What Fannie Says Effective June 29, 2023
Say This, Not That: Words and Phrases to Replace in Your Appraisal Reports
By McKissock
As part of our contributor series, Julie Molendorp Floyd gives tips on how to use more objective language in your appraisal reports ahead of the new Loan Collateral Advisor (LCA) alert messages that will take effect June 29, 2023.
Excerpts: Following that thought process, our appraisal language has simply got to change to reflect current times. In addition, our lenders and GSE’s are implementing tools and programs to identify when “Certain prohibited, subjective or potentially biased words or phrases are included in appraisal reports.”
(Freddie Mac Announcement: “Loan Collateral Advisor: Starting June 29 New Messages Alert Users to Certain Unacceptable Appraisal Practices,” April 28, 2023)
To read, click here
So, if we have the technology and tools to present our conclusions in clearer, fact-based ways, let’s get ahead of the program and make the changes proactively.
None of us enjoy completing revision requests. They take time, effort, and ultimately do not contribute to our bottom line. However, revision requests are part of an appraiser’s life. How can you go about crafting your appraisal report to avoid a revision request for “problematic language” or “unsupported conclusions”? Let’s dive into some words or phrases that should not be included in your appraisal reports and uncover ways to convey your meaning in a compliant, credible way.
Topics:
- Moving toward fact-based language
- Words and phrases to replace in your reports
- Samples:
- Say This Not That:
- Within 10 blocks of shopping areas — Convenient to shopping areas
- Conforms to current market trends — Traditional
- Primary bedroom, ensuite — Master Bedroom
To read more, click here
My comments: If you do lender appraisals, read this post.
Changes in names is nothing new for appraisers. Since FHA, etc stopped redlining since the 1970s, appraisers have been asked to avoid certain words. Now Fannie’s computers will let lenders know.
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NOTE: Please scroll down to read the other topics in this long blog post Non-lender appraisals, ROVs, appraisal business, unusual homes, mortgage origination stats, etc.
TO READ MORE CLICK BELOW
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Rod Stewart Is Selling His Beverly Hills Estate for $70M
Excerpts: Stewart’s Beverly Hills, CA, home is like few others, even by A-list-celebrity standards. The 28,500-square-foot abode has nine bedrooms and 14 baths, along with a three-level guesthouse, two gyms, a pool, and a soccer field. 3+ acre site. There’s also a screening theater, tennis court, hobby room, outdoor fireplaces, barbecue space, and sprawling lawns.
Stewart’s estate is indeed palatial, as the details and decor feel Versailles-like in nearly every room. Intricate marble floors, fancy paneling, ornate molding, and sparkling chandeliers are the work of famed architect Richard Landry, who custom designed the rocker’s European-style chateau in the 1990s.
To read more and see lots of photos click here
My comment: I don’t even want to think about how many employees are needed to keep up this place!
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Fannie Appraiser Update June, 2023
Excerpts: In this edition, we focus on certain appraisal quality issues and share examples of ways we identify and mitigate the resulting risks.
First, we share some patterns of how appraisers adjust for lot size, and compare them to how Collateral Underwriter® (CU®) adjusts for the same features. Then, we look at how new technology enhances our ability to identify inconsistencies in quality and condition ratings.
Topics:
- To adjust or not to adjust
- Using image recognition technology in appraisal report reviews
- Prohibited factors and subjective terms
- In case you missed it: UAD redesign begins rollout phase
- In case you missed it: Selling Guide updates
To read more, click here
My comment: Worth reading, especially if you do lender appraisals.
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Five federal agencies asking for public feedback on potential ROV guidance
Excerpts: The proposed guidance describes how financial institutions may create or enhance ROV processes while preserving the autonomy of independent appraisers and staying responsive to potential borrowers and homebuyers. It also describes the risks of deficient residential real estate valuations, whether through omissions, errors, discrimination or lack of information.
Notably, there’s no explicit rulemaking within the text of the guidance, which is being proposed by the Consumer Financial Protection Bureau (CFPB), the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the National Credit Union Administration (NCUA). Rather, the guidance merely gives a framework of policies agreed upon by the five agencies that financial institutions may implement to make the ROV process more efficient, streamlined and fruitful.
Such policies include the establishment of guidelines for when a second appraisal could be considered and who assumes the cost, as well as implementing a means to inform consumers early enough in the underwriting process for any issues to be resolved before a final credit decision is made.
