Source of Work – refis and foreclosures

www.appraisalport.com

Excerpt:

As we all know, the housing market has been going through some major changes over the past years. As the market changes, so does the source of many appraisal assignments. This month we ran some polls to see how much work is generated from both refinance activity and foreclosure activity.

The first poll asked, “How much of your work comes from refinance activity?” and received a total of 5,404 responses. The results show refinance activity accounts for a good portion of the current appraisal assignments. No surprise there. The top answer was, “I do 51%-75% refinance work,” with 35% of the vote. A close second was, “I do 25%-50% refinance work,” with 30% of the vote. Quite a large group (20% of the appraisers) responded that more than 75% of their work is for a refinance loan. This work seems to be holding steady for now and should continue if interest rates stay at these historical lows.

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The second poll asked a similar question, but instead of refinance work, the focus was switched to foreclosure work. We had 5,395 total responses to this poll and we found that foreclosure assignments make up a much smaller portion of work volume for appraisers. There are a couple of potential reasons why foreclosure work isn’t as important for appraisers when compared to refinance work.

First, often foreclosure work is done by brokers providing BPOs, rather than by lenders ordering a full appraisal. Second, the default and foreclosure rate is actually falling rapidly in most areas of the country, which is good news for everyone. The top answer with 60% of the vote was that less than 25% of the work volume comes from foreclosures. Keep in mind that this answer includes those who get 0% of their work from foreclosures. About 22% of appraisers responded that they still get 25%-50% of their work from foreclosure activity. The last two possible responses of 51%-75% and more than 75% were essentially tied, each category receiving approximately 9% of the vote. So we can conclude appraisers are not currently heavily dependent on foreclosure activity for new assignments.

My comments: nothing new here. BofA’s recent appraiser layoffs and other layoffs due to shrinking foreclosures show that this is happening. They love their BPOs for foreclosures. There is work for Fannie and others trying to get money from appraisers who were to “high” in the boom time.

National Appraisal Compliant Hot Line to start by 3/29/13 Appraisal organizations ask for delay

ASC notice to state regulators:
Excerpt: The Hotline will begin operation no later than March 29,2013. The Hotline will refer complainants to appropriate State and/or Federal agencies to handlecomplaints of alleged violations of the Uniform Standards of Professional Appraisal Practice(USPAP) and/or appraisal independence requirements. The Hotline will direct complainants tocontact you to formally file their complaint using the existing protocols established by your State.The Hotline does not initiate complaints, act on behalf of complainants, arbitrate complaints, assistin appealing the outcome of complaints, or follow up on complaint referrals previously provided

Link to full notice:
http://www.scribd.com/doc/126820613/ASC-Appraisal-Complaint-National-Hotline-Notice-to-States
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Feb 4, ASA/NAIFA sends letter to ASC asking for delay

Excerpts of a few bullet points:
– The ASC designed the appraisal complaint hotline system behind closed doors, and has failed to allow stakeholders to comment on it prior to final implementation:
– The ASC’s hotline system, as proposed, violates congressional intent and the clear language of the dodd-frank provision authorizing it:
– Congress intended the hotline to provide appraisers with an ability to report efforts to undermine their independence, not as a catch-all mechanism to be used against appraisers by persons disgruntled because the appraised value did not meet their needs or for other non-specific or Non-serious reasons:

Link to letter http://c.ymcdn.com/sites/www.naifa.com/resource/resmgr/legislation/02.07.2013_letter_from_asa_a.pdf

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Feb 12, AI/ASFMRA sends letter to ASC asking for delay

Excerpt:

However, in speaking with state appraiser regulatory officials, practicing appraisers and others involved with real estate and mortgage finance, virtually no understanding of the hotline and its intended purpose, as well as the proposed protocol, exists. As such, we believe that the protocol could be met with unnecessary trepidation simply because to date the ASC did not seek stakeholder input. As such, we respectfully request that the ASC refrain from approving the protocol, and instead release the protocol for public comment, similar to the process used by the ASC in drafting Policy Statements. Since the hotline likely will impact other mortgage and real estate professionals and regulatory agencies, we believe that all stakeholders deserve to have an opportunity to review comment on the hotline before it is operational. This is the foundation of good government and, in this case, we believe that such a measure actually will engender support for the proposed protocol.

Link to AI/ASFMRA letter
http://www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2013/AI-ASFMRA-to-ASC-on-Hotline.pdf

My comments: The ASC was mandated by law to set this up. I have not read all these links, so I have no opinion. It is all up to you!!

So, just how accurate is the Zillow “Zestimate” anyway?

Thanks to appraiser Tom Horn for this Most Interesting video!

Have you ever wondered how accurate the Zillow “Zestimate” really is? Whenever I am doing appraisals I have homeowners tell me what their Zillow “Zestimate” is. I am sure they are hoping that my appraisal is similar to that number (if it is high), however the two could be close, but more times that not they are pretty far apart.

I actually just found out recently how you can determine the accuracy of Zillow in your area. Take a look at the video to learn how.

