Appraisal News and Business Tips

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This blog has recent full FREE email newsletters (that start with the date and Newz) plus excerpts from the email newsletters where you can post comments. This newsletter has been sent out almost every week since June, 1994. I started with 6 subscribers on Compuserve. Now it is up to over 15,000 subscribers!! To subscribe to the free email newsletters and get them them when they first come out, go to www.appraisaltoday.com and sign up in the big Yellow Box!!

Read more!!

Posted in: appraisal, appraisal business, Appraisal fees

8-25-16 Newz://What are C&R fees when fees are changing?, 8 colorful cities, Flooded appraiser donations

Donation Fundraising for Louisiana Appraisers

Thanks (again) to Dave Towne for this info!!

Excerpt:

The Louisiana Real Estate Appraisers Coalition (LAREAC) has started a fund raising campaign using PayPal, which will be used to equally provide donated funds to affected appraisers who are suffering as a result of the massive flooding last weekend. PayPal is being used because its administrative fee is less than another more-well-known crowd funding web site.

There are approximately 8-10 presently known appraisers who have had their homes nearly destroyed in the flood.

http://appraisersblogs.com/donation-disaster-louisiana-appraisers

My comment: last week I wrote about donations to Bill Cobb, whose house was flooded. It is great that this donation method is done also.

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8 Colorful Cities that Look Like They Were Designed by Crayola

See the world in a whole new light through these vibrant locales.

Just for Fun!!!

Excerpt:

Many cities are known for their distinctive profiles and unique landmarks, but all across the globe there are regions that are landmarks in and of themselves thanks to their insane colorations. From a all-blue town in Spain that is a leftover from a Smurf marketing stunt, to a Venetian island that looks as though it was born of an intense acid trip, some of the most colorful locations in the world aren’t the biggest, just the most eye-popping. Check out eight cities and towns that offer vibrantly colorful views which are just as unforgettable as any big city skyline.

My comment: None are in the U.S. Too conservative I guess…

Great article with lots of photos and comments!!

http://www.atlasobscura.com/articles/8-colorful-cities-that-look-like-they-were-designed-by-crayola

Read more!!

Posted in: adjustments, appraisal classes, Appraisal fees, Collateral Underwriter, Fannie, forecast, Mortgage applications, mortgage loan volume, weird homes, weird properties

What are Customary & Reasonable fees when residential fees are changing?

I don’t think that residential fees have ever gone up this quickly, both for non-AMCs and some AMCs. Keeping up on residential fees in my local market is tough. Of course, the “flip side” is that fees will go down when the boom is over, especially AMC fees.

Some consider VA fees as C&R, but they are increasing also in some areas.

Although some AMCs keep looking for appraisers who will do a quick turn time for a low fee, it is becoming more and more difficult as fewer appraisers are willing to do this.

I recently attended a CE class nearby that focused on AMCs, who said that there were big issues with turn times and fees from their lender clients. The September issue of the paid Appraisal Today will have an article on what was discussed at the class, “AMCs tell All to residential appraisers”.

Why were fees relatively stable for decades? Prior to HVCC, in my market, fees would gradually go up over time, increasing $25 to $50 when demand was very strong. Most fees were in a fairly narrow price range. We made money on the easy tract homes and lost money on the “tough ones”.

Why have fees gone up so dramatically? Appraisers are reporting turning down (or not responding to) 20-30 or more requests a day from AMCs. Residential appraisers had never competed much on lender fees prior to HVCC. I do commercial appraisals, where bidding has always been done. Fee ranges of $1,500 to $3,000 for the same property have never been unusual. The time and cost of bidding is included in the fee. Most AMCs have been using bidding as there was an oversupply of appraisers. When business is slow, they offer lower fees. Now that business is strong, they pay higher fees. Of course, there are still some appraisers doing them for low fees.

