Pesky Words. Keeping Appraisers out of Language Purgatory
Appraisers: Be Careful with Your Words!
by Dave Towne
Excerpts: Appraisers, on July 17, 2023, a document from Freddie Mac was circulated to numerous appraisers around the US which identified certain words and other info that can be considered to be ‘BIASED’ in appraisal reports. Here is the Link to the Bulletin.
We need to step back for a moment and carefully analyze and consider why that was done, and what it means to appraisers.
In many ways, appraisers forget the purpose of the appraisal assignment – which is to value real estate. In other words, the physical structures tied to the land.
But too often, elements of personal or neighborhood demographics or other comments seep into the reports. Maybe not consciously or on purpose, but because appraisers are not critically reading what they write and may not realize the implications of how what they write can be interpreted.
To read more, click here
To read the Freddie document, click here
My comments: Well written and worth reading. Thanks to Dave Towne! I have subscribed to his emails for a long time. To join his list, send an email to dtowne@fidalgo.net requesting to join. I wrote about the July 17 Freddie announcement in this newsletter’s June 16, 2023 issue. Guess it finally got out into the appraiser internet world.
Fannie: Words and Phrases in Appraisals
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NOTE: Please scroll down to read the other topics in this long blog post on non lender appraisals, USPAP and Bias, Fannie changes, unusual homes, mortgage origination
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Futuristic in Folsom, CA, near Sacramento for $2,395,000
4bed 4.5+bath 4,000sqft 0.35acre lot, Pending sale
This futuristic home is new construction that took years to design and build made of steel frame construction cantilevering in what seems to be thin air.
The centerpoint of the home’s attraction is the over- the- top contemporary design unlike anything seen in the region. The grand great room, loft/office and the homes 4 ensuite bedrooms all have fabulous valley views with walls of glass. The garage is 4 car tandem garage.
To read more and see lots of photos, click here
My comment: The median listing home price in Folsom, CA was $789K in June 2023, trending down -1.3% year-over-year. Over improvement??
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Does USPAP Enable Bias?
By George Dell, MAI
Excerpts: The Ethics Rule, Conduct section, states that bias is not allowed!
The Scope of Work Rule states that credibility is measured in the context of the client’s intended use.
It additionally says that the client communicates most of the information necessary. Although the appraiser is responsible for identification of subject characteristics. The Acceptability section states clearly that scope of work should meet the “expectations of parties [clients] who are regularly intended users for similar assignments.”
We should expect that clients will regularly desire an appraiser to meet their expectations, biased or not. (Or should we expect that users will not have any bias toward their $ goal?)
Standards Rule 1-3(v), requires analysis of “market area trends.” Unfortunately, “market area” is not defined. Market area trend is not relevant! (An area, or neighborhood will contain a wide variety of property types sizes, ages, and locations, with varying price trends! What matters is the trend of competitive property sales. Wrong data in, produces biased results out.
To read more, click here
My comment: Another very interesting viewpoint from George Dell, the Data Science Guy!
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Tired of working for AMC/lenders with their UAD, forms, “modernization”, words to not use, etc? Try doing non lender appraisals. There is none of this! I have been doing non lender work since I started my appraisal business in 1986.
I can give you lots of how to and marketing tips.
To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
If my articles helped you understand it, it is worth the subscription price!
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The Times They Are A-Changin’ for Appraisal Reports
Future of Residential Lender Appraising
By Ken DeFeo & Sean Murphy, Fannie Mae
From the Fall 2023 issue of Appraisal Buzz magazine
Excerpts: Changes are coming to appraisal reports with the redesigned Uniform Appraisal Dataset (UAD) from Fannie Mae and Freddie Mac. The updates will impact how appraisers assemble their report – but not how they analyze the information and develop a value opinion. Let’s look at what’s not changing and what is changing.
What’s not changing?
The UAD update will not change the core role of an appraiser: to complete research and analysis necessary to develop a credible opinion of value.
What’s changing?
You’ll be able to produce a more objective report that offers your clients a more logical flow of information. The big differences with the redesigned UAD will be how information is compiled and assembled into the report output. Veteran appraisers will say goodbye to a few old “friends.”
