September 13, 2024
What’s in This Newsletter (In Order, Scroll Down)
- Family Feud and Intended Use
- 6 Tips for Appraising New Construction Homes
- Vast $100 Million Equestrian Estate With a Bowling Alley in Rancho Santa Fe, CA
- Mortgage Volume Forecasts
- New UAD GSE online appraisal report samples
- Inside the Tiny Arkansas Town Where Homes Sell for $400—With a Huge Catch
- Mortgage applications increased 1.4 percent from one week earlier
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2024 Updated UAD and URAR – What does It Mean for You?
Real Estate Agents and Comparable Sales – Tips for Appraisers
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6 Tips for Appraising New Construction Homes
Excerpts: Lenders, FHA, and the GSEs (Fannie Mae and Freddie Mac) treat new construction a little differently. When appraising new construction homes, certain factors that don’t always apply to existing dwellings must be considered.
New construction appraisals require more work, so you want to charge a fee that is commensurate with the work involved. Perhaps more than that, you need to follow the proper protocols. Stick to these best practices to ensure you cover all your bases when performing a new construction appraisal.
1. Don’t rely totally on blueprints during a new construction appraisal
2. Gather as much detail about plans and specs as you can
3. Keep a file of local building costs
4. Be careful when choosing comparables for a new construction appraisal
5. Use the sales comparison method for site value (if possible)
6. Know the applicable requirements for an appraisal on new construction.
To read more, Click Here
My comments: Read this if you do new construction. I have done many new home appraisals from one-off custom homes to all sizes of projects. My advice: Always check what plan and updates were actually built when doing final inspection. Getting the actual costs and upgrades can be difficult to obtain on the subject and the comps from the project sales office. I always asked to see the final sales document data. Sometimes I got them.
I finally quit doing them – too much hassle. There is little new construction where I work, except for infill projects – townhomes and and condos. My area is almost fully developed, so I did not lose much work. On the plus side, I learned a lot about construction!
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Vast $100 Million Equestrian Estate With a Bowling Alley in Rancho Santa Fe, CA
Excerpts: 26 bedrooms, 22.5+ baths, 15,000 sq. ft., 77 acre lot, built in 2008
Willow Creek Estate, known as the Wellington of the West, seamlessly blends the tranquility of the countryside with the vibrant allure of coastal living.
Nestled just five miles from the ocean and the bustling beach towns of San Diego, this private sanctuary offers both serenity and accessibility. The main residence, exuding understated sophistication inspired by the timeless elegance of Santa Barbara’s architectural style and modeled after Argentina’s most magnificent estancias.
A separate 2-bedroom guest house is next to an entertainment pavilion, which features a fully equipped game room, bowling alley, gym, bar and full kitchen.
Spanning across 77 acres, it features private trails ideal for hiking, running, and horseback riding, as well as a pristine 15-acre bass-filled lake perfect for paddle boarding, canoeing, and fishing. Equestrian facilities include two state-of-the-art barns.
To see the listing, with a virtual tour and 28 photos, Click Here
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Mortgage Volume Forecasts
MBA’s new loan forecast
Aug. 30, 2024
Excerpts: Mortgage origination volume is expected to increase 20 percent in 2024 to $1.76 trillion, although this large percentage growth comes relative to an extremely low base in 2023. In our August forecast, we revised 2023’s estimates based on the most recent Home Mortgage Disclosure Act (HMDA) data.
Total origination volume is now estimated at $1.46 trillion for 2023, a downward revision from $1.6 trillion. Purchase volume for 2023 is now estimated to have been $1.24 trillion, compared to $1.33 trillion in the previous forecast, and refinance volume was also revised lower to $219 billion vs $314 billion previously.
In terms of units, we forecast a 5 percent increase in the total number of loans originated in 2024 to 4.4 million units, compared to a downwardly revised 4.2 million units in 2023, which was the lowest level since at least 1997.
For 2025, we expect an 18 percent increase in total originations, driven by an 11 percent increase in purchase volume and a 37 percent increase in refinances. Home price appreciation, combined with growth in both new and existing home sales, is expected to support purchase growth in 2025. As noted earlier, for-sale inventory continues to recover, but as rates continue to decline, the lock-in effect on inventory should also fade over time.
To read the forecast details (PDF), Click Here
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An Estimated 4M Loans Await Refinancing Once Rates Hit 6% (Corelogic)
September 10, 2024
Excerpts: CoreLogic determines how many loans would be ripe for a refi if rates drop again
Key Takeaways
- 46.2% of the loans in the servicing sample are “refinance burnouts”
- Nearly half (46.1%) of the loans in this sample are “locked-in” to ultra-low rates
- Only 7.7% of loans in the sample are candidates for a lower rate refinance if rates drop to or below 6%
As mortgage rates tick down and expectations rise for multiple rate cuts by the end of 2024, lenders and originators have begun preparing for another refinance wave. After reviewing 15.7 million first-lien mortgages currently in servicing, CoreLogic discovered an overwhelming majority of U.S. household mortgages are either locked into a low-rate mortgage or “refinance burnouts.”
To read more, Click Here
My comments: How much will appraisal work increase? I’m sure there will be increases, but no one knows how much for every market. In my market, with median prices over $1,000,000, I expect significant increases in volume. A relatively small drop in rates means a lot of money saved, and lower monthly payment, on a $1,000,000 loan.
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Threatened with a Lawsuit?