Appraisal Today Paid Newsletter

In some areas, AMCs are desperate for any appraisers at any fees to accept appraisals, especially for purchases. Particularly tough are markets where an AMC has one, or a few appraisers. NAR warned real estate agents not to try for 30 day closes.

How do AMCs handle the high fees? This depends on their lender agreements. TRID is a factor as loan officers usually set the fees, which are very difficult to change. Some lenders will allow AMCs to charge more for a specific appraisal. If not, the AMC has to pay the additional cost.

What about turn time? If a loan needs to close quickly, such as a purchase loan, some lenders are offering very high fees. Be careful taking them – be sure to see how difficult the appraisal will be before accepting as turn time is very critical. Also, you will doing less work for a regular “A list” clients.

Posted in: AMCs, Appraisal fees

8-18-18 Newz: Ex-appraiser sentenced , Statistics humor, Flooding

Statistics humor

Three statisticians go hunting. They see a deer and the first one

shoots, hitting three feet left of the deer. The second one shoots, hitting three feet right of the deer. The third one leaps up in joy, yelling, “we got him!”

Thanks to Scott Jura for this great joke! Posted on a yahoo appraiser discussion group.

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Ex-appraiser sentenced to 6 years for mortgage fraud

Excerpt: A Pittsburgh federal jury convicted Jason Moreno, 33, on five counts of wire fraud and two counts of conspiracy in September 2013.

A former appraiser, Moreno overstated housing values and glossed over problems such as a den of black snakes in one house’s basement so that others in the scheme could obtain loans for more than the properties were worth.

U.S. District Judge Nora Barry Fischer resentenced Moreno on Monday to six years in prison and three years of probation.

http://triblive.com/news/adminpage/10811871-74/moreno-court-sentenced

Court documents from 1/16. Lots of very interesting details:

http://www2.ca3.uscourts.gov/opinarch/141568p.pdf


Read more!!

Posted in: AMCs, data, Mortgage applications, mortgage loan volume, OLYMPICS, unusual home, weird homes, weird properties

8-11-16 Newz//How to fix the appraiser shortage now, Photo blurring, Gold medal for town planning in 1936 Olympics

America’s First Medal at the Nazi Olympics Was For…Town Planning

Excerpt: Yes, from 1928 until 1948, town planning was an actual Olympic sport.

Town planning fell under an “architectural design” category at the Olympic art competition. The field that year was dominated by German entries. Yet the first U.S. medal of the Olympics went to Lay, a New York architect, for his ambitious blueprint to modernize Marine Park in Brooklyn.

http://www.atlasobscura.com/articles/americas-first-medal-at-the-nazi-olympics-was-fortown-planning

My comment: I love these Obscure Olympic Facts ;>

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Photo blurring gone waay overboard!!

Excerpt: At issue was the ubiquitous “client requirement” involving digital masking of people from images. While lenders and AMCs wave the Fair Housing penalty flag in order to assure compliance; there is NO such law. Never has been.

Lenders need to re-examine the reason for all of these pointless and invasive interior shots. They add nothing meaningful to the file. Nobody is laying out mortgages for Beanie Baby collections and bad drapes. So why are appraisers wasting megapixels on decorating images?

AMCs are on notice to cease demanding and insisting that appraisers do digital staging. That is clearly in violation of Illinois law.

Click here to read the full article plus the comments, of course…

http://appraisersblogs.com/digital-staging-amc-fair-housing-myth

My comment: Blurring interior pictures on walls, personal objects, etc. seems very excessive. Don’t know about rooms with strange devices and chains hanging from walls and ceilings, etc ;> Maybe appraisers will only be able to appraise vacant homes with nothing in them without getting requests for blurring. This applies only to AMCs doing business in Illinois, but maybe the AMCs will quit doing it in other states.

Read more!!

Posted in: AMCs, appraisal management company, Appraisal Qualifications Board, appraiser shortage, forecast, lender appraisals, Mortgage applications, mortgage loan volume, new appraisers, OLYMPICS

How to fix the appraiser shortage now!!

