Newz: New URAR Training, “Death Stairs”, Catastrophe and Climate Risk
November 22, 2024
What’s in This Newsletter (In Order, Scroll Down)
- LIA Buyer says value too high
- The Rise of the ‘Death Stairs’! Inside ‘Perilous’ Home Trend Taking the Internet by Storm — and How To Conquer It Safely
- Infinity Symbol-Shaped Circular House Hits the Market for the Unique Price of $3,399,888
- ARCC (Appraisal Regulation Compliance Council) Podcast with Guest Mark Calabria – AVMs, GSEs, and more
- NAR Chief Economist Lawrence Yun Forecasts 9% Increase in Home Sales for 2025 and 13% for 2026, with Mortgage Rates Stabilizing Near 6%
- Catastrophe and Climate Risk Is Only Increasing – Lender and Servicer issues
- New Uniform Residential Appraiser Report Training (for lenders but useful for appraisers)
- Mortgage applications increased 1.7 percent from one week earlier
- Appraisal Business Tips
Humor for Appraisers -
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The Rise of the ‘Death Stairs’! Inside ‘Perilous’ Home Trend Taking the Internet by Storm—and How To Conquer It Safely
Excerpts: Thrill-seekers who are in desperate need of an adrenaline boost need look no further than their own home for their next dose of action—that is, if they are (un)lucky enough to be in possession of a set of “death stairs.”
While walking down a flight of stairs has not historically been considered the most death-defying of acts, one group of social media users is on a mission to change that misconception by highlighting the most dangerous, baffling, and downright weird step designs across the world, starting in their own homes.
In a now-viral Facebook group, which is named “Death Stairs,” hundreds of users have been sharing images of the most mind-boggling steps they have come across, from those so steep that few would dare to descend them, to edgy designs that appear near-impossible to mount.
To read more, Click Here
My Comments: Appraisers see some strange stairs. I have seen many. Usually DYI. I really hate the very narrow spiral staircases – often the only access to a part of the home. And old exterior wood stairs with very shaky hand rails.
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Infinity Symbol-Shaped Circular House Hits the Market for the Unique Price of $3,399,888
Excerpts: 4 bedrooms, 3 baths, 3,113 sq.ft., 6,698 sq.ft lot, built in 1970
If right angles and corners aren’t your thing, then an eye-catching circular home in Seal Beach, CA, might be just perfect for you.
Listed for the unique price of $3,399,888, which is a nod to its shape, the property comprises two giant circular spaces, which give it the appearance of an infinity symbol or the number eight when viewed from above.
“We did 888 because the top view of the house is a figure 8,” listing agent Lisa Kovacs with Real Broker explains.
Inside, however, the structure takes on a different look: It’s something of an interesting illusion when you are—quite literally—doing the rounds within its walls.
“You have to really wrap your head around [the fact] you’re in a round house, because I wouldn’t say you get disoriented, but you’re basically walking in a circle wherever you go,” Kovacs notes. “You’re never getting lost.”
To read more, Click Here
To read the listing with Virtual tour and 52 photos Click Here
My comments: Very unusual and interesting, but I would not like to live there… too many round walls!
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ARCC Podcast with Guest Mark Calabria – AVMs, GSEs, and more
Excerpts: ARCC (Appraisal Regulation Compliance Council) recently hosted a special discussion with Mark Calabria, former Director of the Federal Housing Finance Agency (FHFA), to explore the critical role of a well-managed collateral risk system. The conversation focused on the limitations of Automated Valuation Models (AVMs) and emphasized the necessity of qualified appraisers in property valuation; specifically for all purchase transactions. It also highlighted the importance of consumer protection in the appraisal process, transparency in mortgage lending, and the need to maintain appraiser independence.
Additionally, the discussion addressed concerns about the potential misalignment between Congressional intent and the current regulatory environment. It was suggested that the incoming administration may prioritize these issues in the new year and a timeline was established for the new FHFA appointments.