By Claudia Gaglione, Esq.
In the June 2024 issue of Appraisal Today
Excerpts: At some point in your appraisal career, someone will probably accuse you of making an error in an appraisal report. Perhaps you will
receive a nasty phone call from a property owner, or an attorney may
send you a threatening letter. What should you do?
OPTION #1: Ignore the call or letter
OPTION #2: Handle the situation on your own
OPTION #3: Contact your E&O insurer for advice and guidance
Neither Option #1 nor Option #2 is a good approach to take in this situation.
If someone is serious enough about their claim that they engaged
an attorney, they probably are not just going to forget about you.
Handling a claim on your own makes no sense. You would have to disclose any claim on your next renewal application, so your insurer is going to find out about it.
If you are thinking about paying any money to the person who contacted you, a Release should be signed in exchange for that payment. That is not a document you can just draft up yourself.
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New URAR Online Appraisal Report Samples
FNMA Supplied Samples of Completed New Dynamic URAR’s
FNMA has completed and supplied as examples 9 Uniform Residential Appraisal Reports:
- 4 SFRs
- 2 Condos
- 1 COOP
- 2 Manufactured Homes
Below are links to 2 SFR and 1 condo sample reports (PDF).
- SFR1 Sample, Detached Single Family, Click Here
- SFR2 Sample, Townhome, Click Here
- Condo1 Sample, Click Here
To see all 7 sample reports (Zip files) Click here
Scroll far down (or search for)
Appendix D-1: URAR Sample Scenarios and XML Files (Zip files)
This zip file contains example scenarios, accompanying XMLs, and a document that summarizes the scenarios, including key characteristics and changes since the last published version
Appendix C-1: URAR Layout is also helpful
This zip file contains the URAR with Report Field IDs document and the URAR without Report Field IDs document. The purpose of these documents is to show all possible Report Labels that may display on the URAR, regardless of conditionality.
My comments: Thanks to Todd Redington for posting this on the National Appraisal Forum Google group. There was lots of group discussion about the samples with fields that are unclear and/or needing correction.
The total number of possible fields is very large as it is a Turbo Tax style software where you only see fields relevant to the subject.
Some appraisers are now taking “Train the Instructor” classes from the GSEs on how to teach the new reports to appraisers
My comments: I definitely like online report formats so we don’t have to wait many years for an update on the old forms!
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Inside the Tiny Arkansas Town Where Homes Sell for $400—With a Huge Catch
Excerpts: Homebuyers desperate for a deal might be curious to learn more about a tiny town in Arkansas where homes are selling for just over $400.
In Pine Bluff, just 45 miles outside of Little Rock, a home was recently sold for $402.74 at a tax auction.
The city found itself thrust into the spotlight when a documentary titled “The City Left Behind: $400 Abandoned Homes in Pine Bluff” got 1.6 million views in the past three weeks on YouTube.
But there’s a catch, of course: According to the 2020 U.S. Census, Pine Bluff is the “fastest-shrinking city” in America, losing over 12% of its population in a decade due largely to its lack of jobs and poor-quality schools.
To read more, Click Here
My comments: Do a search for your state and see how many cheap homes are for sale. Some California coastal areas have very high prices, with $100,000 for a starter homes. When I searched for under $100,000 homes there were homes available for under $50,000 in Northern California, typically in remote counties with limited employment, health care, etc. Some were old boom towns from the Gold Rush (1848–1855) with few residents.
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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. WE ARE ALL WAITING FOR RATES TO DROP SO WE WILL FINALLY BE VERY BUSY! AND BUYERS WILL PURCHASE HOMES AND HOME OWNERS WILL REFI TO A LOWER RATE!
Mortgage applications increased 1.4 percent from one week earlier
WASHINGTON, D.C. (September 11, 2024) — Mortgage applications increased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 6, 2024. This week’s results include an adjustment for the Labor Day Holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.4 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 increased 1 percent from the previous week and was 106 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index decreased 10 percent compared with the previous week and was 3 percent lower than the same week one year ago.
“Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate decreasing to 6.29 percent, the lowest rate since February 2023. Treasury yields have been responding to data showing a picture of cooling inflation, a slowing job market, and the anticipated first rate cut from the Federal Reserve later this month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“With rates almost a full percentage point lower than a year ago, refinance applications continue to run much higher than last year’s pace. However, there is still somewhat limited refinance potential as many borrowers still have sub-5 percent rates. It is a positive development that there are homeowners who can benefit from a refinance as rates continues to move lower.”
Added Kan, “Purchase applications increased over the week and are edging closer to last year’s levels. Despite the drop in rates, affordability challenges and other factors such as limited inventory might still be hindering purchase decisions.”
The refinance share of mortgage activity increased to 46.7 percent of total applications from 46.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4 percent of total applications.
The FHA share of total applications increased to 14.7 percent from 14.6 percent the week prior. The VA share of total applications decreased to 16.4 percent from 16.7 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 6.29 percent from 6.43 percent, with points decreasing to 0.55 from 0.56 (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 6.56 percent from 6.73 percent, with points decreasing to 0.33 from 0.35 (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 6.24 percent from 6.30 percent, with points decreasing to 0.76 from 0.80 (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 5.71 percent from 5.98 percent, with points increasing to 0.73 from 0.64 (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 5.85 percent from 5.98 percent, with points decreasing to 0.29 from 0.76 (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.
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