To read more, click here
To read CFPB document click here
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7 Key Considerations for Using a Restricted Appraisal Report
By: McKissock
Excerpt:
#3. Which is appropriate?
Before taking on an assignment, it’s important to consider whether a Restricted Appraisal Report is appropriate. There are two major caveats to consider:
Be sure that the intended user is capable of understanding the appraisal analysis with limited explanation, and that the intended use allows for a report that does not contain supporting rationale for all the opinions and conclusions.
A Restricted Appraisal Report does not mean shortcuts may be taken in developing the appraisal. The workfile in support of a Restricted Appraisal Report must be sufficient to produce an Appraisal Report.
To read all 7 of the suggestions, click here
My comments: Earlier this week, a subscriber called me about doing pre-listing appraisals. Local real estate agents wanted them. The fee would be considerably less than he gets from VA and his non-lender appraisals, but he wanted to do them. But he needed a more efficient way.
We brainstormed for a while, such as an oral report. One of my suggestions was a restricted report, which most residential appraisers don’t use. Forms are available in most forms software. Then I saw the McKissock blog post! Only USPAP conformity is required. You don’t need any long addendums, photos, maps, etc. Of course, you have to do all your appraisal research and keep a good work file.
The last time I wrote about a related topic was the “comp check” era, which were oral reports. I never did many because when I saw the house, my comp check number was almost always way off ;>
Maybe this is a good opportunity for you to make more money!
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A Desert Mansion That Looks Like a Fossil
Excerpts: The house, which looks like a fossil by design, was built for artist Bev Doolittle and her husband Jay, who had a fondness for fossils.
The original owner of the house Jay was fascinated by fossils. every other week when I arrived he would have another book on fossils for me so I tried to incorporate a lot of vertebrae type motifs the whole time I was building it. …
Vugrin was the protegé of organic architect Kendrick Bangs Kellogg during the 1980s when construction began. The finished mansion took nearly twenty years and its distinctive style is simultaneously primitive and modern, blending well into the high desert landscape.
The sensational build was designed by organic architect Kendrick Bangs Kellogg and his protegee John Vugrin in the 1980s taking over 20 years to complete.
To read more, click here
My comment: Watch the 14 min.video. Or scroll through the video. Fascinating! Available on Airbnb for $5,000 a night. Per Airbnb: “Yes, the price tag which is north of $5,000 per night is hefty, but the chance to stay in this one-of-a-kind home is doubtless worth it.”
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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, click here.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 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 have little work. Varies widely around the country.
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Mortgage applications increased 7.2 percent from one week earlier
WASHINGTON, D.C. (June 14, 2023) — Mortgage applications increased 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 9, 2023.
The Market Composite Index, a measure of mortgage loan application volume, increased 7.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 18 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week and was 41 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 8 percent from one week earlier. The unadjusted Purchase Index increased 17 percent compared with the previous week and was 27 percent lower than the same week one year ago.
“Mortgage rates declined for the second straight week, with the 30-year fixed rate decreasing to 6.77 percent. Mortgage applications were up over the week, but remained well below levels from a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Rates that are still more than a percentage point higher than a year ago, and low for-sale inventory continue to constrain homebuying activity in many markets. The average loan size on a purchase loan decreased for the third straight week, as we continue to see more first-time homebuyer activity in the purchase market.
Added Kan, “Refinance applications accounted for less than a third of all applications and remained more than 40 percent behind last year’s pace. Elevated rates have reduced the benefit of a rate/term refinance for many borrowers and continue to discourage cash-out refinances as borrowers are unwilling to give up their lower rates.”
The refinance share of mortgage activity remained unchanged at 27.3 percent of total applications from 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 13.0 percent from 13.2 percent the week prior. The VA share of total applications increased to 12.6 percent from 12.5 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.77 percent from 6.81 percent, with points decreasing to 0.65 from 0.66 (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) increased to 6.79 percent from 6.74 percent, with points decreasing to 0.5 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 30-year fixed-rate mortgages backed by the FHA decreased to 6.70 percent from 6.73 percent, with points decreasing to 1.14 from 1.15 (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 remained unchanged at 6.25 percent, with points increasing to 1.05 from 0.62 (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 5.90 percent from 5.93 percent, with points increasing to 1.17 from 0.96 (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.
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.
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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
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