Newz: FHA Appraisal Changes, Fannie Measurement Standards Update
July 4, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA AD: Unreasonable Subpoena Request
- HUD Announces Changes to FHA Appraisal Requirements
- The Rock House In Larkspur CO Is Back On The Market for $1,000,000
- Baghdad Bob of Freddie Mac Merits Mention As Mideast Erupts
- The Full Measure – June 25, 2025 By Kevin Hecht, Appraiser and Economist
- Fannie: Standardizing Property Measuring Guidelines
- MBA: Mortgage applications increased 2.7 percent from one week earlier
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HUD Announces Changes to FHA Appraisal Requirements
Excerpts: There are four significant appraisal-related revisions to Section II. D. of the Handbook.
- Subject and comparable photograph requirements have been revised….
- The appraiser is no longer required to state the remaining economic life of the dwelling in the appraisal report.
- In situations in which the subject is located in an increasing or decreasing market, the appraiser is no longer required to include an absorption analysis, a minimum of two sales that closed within 90 days of the effective date, and two active listings or pending sales.
- For Section 223(e) mortgages, the appraiser is no longer required to include an estimate of remaining physical life for the subject property improvements.
It is important to note that the originating lender is the client, not HUD/FHA, and as such, the lender may still require some or all the above items.
To read more, Click Here
To read the full document, Mortgagee Letter 2025-18, Click Here
My comments: Read the full article above and the original Morgagee Letter (Link above) for more details if you do FHA appraisals.
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The Rock House In Larkspur CO Is Back On The Market for $1,000,000
Excerpts: 2 bedrooms, 2 baths, 2,432 sq.ft., 0.86 acre lot. Built in 2000.
The Larkspur Rock House is an iconic Flinstones style home, and now it can be yours for only $1,000,000. The rocks are maybe 200 million years old!!!Outdoor living spaces.
The Rock House is anything but ordinary—this striking, stucco-clad home is seamlessly built into a soaring red rock monolith, transforming nature’s artistry into a one-of-a-kind architectural statement.
The dramatic rock wall isn’t a backdrop—it’s the centerpiece, rising through all three levels and anchoring each floor in natural grandeur. Every space is visually and physically connected to the monolith at its core.
To read more, Click Here
To read the listing, Click Here
https://www.zillow.com/homedetails/6619-Apache-Pl-Larkspur-CO-80118/13497121_zpid/
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Baghdad Bob of Freddie Mac Merits Mention As Mideast Erupts
By Jeremy Bagott, MAI
Excerpts: In true Baghdad Bob fashion, Scott Reuter leads Freddie Mac’s effort to ensure that no inconvenient fact is left uncensored.
Denying reality, al-Sahhaf insisted: “There are no American troops in Baghdad!” The next day, Baghdad fell. But al-Sahhaf’s gift for bombastic metaphors and outrageous superlatives eclipsed his mendacity. He’d gained the nickname “Baghdad Bob.” (The British called him “Comical Ali” – a spoof on another of Saddam’s ministers ominously nicknamed “Chemical Ali.”)
More than two decades later, as troubles in the Mideast again mount, a government-sponsored purveyor of equal talent can be found much closer to home. Like Baghdad Bob, he, too, deserves to be featured on memes, fan pages, coffee mugs and T-shirts.
Unlike Baghdad Bob, he’s still on the job. His name is Scott Reuter. The results of his handiwork are buried in a portfolio of more than $2.2 trillion in mortgage-backed securities purchased by the U.S. Federal Reserve. While no one was paying attention, America’s central bank became Fannie and Freddie’s biggest customer. More on Reuter in a minute.
Since 2023, government-backed mortgage giant Freddie Mac has maintained a nonpublic and growing list of words it has expunged from appraisal reports with the help, and potentially the coercion, of vendors.
The censorship has turned many appraisal reports into misleading gibberish and eliminated salient facts about properties that serve as collateral for trillions in taxpayer-backed mortgages. The distorted reports have been relied on by underwriters, lending institutions and ultimately purchasers of mortgage-backed securities – now largely the Federal Reserve.
The censorship has turned appraisers’ observations on such things as markets, submarkets, sales trends and school districts into gobbledygook by expurgating basic words in the English language. This wasn’t an accident. Appraisers report that some of the banned words are known to them. They include “good,” “bad,” “high,” “low,” “strong,” “weak,” “slow,” and “rapid.”
Banned are other words and terms, much of the censorship clearly designed to mask economic realities relating to the properties being appraised. Banned words include “crime,” “school district” “neighborhood,” “blight,” “student,” “preferred,” “up-and-coming,” “well-kept,” “graffiti” and “desirable” and many puzzlingly innocuous phrases like “convenient to,” “walking distance” and “demographer.”
To read more, Click Here
My comments: I interviewed Bagott when he wrote his book, “The Ichthyologist’s Guide to the Subprime Meltdown”. I reviewed the book.
Bagott is an appraiser who is a former newspaperman.
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From UAD 2.6 to UAD 3.6. What appraisal software vendors are doing
In the July 2025 issue of Appraisal Today
Excerpts:
Why are the software vendors writing the new software?
So they can stay in business.
Why are appraisers learning how to use the new software?
So they can stay in business..
