Fannie

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Complex Residential Properties for Appraisers

Appraising Solar Panels

By Ann O'Rourke on April 28, 2023 / adjustments, appraisal business, appraisal how to, Fannie / Leave a comment

Tags: adjustments, AMC, appraisal business, appraisal how to, Fannie

Appraising Solar Panels

By Mark Buhler

Excerpts: You drive up to the property. There they are, on the roof: those shiny black rectangles that are just about to turn a simple assignment into a headache. What to do? Put the car in reverse and slowly back away? Call the client and have them re-assign the order?

Those are certainly options. But in today’s tight market, with orders as scarce as hens’ teeth, let’s explore some other approaches to solving this problem.

First: How do appraisers value any amenity of a property?

Appraisal 101 would suggest the matched pairs analysis. So our first task is to find a property with solar panels that’s similar to the subject.

That search quickly comes to a screeching halt. (I can almost smell the brake dust.) There are no comps with solar panels in the area. So when we type the report, a comment like this might slip past the reviewer and underwriter: “A thorough search of the subject’s marketing area revealed a scarcity of sales comparables with solar panels.”

So far, so good. Now let’s continue with that reasoning: “Due to a lack of comparables with solar panels, no contributory value can be extracted.”

This supports a zero (0) adjustment, right?

Well … maybe. A savvy underwriter or reviewer might wonder why the appraiser didn’t consider the cost and income approaches…

To read more click here

My comments: Good, practical advice. The article is worth reading. Solar for homes is everywhere now. I recently spoke with Mark. I asked some technical questions about financing solar and electric companies lowering what they pay to homeowners with solar. He knew everything! Taking a webinar or class from him is definitely worth the price. He has been teaching the classes for a long time.

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State Appraisal Boards – What Do They Look For?

By Ann O'Rourke on April 21, 2023 / bias, Fannie, liability, non-lender appraisals, state appraiser regulators / Leave a comment

Tags: bias, Fannie, liability, non-lender appraisals, state appraiser regulators

The State Appraisal Board Wants to Throw Me Under the Bus, Right?

by Barry Phillips and Tim Andersen

Excerpts: So, what do the investigator and the state board look for as part of their investigation? Again, simply put, the investigator and board look to see if the appraisal meets the requirements of USPAP’s Standard 1, and if the report meets the requirements of USPAP’s Standard 2. Everything else in such an investigation is merely an elaboration of the answers to these two questions.

Nevertheless, there is a warning due here. Increased numbers of state appraisal boards are looking at complaints against appraisers from the standpoint of the consumer, rather than that of the client and/or the intended user(s).

This, to a great extent, is a function of the current political climate. As all appraisers are aware, the consumer has no standing with the appraiser (assuming the consumer is not the named client or intended user). Nevertheless, state boards tend to favor the consumer (the complainant) over the appraiser (the respondent).

To read more, click here

My comments: Good analysis of how state boards work and what they look for. Tim Andersen, MAI, is definitely “The” USPAP Expert.

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Appraising Fixer Uppers

By Ann O'Rourke on April 14, 2023 / adjustments, appraisal how to, Fannie, liability, non-lender appraisals / Leave a comment

Tags: adjustments, appraisal how to, Fannie, liability, non-lender appraisals

Appraising Fixer Uppers

Excerpts: We’re all familiar with the term “fixer-upper.” For many different reasons, properties can come on the market in less-than-par condition. The degree and cost to cure becomes an issue to buyers and sellers, and a challenge for appraisers. At some point it’s no longer “normal market value minus cost to cure equals as-is value.”

The terms “entrepreneurial incentive” and “entrepreneurial profit” are typically discussed in terms of investment property, but the principles involved can also be applied to the many fixer-uppers—whether the buyer is a “purely investor type” or an “owner occupied investor type.” Maybe a couple new terms should be discussed: “sweat equity incentive” and “sweat equity profit.”

The rest of the post is a very good case study

To read more, click here

My comments: I have appraised many fixer-uppers. My overall ratings are: Unlivable with holes in wall or ceiling, kitchen, and bath not functional, not lendable, etc. ) In my MLS “contractor special” is often used. Liveable: needs work but functional kitchen and bath.

Most of my appraisals are for estates, and fixers are relatively common. There are few comps as almost all homes are fixed up for sale. There are some good ideas in this post. Even if you have comps, there is often a very wide range of conditions.