[youtube=http://www.youtube.com/watch?v=1pT9HPqsu-I&feature=player_embedded]

click here to see the original blog posting

1-1 GOOD AT final rev newslet

Is the appraisal system broken?

Speakers – John Brenan, Director of Appraisal Issues – Appraisal Foundation and Melissa Cohn, President of The Manhattan Mortgage Company

junkyardNothing new, but at least they have an experienced appraiser (over 30 years) speaking. Of course, the mortgage person says the usual stuff about deal killer appraisers – out of area, QC delays, get rid of HVCC, loosen rules up, etc.

4:42 min long video, after relatively short commercial. Sorry, I was unable to “imbed” the video in this message. Click below to view.

http://video.cnbc.com/gallery/?video=3000144447 

1-1 GOOD AT final rev newslet

Appraiser comedian at the Punchline

Appraiser David Cash at the Punchline Comedy Club.
An oldie from 2008 but a goodie!! A blast from the past, pre-HVCC!!

I searched online but could not find any more videos. Also, there are lots of David Cash appraisers and I was not sure which one did this. I did find some other David Cash’s such as a hip-hop musician!!

If you know anything, please leave a comment!!

[youtube=http://www.youtube.com/watch?v=-ioDtuZh5_k]

1-1 GOOD AT final rev newslet

The Value of Evaluators

Another great article from the Illinois appraisal regulator

Excerpts:

The argument to promote evaluations as an alternative to appraisals was driven by rural lenders who feared a shortage of appraisers might slow down closings. That was it. That was the main beef. A simple supply and demand issue for banks in the boonies… twenty years ago! An evaluation was regarded as “a generally simpler assessmentmonkeys see hear no evil
of real estate market value.”

Evaluations versus Appraisals (2012) —
The most recent incarnation of the Interagency Appraisal and Evaluation Guidelines emerged in December of 2010. Section XIII provides the suggested content of a evaluation…“a generally simpler assessment of real estate market value.

(BPOs cannot be used for evaluations.) A valuation method that does not provide a property’s market value or sufficient information and analysis to support the value conclusion is not acceptable as an evaluation. For example, a valuation method that
provides a sales or list price, such as a broker price opinion, cannot be used as an evaluation because, among other things, it does not provide a property’s market value.

1-1 GOOD AT final rev newslet

If you want to know what the feds meant by “a simpler assessment”, go ask them. I’d love to hear that explanation myself.

Many AMCs, while eager to take on the evaluation function, fail to understand who is ultimately responsible for the entire program. (Their clients, the lenders)

Banks cannot hand‐off liability to AMCs like a hot potato just because they can’t be bothered managing their own evaluation program. If an AMC makes a mess of the bank’s
evaluation program, the responsibility of the failure falls squarely back on the bank.

Turning an evaluation into an USPAP compliant appraisal takes far less effort than trying to cobble together a cadre of competent and reliable evaluators to provide something that by state statute,must fall short of an appraisal.

My comment: This is an issue that has been around since the early 1990s. What does an evaluation mean? Cheap and fast. Banks want them. AMCs would love to provide them. I have no idea who would do them and what they look like. I have no idea how a licensed appraiser would do them as they must be USPAP compliant.

Seems easier to me just to do an appraisal. Maybe a shorter appraisal that is not 30 pages long with 9 comps and pages and pages of explanations!! Now that is a very practical idea. Just go back to the past pre-HVCC and incredible scope creep since then.

Click here to read the full newsletter article.

Dear Clipboard and Measuring Wheel – A Walk Down Memory Lane

By Dustin Harris, The Appraiser Coach

Hey!  How have you been?  Sorry I have not written in a while.  Wow, I cannot believe it has been over 15 years since I broke up with you.  How time flies.  My purpose in writing is not to make you feel bad, but I am not disappointed that we parted ways, and I honestly do not miss you two… at all.  I know that seems harsh, but you said I would be sorry, and I just wanted you to know that you were wrong… again.

Oh, in the beginning, I thought I had made a huge mistake.  My new flings were not as easy to get used to as you were. There was that one night, early on, where I had a little cry, ate an entire carton of Ben and Jerry’s, and almost broke up and came running back to you.  How glad I am that I did not.  That would have been a huge mistake.  Why?  Despite your warnings, your replacements have loved me without condition, been nearly completely faithful, and have allowed me to be more efficient and more accurate than I ever was with you.  Though they may have cost more in the beginning, they have paid for themselves over and over and over.

measuring wheel Measuring Wheel, I am sorry for the jealousy I caused you when I left you for Disto.  I still remember the harsh words you spewed at me as I laid you in the trunk of the car as a ‘backup.’  You said, “You will regret this!  Her smaller frame and fancy red laser can never replace me.  You will, I repeat, WILL be back.”  In all honesty, I thought at the time that you might have been correct.  That is why I carried you around for so many years even after turning my attention to Disto.  Please accept my apology that I never did pick you up again, even for a short fling.  I just cannot tell you how happy I am now with Disto by my side.  Is she accurate?  So much so that I have to ‘dumb her down’ a bit in order to meet ANSII standards of measuring to the nearest half foot.  “But, what about those really sunny days or walls that do not have anything to bounce off of” you ask?  Let me just say that everyone had a period of ‘getting used to.”  She had hers as well (and honestly, it was longer than it took to get used to you), but once I understood what makes her tick and how to really ‘push her buttons,’ I have never met a wall I could not measure with her since.  She and I are quite a team now.  Granted, she will never protect me like you did (remember that time I used you to beat that vicious dog over the head?), but thankfully I have never had an incident like that one again.

