Newz: Time Adjustments, Fannie Condo “Blacklist”, Future of GSEs?
March 28, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA ad: Navigating Value Revisions
- On Time Adjustments By Timothy Andersen, MAI
- 19.5 Million Arizona Airpark Mansion Boasts Private Jet Hangar, Indoor Shooting Range, and 11 Bathrooms — but Only 3 Bedrooms
- Pulte has no plans to lower conforming loan limits for Fannie and Freddie
- Fannie Mae’s Condo “Blacklist”
- FHA rescinds mortgage appraisal policies aimed at countering bias (update on last week’s newsletter topic)
- Fannie, Freddie face uncertain futures, potential jobs cuts
- Mortgage applications decreased 2.0 percent from one week earlier
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On Time Adjustments
Timothy Andersen, MAI, MSc., CDEI, MNAA
Excerpts: Typically, this time starts when the comparable goes under contract, then ends on the effective date of the appraisal. If the market has measurably changed over that period, that change means the appraiser should market-adjust the comps up- or downward, as the market demands¹.
This analysis reveals yet another dilemma. For example, to conclude prices went up twelve per cent (12%) per year is a simple average increase of one percent per month, or a daily factor of (0.12 ÷ 365 =) 0.000329. This simplistic analysis means that for a sale that went under contract at $400,000 42-days ago, the increase factor would be $400,000 X 0.000329, or an increase of $131.51 times 42-days or $5,523. This rationale is mathematically correct.
But our training must govern here and force us to ask the question, “Does this adjustment protocol reflect current market verities?” If not, then following this protocol is, in effect, to guess at a time adjustment. To guess at the time adjustment is to fail to reflect market trends truly and correctly. To fail to reflect them truly and correctly in the final value opinion is to mislead the client. See the dilemma?
Does USPAP² offer any advice on this issue? No. USPAP does not even use the word adjustment (or any of its derivatives) until AO-13.
To read more, Click Here
My comments: Good analysis of the current time adjustment issues. Using only an annual increase (Like most of us were trained to do) is not very accurate. Tim writes, teaches USPAP and advises appraisers on how to do better reports. He is a USPAP Expert. Tim is a regular contributor to the monthly Appraisal Today.
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19.5 Million Arizona Airpark Mansion Boasts Private Jet Hangar, Indoor Shooting Range, and 11 Bathrooms — but Only 3 Bedrooms
Excerpts: 3 bedrooms, 11 baths, 16,109 square feet, 2.09 Acre lot
$19.5 million Arizona mansion that has been decked out with a truly astounding array of amenities has been hailed as an introvert’s paradise thanks to its somewhat comically tiny number of bedrooms.
While the airpark property, which is located in the Pegasus Airpark in Queen Creek, AZ, features a laundry list of upscale features—from a private jet hangar and taxiway to an indoor shooting range and multiple swimming pools—its 16,000-square-foot main residence offers just three bedrooms.
It could well be that the mastermind behind the opulent Spanish-style dwelling, which is known as Misión Veintidós, felt the expanse of space inside the home was better suited to more entertaining design options, such as a bowling alley, wine cellar, walk-in vault, and private bar.
Whatever the reason behind the design decision, it has raised many an eyebrow on social media, where users were quick to joke that the home would be perfect for anyone who prefers solo time over socializing.
To read more, Click Here
To read more and see the listing with a 3d tour and 149 photos, Click Here
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Pulte has no plans to lower conforming loan limits for Fannie and Freddie
Many expected the loan limits to be lowered as part of a privatization plan
March 25, 2025
Excerpts: There are no plans to lower the conforming loan limit, or the maximum value for the loans that Fannie Mae and Freddie Mac will buy and guarantee, said Bill Pulte, director of the Federal Housing Finance Agency (FHFA), which oversees the two mortgage giants.
In an interview with CNBC, Pulte clarified that he would not lower the conforming loan limit, which is calculated each year based on current home prices. It now stands at $806,500, an increase of $39,950 or 5.2% from 2024.
“There are no plans to do anything as it relates to the conforming loan limit,” Pulte said.
CNBC reports that in the process of reducing the size of the federal government, the Trump administration was expected to try to shrink the size of government-sponsored enterprises Fannie Mae and Freddie Mac, the largest players in the mortgage industry and guarantors of the majority of the nation’s $12 trillion mortgage market.
To read more, Click Here
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How to stay positive with slow business
In the April, 2024 issue of Appraisal Today
We are in a significant appraisal downturn. No one knows for sure when it will end. Staying positive is harder than it was few years ago. But, if you can stay positive you will survive the downturn. Humans, including appraisers, don’t like change. Overcoming negative attitudes can be done.