What’s next?
Activities through the rest of 2023 and during 2024 will include software development, system updates and testing, and the kick-off of training for appraisers, AMCs, and mortgage lenders. Appraiser training opportunities include in-person and online courses for CE credit as well as webinars and other informational sessions.
To read lots more and see sample forms excerpts, Click Here
My comments: Read this article. The best I have read for appraisers!! Finally, an easy-to-read explanation from Fannie! Below is what they usually send out. I have written about them very briefly in this newsletter, but they are very long, technical, and complicated. They gave me headaches trying to understand what they were trying to say! I won’t miss the old forms. Way too rigid.
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Future of Residential Lender Appraising
Uniform Property Dataset
Improving the quality and consistency of property data
Excerpts: Property Data Collection User Guide, July 2023 has information on collecting data, which data, formats, photos etc. Plus excerpts from sample reports.
Click here to read
Link to main page with other links Click here to read
My comments: As with other similar announcements from the GSEs, this one has links for appraisers, lenders, and tech people. The top link is the most useful for practicing appraisers to understand what is coming. It also includes a timeline which I have been hearing about for a while, but this sorta makes it “official.”
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The 10 Most Affordable Lake Towns in America in 2023
Just For Fun (and maybe retirement!)
Excerpts: Median home prices from $122,750 to $285,000
In these languid—and, for much of the country, excruciatingly, unbelievably hot—days of summer, the timeless allure of a large, cool body of water beckons. And while heading to the lake is, for some, an occasional destination, for others it’s a way of life.
Sure, some of America’s more famous lake towns are pricey. But there are others that are surprisingly affordable, offering lakeside living for bargain-basement prices. The data team at Realtor.com® dug into the data to find some of the cheapest lake town real estate in the nation.
It helps that there are a lot of lakes in America. According to the U.S. Geological Survey, there are just shy of 7 million bodies of water in the U.S. and in adjacent areas along the borders. Of those, 5.76 million are classified as a lake or pond, and 134,000 have official names.
Each of the lake towns we found has a unique charm, blending natural beauty and local culture. All of them are nestled in the most affordable regions of the country, especially the Upper Midwest to the Deep South—areas known for their low cost of living. As it turns out, they’re also ideal places for lake house shoppers not looking to stretch their budget.
As famously avid lake admirer Henry David Thoreau once wrote, “A lake is a landscape’s most beautiful and expressive feature. It is Earth’s eye; looking into which the beholder measures the depth of his own nature.”
To read more, click here
My comments: I have always wanted to live on a lake, but there are few in California. I did live on bay waters with a dock for 30 years, fortunately. Nothing in the western states. Darn!
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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 decreased 1.8 percent from one week earlier
WASHINGTON, D.C. (July 26, 2023) — Mortgage applications decreased 1.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 21, 2023.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.5 percent compared with the previous week. The Refinance Index decreased 0.4 percent from the previous week and was 30 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 23 percent lower than the same week one year ago.
“Mortgage rates were essentially flat last week but remained high, with the 30-year fixed rate staying at 6.87 percent and contributing to a pullback in mortgage applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 2.5 percent decline in purchase activity, partly driven by a 10 percent decrease in FHA applications, pushed the purchase index to its lowest level in over a month. The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May. Refinance applications remained lackluster, running 30 percent behind year-ago levels. Many borrowers remain on the sidelines given current rates and persistent affordability challenges.”
The refinance share of mortgage activity increased to 28.7 percent of total applications from 28.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.9 percent of total applications.
The FHA share of total applications decreased to 12.7 percent from 13.6 percent the week prior. The VA share of total applications remained unchanged at 12.1 percent from the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) remained unchanged at 6.87 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 6.90 percent from 6.89 percent, with points remaining at 0.64 (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 6.80 percent from 6.77 percent, with points decreasing to 1.03 from 1.12 (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 6.37 percent from 6.36 percent, with points increasing to 0.75 from 0.72 (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 6.01 percent from 6.27 percent, with points increasing to 1.25 from 0.91 (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.
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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