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Why Appraisers Love Appraising!

The Power of Praise for Appraisers and Clients 3-24-23

By Ann O'Rourke on April 1, 2023 / appraisal, appraisal how to, Fannie, lender appraisals, liability, non-lender appraisals / Leave a comment

Tags: appraisal, appraisal business, appraisal how to, Fannie, non-lender appraisals

The Power of Praise

By Rachel Massey, SRA, AI-RRS, CDEI

Excerpts: …I received a really nice compliment from a reviewer with the Farm Credit Bureau. I had completed a complex appraisal assignment and was expecting multiple revision requests, but instead, got a note saying how thorough my appraisal report was and thanking me for the work. A couple days later, I got a call from a relocation company reviewer on another mind-boggling relocation assignment. Again, I was expecting multiple questions about the report since it was complex and atypical for the area. Instead this reviewer proceeded to tell me that it was one of the most detailed and well-developed reports he had seen in all his years reviewing relocation work. Boy I wish I had that one in writing!

Granted, I tend to be a bit verbose because I like to write, and I believe that it is important that my work be understandable, and not just now but in the future. I tend to put a similar amount of effort into the communication side for all clients, and like to think that my work product is solid. This begs the question of why two reviewers went out of their way to compliment my work, when it seems that almost every mortgage assignment that I complete for a production group, comes back with stipulations.

Stipulations that I forgot to add a listing which was a requirement of the engagement agreement (yes, I missed that) or that I didn’t put a sketch of an unfinished basement in the report (yes, I missed that as well). No words of thank you for an otherwise job well done. I missed something, fix it.

To read more, click here

My comments: Rachel is one of my favorite appraisal authors. She has seen all sides of the residential appraisal profession. Rachel has shifted between lender staff appraiser and reviewer and fee appraisals. Currently, she is a reviewer for a large lender. You could send a link to this article to a Very Picky or Very Supportive reviewer.>

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Fannie Wants Desktop Appraisals

Fannie Mae: No Appraisals Required? 3-10-23

By Ann O'Rourke on March 31, 2023 / AMCs, Fannie, non-lender appraisals, waivers / Leave a comment

Tags: AMC, appraisal waivers, Fannie, non-lender appraisals

Fannie Mae: Appraisals are no longer the default option: Value Acceptance replaces Appraisal Waiver

Fannie Mae updated its Selling Guide on March 1 to include more options for property valuations, saying that they are “moving away from implying that an appraisal is a default requirement.” Those options include value acceptance (formerly appraisal waivers), value acceptance plus property data and hybrid appraisals.

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Fannie Mae – No Appraisals Required – The End of Appraisers?

Hamp Thomas 12 minute video – my favorite commentary on this issue!

Fannie Mae took a direct shot at appraisers today with the announcement of changes in their Selling Guide. Two options for the future, both of which do great harm to the appraisal industry.

First, “third party” inspections. Appraisal trainees aren’t good enough, so now we will have unlicensed inspectors going through the homes of unsuspecting homeowners. And, with this inspection a traditional appraisal is no longer a requirement for the mortgage loan.

Secondly, the 3rd party inspection is sent to a licensed appraiser. FNMA wants an appraiser’s signature so the appraiser can be held responsible if there’s any problem in the future. Both options say they are good for consumers and both options are filled with fabrications and misinformation. At the end of it all, it’s about control and profits. Why trainees can’t provide the data is simply because big banking and AMC’s don’t make profit from the inspection part of the process.

If appraisers don’t stand up and say no, right now, the running joke of the appraisal industry could be gone in five years; well, it just very well may come true. Ok appraisers, it’s time to speak out and stand together.

The only reason for these changes are about a piece of the 11 TRILLION dollar mortgage market. And that’s the way it is – March 1, 2023.

To watch the video, click here

My comments: Worth watching the video. Call to Action. Hamp is an excellent speaker and teacher.

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Fannie Statement: “Value acceptance + property data has arrived”

“This new option reduces cycle times and may reduce borrower costs, promotes safety and soundness by obtaining a current observation of the subject property, and provides operational simplicity and certainty at time of loan application.“

To read what Fannie says, click here

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Link to Fannie SEL-2023-02: Selling Guide Updates PDF

To read more, click here

My comments: Lenders Are Happeeee! Those darn appraisers and appraisals have always taken too much time. Fannie sells their loans to investors. The more loans, the more money Fannie makes. I did not include links to what the happy lenders say. You already know.Clear the Tracks!