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 issues today. This attitude is not good for any business person, but is particularly bad when business is slow but 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.
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. Those who adapt survive. You can survive the current downturn.
To read the full article with ideas on how to become more positive, plus 3+ years of previous issues, subscribe to the paid Appraisal Today.
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Fannie Mae’s Condo “Blacklist”
Excerpts: Fannie Mae … maintains a list of condo and co-op projects that fail to meet its lending criteria. Properties on this list are ineligible for conventional loans backed by Fannie Mae, which significantly reduces financing options for buyers and owners looking to refinance.
Condo developments may be blacklisted for several reasons, including:
- Structural or safety concerns that remain unaddressed
- Insufficient reserves to cover maintenance and repairs
- Pending litigation that could pose financial risks
- High investor ownership, making the property less appealing to lenders
- Insurance issues that fail to meet Fannie Mae’s requirements
Once a condo is on the list, obtaining financing through traditional lenders becomes extremely difficult, often forcing buyers into cash-only purchases or high-interest alternative loans.
To read more, Click Here
My comments: Of course, this escalated in the Florida condo project where part of the building collapsed. A list of the condo projects is not available, as far as I can tell. No conventional financing reduces the values considerably.
Google to see what is happening in your state. Over 700 condo projects have been “flagged” in California. I could not find a list of the project names.
In my city, a World War II housing project for workers was converted to a co-op after the war. Most units were townhomes. No lender would loan on the project. I had to visit the office to find out what had sold. All sales were cash or seller financed and the sales were significantly lower than nearby condo or townhome projects. Finally, in the 1990s one local lender started making loans. Later conventional loans were available and the prices increased to slightly less than the other condos. There are very few co-ops in my area and many buyers preferred condos over co-ops. I have appraised units some co-ops and units sell for less than condos.
Across the street from my office, a marina is being converted into housing. Most are stacked condos 3-5 stories tall with a few townhomes. They are being built all over the San Francisco Bay area mostly because of the very limited land available. Also, with median prices well over $1,000,000 condos are more affordable.
In older condo (and townhome) projects sometimes the reserves are not adequate. When appraising in these projects I always ask for the reserve statement and discuss it in my appraisal. Sometimes the project decides to fix the problems with a significant dues increase, decreasing the condo values. Other projects have lower dues and sold for higher prices.
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FHA rescinds mortgage appraisal policies aimed at countering bias (update on last week’s newsletter)
The moves eliminate Biden administration changes to appraisal reviews
March 24, 2025
Excerpts: The Federal Housing Administration (FHA) has withdrawn appraisal review guidelines that were in use by the U.S. Department of Housing and Urban Development (HUD). The changes are meant to streamline the appraisal process by removing a layer of oversight.
The announcement marks a significant change regarding appraisal reviews. They rescind the reconsideration of value (ROV) process implemented by the FHA during the administration of President Joe Biden in response to findings of possible appraisal bias.
To read the Mortgagee letter Click Here
To read more, Click Here
My comments: I wrote about the Mortgagee letter in last weeks newsletter.
There were some comments online that it was related to bias, but I did not write about it as I was not sure. This article from a reliable source confirms the bias connection.
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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.
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Mortgage applications decreased 2.0 percent from one week earlier
WASHINGTON, D.C. (March 26, 2025) — Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 21, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week and was 63 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 7 percent higher than the same week one year ago.
“Purchase applications saw the strongest weekly pace in almost two months and were 7 percent higher than a year ago. Last week’s purchase activity was driven primarily by a 6 percent increase in FHA applications, as the combination of loosening housing inventory and slowly declining mortgage rates have presented this segment of buyers with more opportunities,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Additionally, VA purchase applications saw a modest increase over the week. Overall applications declined, however, as refinance applications were down 5 percent to its lowest level in a month.”
Added Kan, “Markets remained focused on potential trade policy changes, while the Fed held the funds rate its current level, resulting in the 30-year fixed rate averaging 6.71 percent last week.”
The refinance share of mortgage activity decreased to 40.4 percent of total applications from 42.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications.
The FHA share of total applications remained unchanged at 16.5 percent from the week prior. The VA share of total applications decreased to 14.5 percent from 14.6 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.4 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.71 percent from 6.72 percent, with points decreasing to 0.60 from 0.64 (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 $806,500) decreased to 6.77 percent from 6.78 percent, with points increasing to 0.50 from 0.38 (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 remained unchanged at 6.40 percent, with points increasing to 0.74 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 15-year fixed-rate mortgages remained unchanged at 6.08 percent, with points increasing to 0.67 from 0.59 (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 5.89 percent from 5.84 percent, with points increasing to 0.59 from 0.38 (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
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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