CLARIFICATION:
Until I wrote this post, I had been saying that AMC low fees and hassles were the main cause of the current appraiser shortage. Many appraisers won’t work for AMCs. Others left the profession because they would not work for AMCs.

I was wrong. The major factor is that trainees cannot sign on their own until certified. There is no other way to manage the huge ups and downs in volume of lender appraising. Prior to HVCC, this had been done for decades.

If this cannot be fixed, lenders will try to get their regulators to require fewer appraisals by using AVMs, BPOs, etc. They have always wanted this.  Their reason now: too few appraisers causing purchases to be delayed. 

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The residential lender appraisal system is broken.

The problem is NOT primarily low fees, licensing requirements, college degree, aging appraiser population, reluctance to hire “competitors”, etc.

The Problem: for the first time, there is no way to bring in trainees during boom times to sign on their own.

Since the 1970s, when Freddie and Fannie started and refis accelerated, lender volume had huge ups and downs, depending on interest rates. Lenders hired armies of trainees and laid them off when business slowed down. During the last big boom prior to the mortgage meltdown, fee appraisers hired the trainees and let them go. Now, very few appraisers are hiring trainees, except friends and relatives.

How can this be fixed now, in the short term? U.S. Bank,  Wells Fargo, and Quicken Loans allow trainees inspect the subject, but not sign on their own. This is a good start, but still does not allow trainees sign on their  own until they are certified, which takes a minimum of 2.5 years. Also, states vary widely on requirements before a trainee can inspect on their own, such as 25  or 100 inspections or never. 

Lots of complaints now about the appraiser shortage. The Appraisal Foundation is considering lowering licensing requirements for certified appraisers. But, this will take years to change.

If lenders accept licensed appraisers, who do not need a college degree but need 150 hours of college classes, this will really help. A minimum of 12 months and 2000 hours of experience is required. The certified appraiser requirements will not have to be reduced. Certified res is 2.5 years of experience.

The AQB experience requirements are the minimum. I am in California, which has the AQB requirement: “Personally inspect the property with the Trainee until the supervisor determines the Trainee is competent to make unsupervised inspections, in accordance with the Competency Rule of USPAP for the type of property being appraised.” Some states have gone way beyond this, requiring the supervisor to inspect the subject with the trainee for the two years of experience. e supervision.

Lenders who want to switch from conventional and FHA will not be able to use licensed or trainees, of course. But, this is much, much better than weeks of delays getting appraisals, especially for purchases.

AQB requirements

Residential (AL) 150 hours, covering specific modules including the 15-hour National USPAP Course (or its equivalent as determined by the AQB); and 30 semester units of college-level education, OR an Associate’s degree or higher (in any field). 2,000 hours and encompassing no less than 12 months of acceptable appraisal experience. Any non-complex 1-4 family property with a transaction value up to $1 million; and non-residential property with a transaction value up to $250,000


Certified Residential (AR) 200 hours, covering specific modules, including the 15-hour National USPAP Course; and a Bachelor’s degree or higher. 2,500 hours and encompassing no less than 2.5 years (30 months) of acceptable appraisal experience. Any 1-4 family property without regard to transaction value or complexity; and non-residential property with a transaction value up to $250,000.


Of course, for existing appraisers, this is a boom time with no new competitors entering the business. Fees are increasing dramatically and have increased this much in the past.

Posted in: AMCs, appraiser shortage

8-4-16 Newz// Data verification, AMCs-percent of work, Drones

Collection and Verification of Residential Data in the Sales Comparison Approach

Appraisal Practices Board, Issued June 30, 2016, First Exposure Draft

Deadline for comments is August 12, 2016

The document includes examples for lender and non-lender work plus references to lender requirements. Extensive discussions on scope of work for different types of assignments, such as relocation, individuals, effect of zoning, estates, etc. as well as verification sources, etc. etc.

