What’s in This Newsletter (in Order)
- Confirming Construction Progress
- The New UAD: “Don’t Borrow Trouble.”
- Nicolas Cage’s Former New Orleans Mansion Lost to Foreclosure listed for $10,250,000
- When will interest rates drop?
- Who will refi when rates are lower?
- Uncovering Flaws in FHA Appraisal & Loan Review Process
- Home Insurance: It’s Not The Hurricanes In High-Cost Areas, But The Tornados In Low-Cost Areas That’ll Get You By Jonathan Miller
- Iconic ‘Constellation 167’ House in Los Angeles for $10.9M
- Mortgage applications increased 3.9 percent from one week earlier
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UAD and Forms Redesign Update for Appraisers (from 12-15-23)
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The New UAD: “Don’t Borrow Trouble.”
By Ernie Durbin, July 15, 2024
Excerpts: Reflecting on one of my father’s favorites, “don’t borrow trouble,” I find his advice particularly relevant today. It reminds me to focus on the present and not jump to conclusions about future uncertainties. What he was trying to convey was to trust in my abilities to handle challenges if and when they arise, rather than assuming the worst.
Many in our industry are “borrowing trouble” when they prematurely conclude that the new UAD and GSE report writing requirements will be detrimental.
The problem is… it’s not a form. The new Uniform Residential Appraisal Report (URAR) is an appraisal report expressed as a form. This may seem like semantics, but it is a very important distinction. Although the UAD data set is all-inclusive of property types, only the data points necessary for a specific property need to be reported.
The dynamic nature of the new report will result in “form” outputs that are remarkably shorter than the early examples provided by the GSEs. As an example, if the income and cost approaches are not necessary for credible results, these elements will not be included in the appraiser’s workflow or the final URAR.
To read more, Click Here
My comments: Worth reading. Current forms date back to 2005. A lot has changed since then, but somehow, we have to put it into our appraisal reports. I much prefer the “Turbo Tax” model where you only see what is relevant for what you are appraising. Changes to the software can be made at any time.
I am looking forward to online software for appraisal reports. Since 2006, I have used Constant Contact for this newsletter, which is completely online. Changes, when needed, such as additional features, can be done easily. With Office 360, Word and Excel software is online. I can work on any computer, anywhere. Of course, I have other software on my computers, including Excel and Word, if my Internet goes out ;>
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Nicolas Cage’s Former New Orleans Mansion Lost to Foreclosure listed for $10,250,000
Excerpts: 8 bedrooms, 8.5+ bathrooms, 10,284 sq.ft., 4,140 sq.ft. lot, built in 1832
Located in the famous French Quarter, the grand property once owned by actor Nicolas Cage offers a three-story primary structure connected to a four-story service wing. Elegant details include double parlors, a billiard room, spiral central staircase, and second-floor dining room. Plus, the wraparound balcony, rooftop deck, and brick courtyard offer beautiful views of the neighborhood.
The legendary property is owned by energy trader Michael Whalen, who gave the place a massive renovation after buying it in 2010 for $2.1 million. According to The Wall Street Journal, updates include the addition of a 2,000-bottle wine cellar and a stylish speakeasy accessed via a mirror in the primary bedroom.
According to local lore, when a fire burned down the original building in the 1830s, it was revealed that owners Delphine Macarty LaLaurie and Dr. Louis LaLaurie apparently were abusing enslaved people when they lived there. The LaLaurie family sold the land, and the home has since been rebuilt. Its ghastly past is said to have inspired a season of the television series “American Horror Stories.”
To see the listing, with a virtual tour and 60 photos, Click Here
My comments: The French Quarter is a Very Special and Unique place. I have been to New Orleans three times and stayed first at the classic Montelone Hotel, next rented a room in a large classic historic home, and finally stayed at a recently renovated hotel across the street from the French Quarter.
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When will interest rates drop?
Traders Pricing in 100% Chance Fed Will Cut Interest Rates in September
Fed Fund Futures Show Expectations for Multiple Cuts Before End of the Year
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- Traders are pricing in a 100% chance of a rate cut at the Federal Reserve’s September meeting.
- Fed officials themselves have said their decision will be based on economic data and do not have a timeline for rate cuts.
- Futures data also shows that traders expect the Federal Reserve to keep cutting rates once it starts.
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Market participants are increasingly convinced that the Federal Reserve will start cutting its benchmark interest rate in September, with more cuts to follow before the end of the year, even as Fed officials say they need to see more economic data before adjusting policy.