Josh and Lori engaged with Mark in a discussion about the politicization of the FHFA and the Government-Sponsored Enterprises (GSEs), stressing the importance of open and transparent procedures to ensure informed decision-making to shape the future of the mortgage industry. Mark underscored the need for robust public comment periods to ensure policy maker decisions are well-informed and reflective of public input.
To listen to the podcast and get more info on ARCC, Click Here
Info on ARCC
We are a non-profit, non-partisan organization dedicated to advanced research to recognize that fraud poses a grave challenge on conventional theories of bank regulation.
A coherent theory of appraisal control fraud is the first acknowledgement to reach accurate and logical conclusions.
Our mission is to make a positive impact on society through fact-based research.
My comments: ARCC is the most reliable source for research and data on AMC issues, especially data on what percent of AMC borrower fee goes to the appraiser. Many appraisers, including myself, rant sometimes about AMCs. Now we have some research and data available.
I wrote about ARCC in the 9-6-24 issue of this newsletter.
Appraisal Regulation Compliance Council Exposes Disturbing AMC Violations
To read the blog post with 95 appraiser comments, Click Here
When I first heard about ARCC I interviewed several people involved in the organization to be sure it was reliable.
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How to stay positive with slow business
Excerpts: Appraisers are trained to look at the past – what about looking at the future of your business?
As appraisers we are trained to look at the past (comps). But if you always
look at the past, you can’t see the future. Many appraisers are pessimistic about the future of appraising because all they can see is what has occurred since 2008 with AMCs. Some become paralyzed, bitter, and cynical.
Some of us are naturally optimistic, so it’s easy for us to have an attitude
adjustment when we get down. If you tend to look at the bad side (pessimistic), you can change your mental attitude. When I make a mistake, I see it as an opportunity to learn what to do next time.
Positive vs. negative attitudes towards your business
For all business owners, seeing the glass as half full rather than half empty
is critical for success. I regularly receive phone calls and emails from appraisers bitterly complaining about the slow business issues. This attitude is not good for anyone who wants to continue appraising, but is particularly bad when business is slow and you are not trying to be an optimist.
Fortunately, I have always been a “glass is half full” person. I learn a lot from
my mistakes and try to do better the next time. If you tend to be a “glass is half empty” person, you can change, but it takes work. Also, having a negative attitude is very stressful, affecting your health and relationships with your family and friends. With a positive attitude, you will spend less energy worrying and fretting over things you cannot change. Then, you can focus on today and planning for the future when business picks up again.
Remember what it was like during the crash after 2008, when there were
very few loans and appraisal volume severely declined? If you are reading this, you are a survivor. Mortgage lending is very, very cyclical. You can make it through the current downturn.
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NAR Chief Economist Lawrence Yun Forecasts 9% Increase in Home Sales for 2025 and 13% for 2026, with Mortgage Rates Stabilizing Near 6%
Excerpts: Yun addressed mortgage rates during a second Donald Trump presidency, saying, “Mortgage rates in his first term (at 4%) were the good old days. Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%. That will be the new normal, bouncing around 5.5%-6.5%.”
Yun said we can expect six-to-eight more interest rate cuts. He also gave advice to the chair of the Federal Reserve on when to make these cuts: “My advice to Jerome Powell: do it in January, rather than December.”
Yun expects there will be four different rounds of rate cuts in 2025. He also addressed the budget deficit.
To read more, Click Here
My comments: No one knows what will really happen of course. Many forecasters have given many widely different opinions.
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Catastrophe and Climate Risk Is Only Increasing – Lender and Servicer issues
By Rob Chrisman
Excerpts: … the question, “What are lenders and servicers doing about the increased number, and severity, of storms impacting borrowers and property values?”