Excerpt:

Example 2 – Client: Conventional Lender Effective Date: January 20, 2015

After the four siblings receive a market value range of $139,000 to $155,000 from the appraiser, they compare this range to a $140,000 cash offer they received from a buyer who was willing to close in one week. The siblings accepted the offer because they were motivated to sell. This new buyer purchases the residence on January 15, 2015, for $140,000 cash and then decides to finance the residence with a conventional loan. In this instance, the client is the lender.

For this assignment, the lender has specific requirements regarding what data points to verify and with whom the appraiser should verity those data points. The lender also has guidelines such as the minimal number of comparable sales the appraisal will report, and a time frame within which those comparables sold. The appraiser accepted the lender’s specific requirements and produced credible assignment results within these parameters. The final opinion of market value was $150,000, with an estimated exposure time of six months.

Every client and assignment condition will have different requirements for how much sales data is collected and how that data is verified. This can include using different sources, using different levels of verification, and concentrating on the verification of different data points. The overall goal for verification is to verify data to a level that is necessary for credible assignment results, not to necessarily verify all data and certainly not to verify all data to the same level. Different levels of verification are acceptable based on assignment conditions, availability of data, and the relevance of each data point.

https://appraisalfoundation.sharefile.com/share?cmd=d&id=s58e5be211d044a79#/view/s58e5be211d044a79

My comment: Finally the APB has something useful and practical for residential appraisers!! Be sure to read and comment on this 52-page draft. Worthwhile reading. Very comprehensive on this important topic. Discusses lender issues, including CU. I have not read the entire document but plan on reading it very soon.

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How Dirt Houses Became Beloved By The Tiny House Movement

Meet the wondrous cob.

Excerpts: It’s likely that earthen homes were among the oldest structures ever built by humanity. There are a few different techniques and many names for a building made mostly of, well, dirt, but the one that’s caught on in this recent revival of the material comes from England: Cob.

See the photo of: Ancient cob high-rise buildings in Shibam, Yemen.

Very interesting and detailed with photos:

http://www.atlasobscura.com/articles/how-dirt-houses-became-beloved-by-the-tiny-house-movement

Read more!!

Posted in: Appraisal Standards Board, forecast, lender appraisals, Mortgage applications, mortgage loan volume, unusual home, unusual homes, USPAP, weird homes

What percentage of your work do you receive from AMCs?

My comment: Looks like there are some appraisers who don’t work for AMCs. I had expected higher percentages that worked mostly for AMCs.  Now that business is strong, some appraisers don’t work for AMCs, or take less work from them. When business is slow, they do more work for AMCs.
Posted in: AMCs, appraisal business, lender appraisals

7-28-16 Newz Origin of tiny houses – HUD warning letters – FHA transfers

The Surprising Origins of the Tiny House Phenomenon

Why ancient hermits are the key to understanding our tiny home obsession

Excerpts”

Invariably, someone will remind you that civilization emerged from tiny houses-caves, yurts, tents, wigwams, igloos, grass huts, and so forth.

These early antecedents are beside the point. Sioux, Samoans, and Inuits were not offered more spacious alternatives. But people who opt for tiny houses-meaning the kind that tug at heartstrings and star on cable-generally choose to live small. The reasons aren’t just practical, but also ethical and emotional.

the true parents of tiny-house living are hermits. From the ancient Chinese Taoists in mountain caves to the Desert Fathers of third century Christianity and onward (the word “hermit” derives from the Greek word for “desert”), hermits were the first people to actively downsize to confined, remote, and minimally furnished living spaces.

Read the full story here:

http://www.curbed.com/2016/7/13/12162832/tiny-house-history-hermits

My comment: The most interesting article I have read on tiny houses. Of course, I started sailing sailboats in the early 1970s. Living aboard a sailboat is the Ultimate Tiny House!! Narrow and long but very portable… Another good link from Jonathan Miller…

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FHA Case Transfer, issued July 26, FHA INFO #16-49

Mortgagees should note the following about case transfers relative to appraisal reports in both the EAD (electronic appraisal delivery) portal and FHAC:

Read more!!