To read more, Click Here
My comments: I can’t wait for rates to drop, especially for mortgages! Of course I won’t be getting 5% on my retirement account money market low risk accounts. The real estate market (and appraisal businesses) are pretty messed up now. Looking forward to more better markets.
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ICE Mortgage Monitor – Who will refi when rates are lower?
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- According to ICE Mortgage Technology data and analytics, as of May, 24% of mortgage holders had current interest rates of 5% or higher, up from 10% two years ago
- Four million loans originated since 2022 have rates of 6.5% or higher – 1.9M at 7%+ – providing modest opportunity for growth in the number of mortgage holders with incentive to refinance as rates ease
- An average of ~240K mortgages sit in each 1/8th of a percent rate band from 7-7.625% providing only modest increases to the number of in-the-money mortgages as those loans gain refinance incentive
- There’s a spike of 690K loans with rates just below 7%, driven in part by borrowers buying down their rates for the comfort of an interest rate that starts with a 6, which could be a tipping point to more meaningful, albeit still modest, refi activity as those borrowers gain incentive to refinance
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To read more, Click Here
My comments: Lots of refis and sales are coming. More work for appraisers!!
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How to communicate with appraisers online. What’s the best for you?
Excerpts:
Why connect with other appraisers online?
There are numerous reasons, especially since many appraisers work solo: get and give advice, see if other appraisers are busy or slow, AMC/client issues, USPAP, Fannie, etc. You can do it any time, at your convenience. You can spend just a little time or lots of time. I discuss many in this article. See which ones you like and try one or two.
Search the services (email discussion groups, Facebook, etc.) for other groups. For example, searching email discussion groups or Facebook for the word appraiser resulted in many groups, many of them very small and with little or no recent activity. Searching by “latest activity” is a good idea to find out how active they are. Each online group is different.
Appraisers use many communication methods, including blogs, YouTube videos, web-based forums, email discussion groups, private email lists, and podcasts. Almost all allow comments.
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Uncovering Flaws in FHA Appraisal & Loan Review Process
By AppraisersBlogs, July 15, 2024
Excerpts: The story of this single mother’s harrowing experience with a defective home purchase and HUD’s negligent oversight exposes deep flaws in the FHA appraisal and loan review process.
After sacrificing for years to rebuild her credit and earn the right to become a homeowner, this borrower found her dream home in the country – or so she thought. During the home inspection, several issues were flagged. The seller, an investor who had purchased the home in an estate sale, was unaware of the system’s location. The seller agreed to pump the tanks so the area could be determined.
When the AMC appraiser arrived, the septic tank had been located and left uncovered for the appraiser to observe. Despite this, the AMC appraiser marked the home as having public water and sewer, failing to note the FHA’s minimum property requirements for the distance between the well and septic. The appraisal was approved, and the home closed.
Three months later, the borrower began experiencing plumbing issues and learned the well and septic system needed to be completely replaced at a cost exceeding $100,000.
Ultimately, the courts sided with the lender and appraiser, leaving the borrower and her children homeless and financially devastated. HUD’s response to inquiries revealed that the defect categorization was improper and the lender should have been required to mitigate the issue, but the agency has done nothing to rectify the situation.
In her own words, the following is her story:
“Losing the Battle to Win the War: How a single mother of two’s refusal to quit exposed HUD’s defected defect taxonomy …
To read more, Click Here
My comments: Long, but worth reading, plus the 25+ appraiser comments.
One of the most significant reasons for appraiser lawsuits is septic tank issues. Be careful out there! I used to live and appraise in Chico, a northern California town with only septic tanks and no sewers. After we purchased our home, we found out there were two septic tanks, one located on an adjacent property. I have seen specific streets in developed cities without public sewers.
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Home Insurance: It’s Not The Hurricanes In High-Cost Areas, But The Tornados In Low-Cost Areas That’ll Get You
By Jonathan Miller, July 16, 2024
Excerpts:
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- Home insurance costs are heavily influenced by how tough the state regulators are.
- Relationships between cost and risk of the location are becoming disconnected.
- Insurance such as protection against wildfires, is now unavailable in some markets.
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Climate Change Is An Insurance Thing
The before and after photos of this Nantucket home over 26 years are shocking. (see photo above)
The headline of this recent article screamed at me: Our home was worth $2m. We were forced to sell it for a tenth of that. After looking at the before and after photos, I think I understand why someone would pay $200,000 for a home that is likely going out to sea in about two decades. That price works out to about $10,000 per year which seems reasonable as an annual lease rate for the location – assuming the erosion rate doesn’t accelerate. The hard part is going into this deal knowing the home has a finite ending and there is no passing it along to their family.
