheel design that allow you to easily open them up completely to the outdoors,” Fields says. When the window walls are ajar, the house mingles indoor and outdoor spaces. “When completely open, the sensation is akin to being in an elegant and comfortable tree fort, hovering above the landscape,” the architect’s website notes of the firm’s trademark gizmo.

To read more and see lots of interesting photos, Click here

Link to MLS with 69 photos click here


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.mba.orgNote: 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 www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. Some appraisers are very busy, and others need more work. Varies widely around the country.


Mortgage applications increased 7.0 percent from one week earlier

Mortgage applications increased 7.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 20, 2023. This week’s results include an adjustment for the observance of Martin Luther King, Jr. Day.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.0 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 15 percent from the previous week and was 77 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 39 percent lower than the same week one year ago.

“Mortgage rates declined for the third straight week, which is good news for potential homebuyers looking ahead to the spring homebuying season. Mortgage rates on most loan types decreased last week and the 30-year fixed rate reached its lowest level since September 2022 at 6.2 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Overall applications increased with both gains in purchase and refinance activity, but purchase applications remained almost 39 percent lower than a year ago. Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market. Many have been waiting for affordability challenges to subside.”

Added Kan, “Despite a 15 percent increase in refinances, they were still 77 percent behind last year’s pace, as rates remained more than two percentage points higher, thus providing very little refinance incentive for most borrowers who are locked into lower rates.”

The refinance share of mortgage activity increased to 31.9 percent of total applications from 31.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent of total applications.

The FHA share of total applications decreased to 11.9 percent from 13.0 percent the week prior. The VA share of total applications increased to 13.0 percent from 11.8 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 ($726,200 or less) decreased to 6.20 percent from 6.23 percent, with points increasing to 0.69 from0.67 (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 $726,200)decreased to 5.92 percent from 6.08 percent, with points increasing to 0.41 from 0.40 (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 6.22 percent from 6.26 percent, with points increasing to 1.10 from 1.05 (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 5.54 percent from 5.58 percent, with points decreasing to 0.51 from 0.54 (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 increased to 5.44 percent from 5.31 percent, with points increasing to 0.83 from 0.74 (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.


Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com


1 Comment
  1. Didn’t find what I needed: New definitions of “increasing or decreasing Markets.” Any referral to another site would be great.
    Thank you.

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