Newz: Appraiser Loses License, Fannie Market Conditions Deadline
January 17, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA AD: Your Role as a Judge’s Appraiser
- Market Condition Adjustments: A Comprehensive Guide for Appraisers By Jim Amorin
- The Crocker Mansion, New Jersey 50,000 sq ft $ $33,000,000
- LA: Both Ends Burning By Jonathan Miller, Appraiser
- How a Chink in Your Armor Can Create an Ugly Outcome by Richard Hagar, SRA
- Colorado Revokes Appraiser’s License, $97,500 fine
- Mortgage applications increased 33.3 percent from one week earlier
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Market Condition Adjustments: A Comprehensive Guide for Appraisers
By Jim Amorin, MAI, SRA, AI-GRS
Excerpts: To effectively support market condition adjustments in line with recent Fannie Mae guidelines, appraisers can use a variety of market analysis techniques. These methods provide a solid foundation for demonstrating how changing market conditions affect property values over time. Below is a detailed explanation of each technique to ensure the adjustments are well-supported and align with market trends.
The goal is to make sure every adjustment is defensible, based on empirical evidence, and can withstand scrutiny from all stakeholders involved in the appraisal process. By applying these methods, appraisers can provide reliable, accurate valuations that reflect current market conditions and ensure the appraisal’s credibility and acceptance.
Author’s note: I may use time adjustments and market conditions adjustments interchangeably. This is shorthand that every experienced appraiser knows and understands – please don’t @ me
Market Condition Adjustments Illustration
Fannie Mae guidelines emphasize that adjustments made to comparable sales are based on market changes between the contract date of the comparable sales and the effective date of the appraisal. Depending on when the comparable sales occurred, adjustments can be positive, negative, or zero within the same appraisal report. Understanding these nuances is crucial for ensuring that time adjustments accurately reflect changing market conditions.
SEE GRAPH BELOW. FANNIE DOES NOT REQUIRE THiS TYPE OF GRAPH.
Additional Topics:
- Paired Sales Analysis
- Market Trends and Regression Analysis
- Indexing Methods
- CoreLogic’s Home Price Index (HPI)
- S&P CoreLogic Case-Shiller Index
- Use of Listings and Pending Sales
- Subdivision or Neighborhood Analysis
- And More
To read more, Click Here
My comments: READ THIS ARTICLE! Understandable with excellent illustrations. Goes over many topics. The best article I have read on this topic that is not too complicated and/or long.
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From Fannie: Lenders are encouraged to implement these appraisal policy changes immediately but must do so for appraisals dated on or after March 1, 2025.
Source:
© 2024 Fannie Mae SEL-2024-08 Selling Guide Announcement (SEL-2024-08) Dec. 11, 2024
Fannie Announcement:
Time adjustments in appraisals
“We added clarifying language to remind lenders and appraisers the use of home price indices (HPIs), statistical analysis, modeling, paired sales, or other commonly accepted methods are acceptable for supporting appraisal time adjustments. Fannie Mae encourages the use of these tools to provide supporting evidence for market trends and conditions.“
“Failure to make market-derived time adjustments when indicated by market data is an example of an unacceptable appraisal practice. Appraisal reports must summarize all supporting evidence and should include a description of the data sources, tools, and techniques used to determine the overall valuation. “
To read the Fannie notice: Click Here
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GSEs Update: Appraisal Market Area Requirements, effective date Feb. 5, 2025
Required: February 4, 2025
Lenders encouraged to implement now
To read the update, Click Here
The Crocker Mansion, New Jersey 50,000 sq. ft. $33,000,000
Excerpts: 21 bedrooms, 19.5 baths, 50,000 sq.ft. 12 acre lot
This 50,000-square-foot megamansion originally built for railway heir George Crocker was seized last year from its previous owner, Ho Wan Kwok, aka “Miles Guo,” a Chinese tycoon convicted of defrauding online followers out of more than $1 billion.
Built in 1907, the estate has been “meticulously restored” over the years to now offer a “restaurant-style kitchen” and prep kitchen, billiard room, game room, wine room, and home theater.
There are 21 bedrooms and 26 bathrooms along with a two-story great hall, wood-paneled library, massage room, salon, and fitness center.
The 12-acre property with views of the Ramapo Mountains includes a pool, tennis court, guesthouse, gatehouse, and eight-car garage.
