Newz: New URAR, GSEs Update Appraisal Market Areas Requirements, Lender Redlining
November 8, 2024
What’s in This Newsletter (In Order, Scroll Down)
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Claudia Says: Navigating Value Revisions in Appraisals
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The New URAR: Embracing New Beginnings
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$19.8 Million Cape Cod Estate Next to Kennedy Family’s Famed Hyannis Port Compound Hits the Market
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CFPB and Justice Department Take Action Against Fairway for Redlining Black Neighborhoods in Birmingham, Alabama
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October 2024 Real Estate Market Update: A Balancing Act of Hope and Hurdles
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What can we expect for the future of the appraisal and the country?
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GSEs Update Appraisal Market Area Requirements
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Mortgage applications decreased 10.8 percent from one week earlier
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The New URAR: Embracing New Beginnings
By Jo Traut
Excerpts:
What’s New with the New URAR?
Think of the new URAR like upgrading from a basic flip phone to a modern smartphone. The old flip phone did its job—making calls and sending texts—but the new smartphone offers so much more. It’s customizable, adaptable to various apps and functions, and streamlines your daily tasks.
Similarly, the new URAR goes beyond a static, one-size-fits-all approach. It’s dynamic and data-driven, tailored to different property types and appraisal assignments, ultimately allowing us as appraisers to provide clearer and more comprehensive reports .
Why the Change?
The existing URAR has been dependable, much like an old-school flip phone. But as technology advances and standards evolve, the mortgage industry requires a more versatile tool. This redesign addresses current inefficiencies, meeting the rising demand for improved reports, as well as enhancing the experience for both appraisers and report readers.
To read more, Click Here
My comments: Read this blog post! Definitely the best practical appraisal advice I have read on new URAR. Includes links to relevant technical details.
No more 30-40 page appraisal SFR reports that is not what GSEs (and most appraisers) wanted. No more outdate “forms” reports that do not change fast enough to accommodate GSE (and USPAP) changes.
Both URAR and UAD acronyms are used in articles and references I have read. I like that the GSEs kept the same name for the reports (formerly “forms”)
URAR – Uniform Residential Appraisal Report
UAD – Uniform Appraisal Dataset
I will be writing more about the new URAR upcoming changes in future issues of this weekly newsletter and my monthly newsletter.
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- Appraisal Business Tips
Humor for Appraisers - 2024 Updated UAD and URAR – What does It Mean for You?
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$19.8 Million Cape Cod Estate Next to Kennedy Family’s Famed Hyannis Port Compound Hits the Market
Excerpts: 7 bedrooms, 7.5 baths, 9,629 sq.ft. 3 Acre lot, Built in 1914
Adjacent to the famed Kennedy Compound in the exclusive Hyannis Port enclave, the eight-bedroom mansion, known as Port View, has just become available “for the first time in a quarter century,” according to the listing.
The seaside, 9,629-square-foot residence sits right next to the home where President John F. Kennedy and wife Jacqueline Kennedy Onassis famously spent their summers sailing the waters of Nantucket Sound.
Some of the most impressive features found throughout the 26-room estate’s open floor plan include high ceilings, ornate architectural details, an imperial staircase, and six fireplaces.
“The whole interior views to the water,” she said. “It’s like being on a ship with front row ocean views. You are just drawn to it.”
Built in 1914, the Cape Cod mansion has been thoughtfully modernized over the years to retain its historic integrity.
Period details include exposed-beam ceilings and preserved mahogany inlay floors. French doors from the main living and dining areas give way to an enormous patio with waterfront views.
To read more, Click Here
To see the listing, with 28 photos, Click Here
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CFPB and Justice Department Take Action Against Fairway for Redlining Black Neighborhoods in Birmingham, Alabama
Top mortgage lender to pay a $1.9 million penalty and provide $7 million in loan subsidies
Oct. 15, 2024
Excerpts: Today, the Consumer Financial Protection Bureau (CFPB) and the Justice Department (DOJ) took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions.
Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement announced today would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods.
To read more, Click Here
My comments: How much money did Fairway make vs. what an appraiser makes for an appraisal. More lenders in the news vs. “biased” appraisers!
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What is a Good Appraiser?
In the October 2024 issue of Appraisal Today
Excerpts: Everyone has a different opinion of a “good” appraiser – clients, review appraisers, AMCs, other appraisers, regulators, etc. In this article, I discuss what clients want and what appraisers see as good appraisers. Sometimes they are very similar and sometimes not. For too many clients, they just want a fast turn time you may not get another job.
Appraiser ethics
There two types of appraisers – honest and ethical or give them what they
want (for both residential and commercial). I was trained to be ethical and give my unbiased opinion of value. Whether you can learn to be ethical or are trained that way when you are young is a somewhat controversial topic.
Non-lender clients
Some clients are looking for, or requiring, a specific value and/or
non-disclosure of defects. When interviewing a new client, I try to find out what will happen if I don’t give them what they want. I have two examples below, but it could be any type of non-lender client.
Who is a good appraiser (honest and competent)?
Who do you call when you have an appraisal question? I bet it’s a name from
a short list. This article focuses on what makes those appraisers the people you call when you have a problem.