Clipboard, I know you were angry when I put you in the backseat and started holding a pocket PC instead.  Though Jornada™ seems a little antiquated now, she was light years ahead of you at the time.  Maybe it will make you feel a little better if I told you she did not last either.  Yes, I have now replaced her as well.  Before you start accusing me of being a ‘player,’ you should know I stuck with her for many more years than I ever was with you, and her replacement was a huge step forward.  Yep, I am now hanging with the iPad.  clipboardInterestingly, you will remember that I ditched you for the more petite replacement, but my steady now is almost the same size as you (though she is a tad more heavy—so you at least have that).  Remember when we were together how I would sometimes get clear back to my office before I realized that I had forgotten to take a picture or the two sides of my sketch did not match?  Then, you and I would have to get back in the car for another ‘date’ to the subject property?  Well, those days are so 1997.  iPad never allows me to leave the property without knowing that I have everything I need and that everything matches as it should.  How cool is that?

I know what you are saying, Clipboard.  You think that I am spending more time at the subject than I ever did with you.  OK.  I admit it.  This time you are right (I bet you never thought you would hear those words from me).  I am spending an average of 5 additional minutes at the inspection, but that is not where the time savings comes in.  The efficiency factor comes into play when I get back to the office.  Remember how I used to have to come back to my desk and stare at you for dozens of minutes while I transferred my chicken scratches into the appraisal software?  I know you liked all the attention, but I do not do that anymore.  All that data transfers into the report on its own.  You heard me correctly, all the data, the sketch, and pictures are all there when I get back to my office.  You could never do that for me, Clipboard.

As I reread this letter, I guess I have been hard on you two.  Maybe I shouldn’t send it, but my purpose is not to tear you down, and I am certainly not trying to pour salt in old wounds.  I only think it is fair, since so many appraisers are still spending so much time with you, that you know where you stand.  Just because you are popular does not mean you are better.  There, I said it.  I am sorry if that hurts, but there are other fish in the proverbial sea, as they say.  It is time that other appraisers follow my lead and ditch you guys.  Breaking up is hard to do, but it was a great decision for me, and I know it will be for others as well.  Sometimes we gotta put you relics on the shelves and move on.  Please do not feel bad.  Perhaps it is time for a makeover.  Clipboard, maybe you could round yourself off a bit and get rid of that hideous, metal growth and start a new life as a Frisbee.  And Measuring Wheel; you still make a pretty good billy club.

Wishing you All the Best,

Dustin Harris

The Appraiser Coach

Dustin Harris is a multi-business owner and residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc. He owns and operates The Appraiser Coach where he personally advises and mentors other appraisers. He is also the Founder and President of The Appraisal Coach which implements some of the systems he has developed to help lower costs and free up time. His principles and methodologies are also taught in an online, Mastermind group. He and his wife reside in Idaho with their four children.

AT final rev newslet

Working on Xmas = USPAP violation

stress-relax signs

AppraisalPort Poll Results 12/10/12
www.appraisalport.com

During this holiday season, I plan to:

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Take some time off to relax at home with family and friends. 1,720 votes  37%
Take some time off to travel and see family and friends. 457 votes           10%
Take some time off to catch-up on all those home improvement projects. 195 votes   4%
Take some time off to go somewhere for a real vacation. 162 votes           3%
Work straight through the Holidays – way too busy to stop. 2,109 votes  45%

Total Votes: 4,643

My comment: Bad, Bad, Bad for 45% who will be working! And this does not even count just not working on Xmas!!

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Why are there so many increasing lender/AMC requirements?

Today, lenders are very worried about investors requiring loan buy-backs. I keep hearing aboutpiles of paper minor appraisal errors, such as typos, resulting in buy backs. Of course, many of the loan documents, including appraisals, have been lost.

Is this realistic? I don’t know, but lenders are worried so they tell their agents, AMCs, to increase appraisal requirements. There were much more significant changes in 1989, such as appraiser licensing, that will not be reversed.

AMCs work for lenders, and do what they say. But, if one of an AMCs lender’s require something, that AMC may require that it be done for all of their lenders because it is too much of a “hassle” to send out separate engagement letters for each lender’s appraisals.

This is a short excerpt from an article in the January, 2013 issue of the paid Appraisal Today newsletter, which focuses on AMCs, including background checks and a profile of an AMC that pays well and that appraisers like to work for.

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