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AMC Fined for Appraisal Order Blast Violation

AMC Alleged Violations of Appraiser Independence Requirements

By Ann O'Rourke on February 10, 2023 / AMCs, appraisal business, Fannie, non-lender appraisals / Leave a comment

Tags: AMC, Fannie, non-lender appraisals

Fastapp AMC Alleged Violations of AIR (Appraiser Independence Requirements)

Excerpts: The following court documents in the case Naftali Horowitz v. xxx, Fastapp AMC founder v. Fastapp AMC president, confirm what appraisers have been saying all along, that if you want high-volume AMC work, you have to lower your fees to 1980’s level, have 24 hour turn times, and, above all, be a number hitter.

Horowitz claimed that Andrews engaged in conduct constituting potential violations of the Appraiser Independence Requirements under the Dodd-Frank Act of 2010 (“Dodd-Frank Act”), including unlawfully seeking to influence an appraiser to encourage a targeted value to facilitate the making or pricing of the transaction in violation of 15 U.S.C. § 1639e(b)(3).

… it began to become apparent to Andrews that Horowitz was not complying with appraisal independence standards. Instead, Horowitz would personally select one of a small number of his preferred appraisers for any given appraisal request… It thus became apparent to Andrews that Horowitz was engaged in a widespread scheme in violation of federal law by assigning appraisals to appraisers who would appraise values at requested values in exchange for order flow.

To read more plus over 50 appraiser comments, click here

My comment: Copies of the emails tell the story of “cooperative” appraisers getting most of the assignments. Very similar to the old mortgage broker days. A primary reason for Dodd-Frank.

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1-12-17 Newz .New scam: owners pose as renters, 21 day turn times

Appraiser Scam – Be Careful!

By Ann O'Rourke on January 13, 2023 / appraisal business, Fannie, non-lender appraisals, real estate market / 1 Comment

Tags: appraisal business, Fannie, non-lender appraisals, real estate market

Appraiser Scam – Be Careful!

Posted Jan 5 on National Appraisers Forum. This was also posted in the 100% Appraisers group on FaceBook as happening to others.

“Last week, I received a text from “Master Chief Robert Roy” requesting an appraisal for a cash purchase. I thought it was odd that he was addressing himself by his rank as I do work for the VA and no service member has ever done that in my experience. Also my daughter’s boyfriend, a West Point graduate, was visiting at the time and he also thought it was odd too. I looked him up on line and saw that he was a Navy Seal and a public speaker. I addressed him as Sir in our texts out of respect.“

“He requested that I inspect the property 1/5/2023 as the inspector would be there at the same time. My fee was $775 however sent me a $1950 cashier’s check via Fed Ex the next day. He stated that his assistant mistakenly included the inspector’s fee and would I please pay the inspector the $1175 balance. (That seemed high for an inspector….) “

One of the responses:

“Sorry this happened to you. I posted about this about a month ago. Same guy. Because it seemed so odd, I didn’t respond to him and instead called the listing agent directly. He said I was the 4th female appraiser to call him about this in 24 hours. He had reported it all to the police. I never responded to the dude, as it is obviously a scam or worse. When I researched the name he was using, I found that person to be deceased. “

My comments: When appraisers are very slow, it is very hard to turn down an appraisal. Savvy scammers may know about this. Beware!!

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Fannie New Appraisal Form Modernization

Appraisal Risk and Modernization

By Ann O'Rourke on December 16, 2022 / appraisal business, Fannie, real estate market / Leave a comment

Tags: appraisal business, Fannie, real estate market

Industry Insider Insight on Risk and Modernization

Excerpts: The Collateral Risk Network (CRN) met in Sarasota on December 6th to discuss a variety of issues ranging from appraisal turn times to Fannie Mae’s economic outlook for 2023. Bill Rayburn gave a rousing and lively explanation of exactly what quality means in valuation at a recent meeting. Lenders want a compliant document that allows the loan package to be sold as quickly as possible, while investors want an appraisal that allows for securitization or resale to another downstream buyer.

Appraisers were encouraged to provide convenience as one aspect of quality. His figures show there is a holding cost of $200 per day on an unclosed loan and this hinges on the appraisal which is the last thing in the critical path to closing. He suggested we redefine quality to include a time element.