To read the listing with 37 photos, Click Here
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LA: Both Ends Burning
By Jonathan Miller
January 10, 2025
Excerpts:
The LA Wildfires Will Be The Largest U.S. Fire Event On Record
Don’t Blame The Insurance Carriers – They Can’t Provide Coverage If Insolvent
State Farm Cancelled 69% Of Pacific Palisades Policies Earlier This Year
Thoughts On Housing Prices And Sales Trends After A Catastrophic Event
Towns And Neighborhoods Get Rebuilt – It’s been my experience that housing markets tend to be rebuilt after a natural disaster. At this moment in LA, it’s hard to imagine any rebuilding with all the devastation, but I don’t think that everyone will walk away from LA….
The New Housing Stock Will Skew To Higher-End – The housing stock replacements tend to be more expensive than those it replaced. We saw that clearly on the south shore of Long Island after Hurricane Sandy in 2012. Sales fall sharply and then rebound as new construction surges….
The Cost Of Home Construction Soars
Privatizing Fire Departments Won’t Solve The Problem
Local and state governments need to be much more proactive
Housing Notes Reads – many good links for more information.
To read more, Click Here
NOTE: Scroll down the page to “Thoughts On Housing Prices And Sales Trends After A Catastrophic Event” and “Housing Notes Reads” for good links.
My comments: Written by a long time appraiser based in New York City. Worth reading.
I know a lot about Northern California wild fires. Horrible.
What everyone wants to know is what happened to their house.
Oakland CA fire in 2001: On a steep hillside. I can see it from my house and had appraised many homes there. All I could see after the fire was the brick chimneys for fire places. I was not able to appraise there again for 2 years: too sad. Many homeowners had reproduction (not replacement) costs from their insurance companies.. Many unique homes were built after the fire. I learned about what people were able to take and what they forgot when fleeing from the fire and many other post-fire issues.
Paradise CA: many deaths and homes destroyed. I had appraised many homes for the assessor’s office in the late 1970s.
What Oakland and Paradise had in common: very limited road access to escape.
Middletown CA (Lake County) north of San Francisco. My brother lived there for 20 years. Regular wildfires. The most recent one was very bad. Small downtown with most buildings and homes nearby destroyed. Cobb Mountain (nearby): many homes destroyed. My brother (and some other residents) spent almost a week in a nearby town living in his pickup after going to a WalMart to get more propane. He was not allowed to return to his 2 houses. It was not damaged fortunately.
About 15 years ago I quit working in the Oakland hills. Every time I appraised there I worried about a fire. Very little mitigation has been done since the fire in 2001. Within the past month, there was a small contained fire in a grove of eucalyptus trees which are extremely hazardous – light up like matches. No talk of removing the trees, which are all over that area.
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If people can’t contact you, they can’t order an appraisal or give you a referral
In the August 2024 issue of Appraisal Today
Excerpts: Phone Communication
How easy are you to find? Google your name as though you are searching
for an appraiser. Can you locate yourself? Can you be reached or are you difficult to find? Can you easily get your phone number or email address?
How much time do you spend looking for a company or service if there is no
online contact information? Do you just go to the next company if it is difficult or impossible? Do you hang-up if the voicemail message is only a phone number?
Voice Mail Greeting and Call Screening
I am amazed how many appraisers are difficult to contact by phone. My
office assistant calls appraisers every day, for credit card updates or other
reasons. Often her call automatically goes to voice mail. Frequently she only gets a phone number: 444-32-2231. No name, no business name. Nothing. Many people just hang up rather than leave a message to an unknown recipient.
Call screening is useful for incoming calls, but what if you really need
appraisal work now. Answer all the calls, unless you know for sure it is annoying telemarketer. You can block those identified as spam.
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How a Chink in Your Armor Can Create an Ugly Outcome
How to Keep Out of Trouble
by Richard Hagar, SRA
Excerpts: We’ve all been here before: The borrower doesn’t agree with your value conclusion, so like a spoiled brat stomping their feet, they complain to the appraisal management company (AMC)/client, pointing out all sorts of bogus issues. The AMC/client then performs a detailed review of your appraisal and adjustments.
This is the major inflection point between a good outcome or an ugly one. If the appraisal was completed properly and included sufficient information, this problem would go away. However, in this instance, the reviewer reads generic statements regarding how the adjustments were determined such as, “Adjustments were based on a regression analysis, matched-pair analysis, depreciated cost, and/or the appraiser’s opinion based on 20 years of experience.”