To read more, Click Here
My comments: Worth reading, plus the images. A good summary of the issues.
About 20 years ago, I spent a week on Nantucket in a Bed and Breakfast next to the boat harbor and drove around in my rental car. It was beautiful!
Sea-level rise affects homes on the water all over the U.S. coasts. As temperature increases, sea levels rise. The Atlantic Ocean is getting warmer than the colder Pacific Ocean, with more homes affected. Also, the waterfronts are lower, as the East Coast is older geologically. The West Coast is much newer, with many properties on the coast well above sea level, especially in Northern California.
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Iconic ‘Constellation 167’ House in Los Angeles for $10.9M
Excerpts: 4 bedrooms, 5 baths, 5,476 sq.ft., 0.27 acre lot, built in 1991
The first residence drafted by world-renowned designer Eric Owen Moss is up for grabs in L.A.—with a $10,950,000 price tag.
Known as Constellation 167, this visually arresting home was completed in 1992 and restored by its current owner between 2011 and 2014. The updates include the addition of a high-end, lagoon-shaped pool.
The property first hit the market last fall for $11,995,000. But without a taker, the home came off the market at the end of last year, only to resurface a month ago.
Moss’ work has long been more than a means to an end—what would typically just be a finished building—and is instead part of a larger ideological framework that sees architecture as an art form that can revitalize neighborhoods or create stunning spaces that bring nature and life together, as it does at Constellation 167.
The dwelling’s smooth, sugary concrete exterior angles and curves converge atop a skyward dome. The exterior walls are stucco, with poured-in-place concrete, and the roof features structural glass, standing-seam metal, and conical configuration.
“We call it Constellation 167 due to its interstellar design,” Forster Jones says. “It’s an address from another world or universe. The name also leans into the home’s one-of-a-kind design. Its otherworldly shape is concealed by a surrounding lush paradise, with a $500,000, 50-foot-by-10-foot lap pool.”
The home was reconstructed by its current owner, German-American model and actress Nicole Nagel (of TV shows “ER” and “Suddenly Susan”), Forster Jones notes.
Nagel restored the home over several years, returning it to Moss’ original vision, which includes the enormous lagoon with a lap pool and a Baja shelf. There’s also a spa with a lounging area and an outdoor barbecue area with refrigerator drawers and a stove.
To read more, Click Here
To see the listing, with a video tour, Click Here
My comment: Check out the photos. Very interesting!
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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. Many appraisers are not busy. Some are busy, usually with non-lender appraisals.Mortgage applications increased 3.9 percent from one week earlier
Mortgage applications increased 3.9 percent from one week earlier
WASHINGTON, D.C. (July 17, 2024) — Mortgage applications increased 3.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending July 12, 2024.
The Market Composite Index, a measure of mortgage loan application volume, increased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 30 percent compared with the previous week. The Refinance Index increased 15 percent from the previous week and was 37 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 22 percent compared with the previous week and was 14 percent lower than the same week one year ago.
“Mortgage rates declined last week, as recent signs of cooling inflation and the increased likelihood of Fed rate cuts later this year pulled them lower. The 30-year fixed rate declined to 6.87 percent, the lowest rate since March 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Application activity was up 4 percent, driven by a 15 percent jump in refinances to the highest level since August 2022. While FHA and VA refinance applications accounted for a significant share of the increase, these are likely recently originated loans with even higher than current offered rates. Even with last week’s rate decline, purchase applications continue to lag, down 14 percent compared to last year’s pace.”
The refinance share of mortgage activity increased to 38.8 percent of total applications from 34.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.8 percent of total applications.
The FHA share of total applications increased to 13.5 percent from 12.5 percent the week prior. The VA share of total applications increased to 15.2 percent from 13.7 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.87 percent from 7.00 percent, with points decreasing to 0.57 from 0.60 (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 $766,550) decreased to 7.07 percent from 7.13 percent, with points increasing to 0.57 from 0.38 (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 6.75 percent from 6.87 percent, with points decreasing to 0.81 from 0.92 (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 6.49 percent from 6.63 percent, with points decreasing to 0.50 from 0.61 (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 6.33 percent from 6.22 percent, with points decreasing to 0.58 from 0.60 (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.
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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
Online: www.appraisaltoday.com
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