Posted in: AMCs, appraisal business, computers, FHA, Mortgage applications, mortgage loan volume, weird homes

7-21-16 Newz//Bracketing-AMC staff appraisers-Appraiserville

8 Spooky New York Places That Should Be in the New Ghostbusters Movie

There’s something strange in these neighborhoods.

Excerpt: Here is one, but you gotta see the photos and the other 7!!

The Morris-Jumel Mansion

On a hill overlooking the Harlem River, the stately Morris-Jumel mansion is not only Manhattan’s oldest home but supposedly one of its most haunted. Its macabre history started after owner Stephen Jumel died in 1832. His wife Eliza was rumored to have had a hand in the death-there was some suspicion afoot that she orchestrated the carriage accident that killed him….

Take a break from typing appraisal reports and check it out!!

http://www.atlasobscura.com/articles/8-spooky-new-york-places-that-should-be-in-the-new-ghostbusters-movie

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The Shrinking of the American Lawn

As houses have gotten bigger, yard sizes have receded. What gives?

Excerpts:

The American house is growing. These days, the average new home encompasses 2,500 square feet, about 50 percent more area than the average house in the late 1970s, according to Census data. Compared to the typical house of 40 years ago, today’s likely has another bathroom and an extra bedroom, making it about the same size as the Brady Bunch house, which famously fit two families.

This expansion has come at a cost: the American lawn.

As homes have grown larger, the lots they’re built on have actually gotten smaller-average area is down 13 percent since 1978, to 0.19 acres. That might not seem like a lot, but after adjusting for houses’ bigger footprints, it appears the median yard has shrunk by more than 26 percent, and now stands at just 0.14 acres. The actual value lies somewhere between those two numbers, since a house’s square footage could include a second (or third) floor. Either way, it’s a substantial reduction.

Read the full story at: Very interesting!!

http://www.citylab.com/navigator/2016/07/the-shrinking-of-the-american-lawn/490157/

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There Go My Brackets

From the Illinois Appraiser June 2016

Excerpt:

Is it a USPAP violation to fail to bracket or end up with a tight bracket?

Read more!!

Posted in: adjustments, AMCs, appraisal business, appraisal management company, Mortgage applications, mortgage loan volume, USPAP, weird properties

Bracketing and USPAP

There Go My Brackets
From the Illinois Appraiser June 2016
Excerpt:
Is it a USPAP violation to fail to bracket or end up with a tight bracket?

USPAP is silent on bracketing. For that matter, so is Illinois law. Here’s what Fannie Mae says;
“When there are no truly comparable sales for a particular property because of the uniqueness of the property or other conditions, the appraiser must select sales that represent the best indicators of value for the subject property and make adjustments to reflect the actions of typical purchasers in that market.”

Not a word about bracketing.
While comforting for an underwriter to see the collateral fall snugly into place, bracketing is still a guideline. This hasn’t stopped AMCs and lenders from complaining to the Board about missed brackets or huge ranges. There just isn’t a law against having a sloppy bracket, nor should there be.

Something else from Fannie Mae;
“It should be noted that the indicated value in the Sales Comparison Approach must be within the range of the adjusted sales price of the comparables that are reported in the appraisal report form.”

Read here for the full article:

Check out the other very interesting articles such as AMC fair housing Myths and Evaluations. Link to original newsletter.

My comment: I have never “bracketed” anything except the value, when I used to do appraisals for Fannie Mae loans. I have no idea why lenders are requiring bracketing for everything with an adjustment. Just another Stupid Scope Creep I guess. Works ok in conforming tracts with lots of sales and minimal adjustments, but goes downhill quickly after that. Of course, the entire appraisal review-by-computer assumes that all houses are in conforming tracts. As do the Fannie forms, of course.
AT_final_rev_newslet
Posted in: adjustments, lender appraisals, USPAP
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