The GSEs included the data they wanted. If you want to do GSE appraisals
you must use UAD 3.6 starting in November 2026.
Who decided what is in the software?
GSEs gave specifications for the Scenarios (Reports) to the software
vendors. They spent 5 years working on their specifications. That is why the
vendor’s reports look almost identical.
What if you don’t want to learn the new software?
The current forms software will still be needed. FHA, VA and USDA will not
be ready to receive the new reports for awhile. Lenders not selling their loans to GSEs may prefer the form reports.
The non-lender forms will be needed if you do non-lender work.
Non-lender appraisal work is available. Much easier than the new UAD 3.6
software.
Live online demos that I watched and wrote about.
• SFREP Filling out the report
• Bradford – filling out part of the valuation software
• a la mode – New mobile app
• ACI – demo not available by my deadline. I watched a 10 minute demo during a recorded webinar and included a link in my article.
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The Full Measure – June 25, 2025
By Kevin Hecht, Appraiser and Economist
Excerpts: Each month, I’ve opened this blog with a look at what’s moving the market. This time, I’ll begin with what isn’t. Despite rising inventories and steady economic growth, a sense of stall has crept into the housing sector.
May was a month of missed momentum—sales edged upward, yet confidence declined. Price appreciation continued, but more slowly. Inventory increased, but new construction took a step back. The pause in Fed policy is also being mirrored by a broader pause in market conviction.
In short, we are witnessing a housing economy defined by hesitation.
What this Means for Appraisers
As always, appraisers must cut through the noise and focus on the fundamentals:
Watch incentives and concessions closely, especially in new construction comps. These are increasingly necessary to secure deals, but they can complicate the interpretation of market value.
Apply time adjustments carefully. While year-over-year metrics remain positive, seasonally adjusted trends show flat or declining prices in many regions.
Expect greater price stratification. Entry-level homes are facing the brunt of affordability constraints, while high-end properties are seeing more stable pricing.
Be attentive to regional variation. The Midwest and Northeast are outperforming, while the West continues to underperform in both sales volume and pricing.
To read more, Click Here
My comments: I always read this monthly summary as it is for appraisers, not the general public, real estate agents, etc.
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Fannie: Standardizing Property Measuring Guidelines
Updated Guidance and Frequently Asked Questions
June, 2025
As the mortgage industry transitions from Uniform Appraisal Dataset (UAD) 2.6 to UAD 3.6 and adopts the redesigned Uniform Residential Appraisal Report (URAR), it is an opportune time to further align measurement practices with the American National Standards Institute® (ANSI®)’s Square Footage–Method for Calculating ANSI Z765-2021 (“ANSI standard”).
This document addresses ANSI considerations and common questions on appraisals submitted using UAD 2.6 with legacy forms or UAD 3.6 with the new URAR. It’s important to note that square footage reporting practices may differ depending on the form used. Therefore, pay close attention when a question includes answers for both UAD 2.6 and UAD 3.6, as the guidance may vary accordingly.
Q8.
Do appraisers need to use software to comply with the requirement for sketches to be computer generated?
Yes. Appraisers must provide computer-generated (not hand drawn) sketches in their reports. Software that generates computer-based floor plans and footprint sketches for appraisal reports is widely available and commonly used by appraisers.
Q9.
When common practice in the local market differs from the ANSI standard, can the appraiser modify the subject’s square footages to conform to local custom?
No. The appraiser must measure and report the subject’s square footage(s) following the ANSI standard.
Q10.
Can appraisers voluntarily opt out of compliance with the ANSI standard?
No.
To download and read the PDF document, including all the Q and As (6 pages), Click Here
My comments: Definitely worth reading and keeping as a reference. Excellent Q and As.
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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 2.7 percent from one week earlier,
WASHINGTON, D.C. (July 2, 2025) — Mortgage applications increased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 27, 2025. Last week’s results included an adjustment for the Juneteenth holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 13 percent compared with the previous week. The Refinance Index increased 7 percent from the previous week and was 40 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 10 percent compared with the previous week and was 16 percent higher than the same week one year ago.
“Mortgage rates were lower across all loan types last week, with the 30-year fixed rate declining to its lowest level since April at 6.79 percent. This decline prompted an increase in refinance applications, driven by a 10 percent increase in conventional applications and a 22 percent increase in VA refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As borrowers with larger loans tend to be more sensitive to rate changes, the average loan size for a refinance application increased to $313,700 after averaging less than $300,000 for the past six weeks. Purchase activity was essentially flat over the week, as overall uncertainty continues to hold homebuyers out of the market. However, purchase activity still remains 16 percent higher than last year’s pace.”
The refinance share of mortgage activity increased to 40.1 percent of total applications from 38.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.8 percent of total applications.
The FHA share of total applications decreased to 18.2 percent from 19.3 percent the week prior. The VA share of total applications increased to 12.0 percent from 11.7 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.79 percent from 6.88 percent, with points decreasing to 0.62 from 0.63 (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 6.78 percent from 6.88 percent, with points decreasing to 0.40 from 0.60 (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 6.53 percent from 6.59 percent, with points decreasing to 0.76 from 0.85 (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 6.06 percent from 6.11 percent, with points decreasing to 0.67 from 0.74 (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 5.99 percent from 6.16 percent, with points increasing to 0.60 from 0.54 (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
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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