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October 2024 Real Estate Market Update: A Balancing Act of Hope and Hurdles
By Kevin Hecht
Excerpts: They say the only thing predictable about the housing market is its unpredictability. October was no exception—it’s been like watching a suspense movie where you’re not sure if the villain is rising mortgage rates or the hero is a pending home sale trying to make a comeback. So buckle up and get ready for a plot twist or two as we dive into this month’s market insights…
Key takeaway for appraisers: A strong economy is generally a positive sign, potentially spurring housing demand. However, rising rates can temper this effect by dampening affordability, so keep a close eye on economic indicators like inflation and employment data.
2. Mortgage rates and their roller-coaster ride
… Key takeaway for appraisers: Rate cuts can initially boost market sentiment, but fluctuations can disrupt affordability and homebuyer confidence. Stay nimble as rate changes affect buyer behavior and influence the volume and type of appraisal requests you receive.
To read more, Click Here
My comments: I like these monthly analyses because it includes
“What this means for appraisers”, what we all want to know!
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What can we expect for the future of the appraisal and the country?
November 3, 2024
By Jim Morrison
Excerpts: Industry leaders converged in Denver Colorado last week to discuss some of the changes coming to the industry (MBA National Conference). Some major announcements were made and there was a lot of discussion on what is to come for the country and real estate market. While there were four days of sessions covering a range of different topics, here were the sessions and panels that will affect the appraiser audience the most.
Weathering the Insurance Crisis: With Peter Carroll of CoreLogic, Ethan Aumann of APCIA, and Don White of PennyMac
Market Outlook with Mike Fratantoni, Ph.D., Joel Kan, and Marina Walsh, CMB all of the Mortgage Bankers Association
There is some great news for appraisers and the real estate industry has a whole. They are projecting the FED to get interest rates to 3.5% by the end of 2025.
Housing Leader Insight with The Honorable Adrianne Todman, Acting Secretary at the US Department of Housing and Urban Development, and Naa Awaa Tagoe, Deputy Director FHFA
The big news of the day from an appraisal industry point of view was when Naa Awaa Tagoe announced that FHFA was increasing Appraisal Waiver and Appraisal Waiver with Property Data Collector flexibilities. Straight Appraisal Waivers have been increased it to apply to loans with an LTV of 90% and with PffDC to up to 97%.
To read more, Click Here
My comments: Many thanks for Appraisal Buzz for attending the Conference and writing about what was important for appraisers.
The original post above has “appraisal industry” in the title. I am not in an “industry”. I am a professional appraiser. An Industry refers to “an economic activity that deals with the production of goods like the coal mining industry and the provision of services like tourism industry…” I will have an article on this topic in the December Appraisal Today newsletter.
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GSEs Update Appraisal Market Area Requirements
Announcement SEL-2024-07: Selling Guide Updates
Updated Appraisal Market Areas Requirements
Required: February 5, 2025
Lenders encouraged to implement now
To promote consistency and transparency in appraisal reports, Fannie Mae, in collaboration with Freddie Mac, is updating requirements related to the Market Area analysis of the appraisal report and implementing standardized definitions for the terms “Neighborhood” and “Market Area.” The Selling Guide is being updated to include these new definitions in the Glossary.
Additional guidance and requirements are provided for the following:
• Selection of comparable sales;
• Establish a minimum timeframe of 12 months from which the overall market trend must be derived;
• Identify that the overall market trend may be different from the adjustments applied to individual comparable sales;
• Include an illustration of the methodology used to determine specific comparable sale time adjustments for changes in
market conditions; and
• The appraiser must report the market analysis that supports both the indicated overall market trend and market derived
time adjustments for changes in market conditions.
Effective Date: Lenders are encouraged to implement these policy changes immediately but must do so for loans that require
an appraisal with applications dated on or after Feb. 4, 2025
To read more, Click Here
Scroll down to appraisal market area
My comments: Too many appraisals are seen as inadequate in market analysis by the GSEs and review appraisers
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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 decreased 10.8 percent from one week earlier
WASHINGTON, D.C. (November 6, 2024) — Mortgage applications decreased 10.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending November 1, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 10.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12 percent compared with the previous week. The Refinance Index decreased 19 percent from the previous week and was 48 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.
“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates. The 30-year fixed rate last week increased to 6.81 percent, the highest level since July,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications decreased for the sixth consecutive week, with purchase activity falling to its lowest level since mid-August and refinance activity declining to the lowest level since May. The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates.”
The refinance share of mortgage activity decreased to 39.9 percent of total applications from 43.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.0 percent of total applications.
The FHA share of total applications decreased to 15.5 percent from 16.4 percent the week prior. The VA share of total applications decreased to 12.5 percent from 14.6 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 ($766,550 or less) increased to 6.81 percent from 6.73 percent, with points decreasing to 0.68 from 0.69 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 6.98 percent from 6.77 percent, with points increasing to 0.65 from 0.49 (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 6.75 percent from 6.55 percent, with points decreasing to 0.87 from 0.94 (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 decreased to 6.21 percent from 6.27 percent, with points decreasing to 0.55 from 0.77 (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 6.05 percent from 6.20 percent, with points increasing to 0.84 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The survey covers U.S. closed-end residential mortgage applications originated through retail and consumer direct channels. The survey has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, thrifts, and credit unions. Base period and value for all indexes is March 16, 1990=100.
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Ann O’Rourke, MAI, SRA, MBA
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