Joe Minnich, a condo risk consultant, spoke on how loans secured by an individual unit in a condominium project have greater risk than found in typical SFR lending. Lenders must address the various layers of risk to ensure that the loan is of saleable quality and the likelihood the borrower can/will repay the loan.

To read more, click here

My comments: Bill Rayburn, Chairman, and CEO at mTrade, is an excellent speaker and very savvy. I have known him for many years. FYI, CRN (Collateral Risk Network) was set up for AMCs and lenders. It was “closed” to appraisers for a while but is open now. Worth attending.

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NOTE: Please scroll down to read the other topics in this long blog post on Fannie December newsletter, estate appraisals real estate market, unusual homes, mortgage origination stats, etc.

Reliable MLS Data important for appraisals

Fannie Mae Takes A Closer Look at Appraisals

By Ann O'Rourke on November 20, 2022 / appraisal business, Fannie, future, real estate market, state appraiser regulators / Leave a comment

Tags: Fannie, future, real estate market, state appraiser regulators

Sins of the Past Are Back to Haunt Appraisers

Fannie Mae Takes A Closer Look at Appraisals

By Richard Hagar, SRA

Excerpts:

In the recent past, when appraisers were swamped

Even with the Collateral Underwriter program review, appraisers were overwhelmed. Every lender and AMC were seeking and hiring review appraisers in order to keep up with demand. Due to the shortage of review appraisers (exacerbated by low fees and time pressures), tens of thousands of poorly created appraisals were accepted without receiving adequate review.

Unfortunately, because many appraisals were rarely rejected or required corrections, appraisers developed the false notion that poorly crafted appraisals were okay to turn in. Many appraisers were bragging about their ability to fill out two or three appraisal forms a day and receive no call-backs from lenders.

However, time and time again we’d review appraisals, that were accepted by lenders, but had failures such as:

• No highest and best use analysis (as if vacant and improved).

• Failure to make appropriate time/market adjustments (positive or negative).

• Using only a single approach to value.

• Incorrect land values.

• Square footage costs and depreciation based more on opinion than reality.

• Unsupported adjustments (adjustments based on “my 30 years in the business” instead of facts).

• Failures to personally inspect and photograph comparables.

What’s happening now

FNMA indicates that their 2022 lending volume is down 47% from 2021 and is expected to drop by another 50% in 2023. So, it’s pretty safe to state that the “appraiser shortage” of yesteryear is over, and reviewers now have more time on their hands.

Which appraisers are going to survive when the loan volume is down 75-85% and the poor appraisals of the past are catching up with the appraiser today? Well, for the most part, it’s based on the quality of the appraisals delivered to lenders over the past five years.

Do you believe that the quality of your work ranks you as a tier 1 appraiser or do you have a little concern about your rating? Tier 1 appraisers have little to fear but tier 2 and 3 appraisers…

What you can do today

Today, you likely have more time on your hands, so slow down and take more time improving the quality of your work. Superior quality appraisals can set you free.

Learn how to accurately determine adjustments. Follow the ANSI standard when measuring the subject (even if you disagree with the method — it’s the requirement). Take more classes! Don’t stop taking classes just because you have enough CE credit to meet your next renewal; that mentality is for the bottom tier of appraisers.

I typically obtain double the CE credit hours necessary to renew my certificate…double! Why? Because I want to do things better, obtain higher fees, and survive the purge that is coming. Lenders have more choices, and you need a way to stand out from the bottom tier and low fee appraisers.

To read more, click here

My comments: Worth reading. Hagar is one of the best residential appraisal instructors. I have known him for over 30 years and have taken many of his classes. Richard can be a bit negative but states what is really happening and what you need to do. Many thanks to Ryan Lundquist’s 2020 blog post for the very appropriate image above!

I also think that now is the time to increase your appraisal skills by taking classes and seminars. I also have always had more CE hours than I need.

I am an appraiser because it is challenging and never boring. I quit working in labs because it was boring after 7 years but have never been bored appraising. I want to be the best appraiser I can be. (I have always been an over-achiever).

Consider doing non-lender appraisals. I have been doing them since 1986 and writing about them in my monthly newsletter since 1992. No CU, UAD, reviews, many pages of differing AMC requirements etc. Your requirements are in USPAP.

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