Servicers and Lenders Beware
Catastrophe and climate risk modeling is becoming more important for lenders and servicers. It is something that every lender and servicer should be aware of, since it will, if it hasn’t already, impact the pricing of loans and servicing across the nation. There is a difference between climate and catastrophes when it comes to evaluating risk. Modeling the financial impact of climate change is relatively new, whereas catastrophe modeling began development in 1992. Gradually rising sea levels are different than forest fires, earthquakes, volcanoes, and tornadoes, although the argument can be made that they are linked.
The Future of Evaluating Climate and Catastrophe Risk
Lenders and servicers should be analyzing how risk will be calculated and reported. How is the industry valuing the impact, potential or actual, of climate change or catastrophes? What is the strain on borrowers, and what are the potential changes in loan-to-value or overall debt service amounts? How do servicers model risk and pass this quantitative information onto mortgage servicing rights (MSR) values? How is this information being reported, if at all, to the parties involved, and how is this information being used?
The questions continue. How will borrowers with different types of loans react? Will delinquencies and defaults vary based on Agency, non-QM, bond loans, and so on? As noted above, people are where they are for a reason. But different states have different hazard zones that insurance companies have developed less tolerance for ignoring.
To read more, Click Here
My comments: Worth reading. There are more sources now for climate risk data and ratings. I know that the risks will affect value in some areas. Several companies offer the analysis for properties.
Zillow recently started using First Street’s climate risk data on for sale listings. I tested First Street on my house. It was accurate for my risks, except did not include earthquake, my highest risk (not climate related). First Street is definitely the well known expert in climate risk data and analysis. To read about the Zillow risk analysis, Click Here
This if the first article I have read on how this topic affects mortgages. Chrisman focuses on the mortgage lending industry and is very savvy. I have been reading Chrisman’s emails for many years.
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New Uniform Residential Appraiser Report Training (For Lenders but Useful for Appraisers)
The Uniform Appraisal Dataset (UAD) and Forms Redesign team has published a new training, The Industry’s Guide to the New URAR, featuring the dynamic appraisal report and updated dataset.
To take the training, Click Here
In 2025, a course offering continuing education credits will be available for appraisers from appraiser education providers.
My comments: Worth watching. For all stakeholders and useful for what appraisers want to know. It is well done and easy to understand. Also, appraisers will learn what lenders are looking for in appraisals. Appraisal software is not included as it is developed by the software companies for 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. We are all waiting for rates to drop in 2025.
Mortgage applications increased 1.7 percent from one week earlier
WASHINGTON, D.C. (November 20, 2024) — Mortgage applications increased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 15, 2024.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 43 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 3 percent compared with the previous week and was 1 percent lower than the same week one year ago.
“Mortgage rates moved higher for the fourth consecutive week, with the 30-year fixed rate increasing to 6.90 percent, its highest level since July 2024. However, even with the uptick in rates, overall mortgage applications increased,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The pickup in purchase applications was driven by conventional and FHA loans, with FHA purchase applications seeing a 7 percent increase. For-sale inventory has loosened in some markets and some potential buyers have been able to take advantage of increasing supply and lower FHA rates, which were down slightly in comparison to the conforming 30-year fixed rate. Refinance activity rose slightly last week, driven largely by a 10 percent increase in VA applications.”
The refinance share of mortgage activity increased to 41.0 percent of total applications from 39.9 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 increased to 16.6 percent from 16.0 percent the week prior. The VA share of total applications increased to 13.6 percent from 13.3 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 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 6.90 percent from 6.86 percent, with points increasing to 0.70 from 0.60 (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 7.03 percent from 7.00 percent, with points increasing to 0.53 from 0.48 (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 6.68 percent from 6.69 percent, with points increasing to 0.90 from 0.76 (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 6.32 percent from 6.21 percent, with points increasing to 0.76 from 0.63 (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 increased to 6.34 percent from 6.06 percent, with points decreasing to 0.42 from 0.64 (including the origination fee) for 80 percent LTV loans. The effective rate increased 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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