OK, but did the appraiser really perform all of these methods in this particular appraisal, or is this (and similar statements) simply a generic, boilerplate statement that could apply to every appraisal ever produced?
Chink in the Armor
I just completed a review of an appraisal that had been turned into the state. The complaint was, according to the client, “due to the appraisal not listing the correct construction date, resulting in an incorrect value.” This was a bogus issue since the original construction date and date of rebuilding the house didn’t impact the description or value; it was simply an excuse to attack the appraisal’s value conclusion.
This slight flaw in the appraisal—a chink or hole in the armor surrounding the appraiser—has now allowed the state to dig into the appraisal and look for any issues, even if they are not part of the complaint.
To read more, Click Here
My comments: I have known Richard Hagar for a long time. He is dedicated to helping appraisers avoid getting into trouble and updating their appraisal skills. Excellent instructor and a good writer.
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Colorado Revokes Appraiser’s License, $97,500 fine
On January 6, 2025, the Director of the Division of Real Estate, Marcia Waters, executed a Stipulation and Final Agency Order for public censure, fines, and revocation of the license for Maksym Mykhailyna, License CR.200002225. The licensee operated as a certified residential appraiser with a principal office address of 1000 Speer Blvd Apt 1409, Denver, CO 80204-4079. In addition, the licensee operated a controlling appraiser license, License CA.200002917, with the same address.
In part, the investigation revealed that the licensee ran an appraisal firm that improperly retained the services of unlicensed individuals located outside of the United States to complete appraisal assignments and then affixed the signatures of credentialed appraisers to the reports, often without their knowledge. This business model was not only misleading to the clients, but also to his credentialed appraisers on staff.
In a second complaint investigation, Mykhailyna, conducted substantially similar violations of license law, notably, by failing to supervise both licensed and unlicensed assistants and by submitting, and aiding and abetting the submission of appraisals that contained signatures from appraisers who did not author the appraisals.
Mykhailyna was ordered to immediately surrender the above referenced licenses and was assessed a total fine of ninety-seven thousand five hundred dollars ($97,500.00) which includes a fine and additional fee.
To read more, Click Here
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Director Waters also identified that federal regulatory agencies are aware of the allegations and violations uncovered by this investigation, specifically referencing a recent Press Release by the United States Department of Justice. “Justice Department Sues Rocket Mortgage, Appraisal Management Company and Appraiser for Race Discrimination in Mortgage Refinance Application”
To read about the original lawsuit (Rocket Mortgage, AMC and Appraiser), Click Here
My comments: Whenever an appraiser calls me about a difficult situation they are in, my first question is: Do you want to lose your appraisal license for one appraisal?
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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 33.3 percent from one week earlier
WASHINGTON, D.C. (January 15, 2025) — Mortgage applications increased 33.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 10, 2025. Last week’s results included an adjustment for the New Year’s holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 33.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 52 percent compared with the previous week. The Refinance Index increased 44 percent from the previous week and was 22 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 27 percent from one week earlier. The unadjusted Purchase Index increased 48 percent compared with the previous week and was 2 percent lower than the same week one year ago.
“Bond yields in the U.S. and abroad continued to move higher in response to concerns over a sticky inflation outlook and still too-high budget deficits, which pushed mortgage rates higher for the fifth consecutive week. The 30-year fixed rate is now at 7.09 percent – its highest level since May 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “This time of the year is a particularly volatile time for application volumes, so it can be more helpful to focus on the level rather than the percent change. Purchase applications were 2 percent lower, and refinances were 22 percent higher compared to a year ago. Total applications were up by 33.3 percent, the highest level in a month, as both purchase and refinance applications saw large percentage increases over the week.”
The refinance share of mortgage activity increased to 42.7 percent of total applications from 40.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.0 percent of total applications.
The FHA share of total applications remained unchanged at 16.9 percent from the week prior. The VA share of total applications decreased to 15.7 percent from 16.2 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 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 7.09 percent from 6.99 percent, with points decreasing to 0.65 from 0.68 (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 7.05 percent from 6.99 percent, with points decreasing to 0.59 from 0.74 (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 6.76 percent from 6.65 percent, with points decreasing to 0.90 from 0.91 (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 6.43 percent from 6.46 percent, with points increasing to 0.71 from 0.62 (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 increased to 6.18 percent from 5.98 percent, with points increasing to 0.54 from 0.26 (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.
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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