Newz: Waiver Risks, Appraisal Alleged Bias, FHA Rescinds Multiple Appraisal Related Policies
March 21, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA ad: Appraisal Used in Divorce Case — Now What?
- The Hidden Risks of Appraisal Waivers: What Homebuyers and Homeowners Need to Know
- Palm Desert California Home With Its Own Shark Tank Hits the Market for $59 Million
- Relocation Appraisals: The Power of Market Analysis
- NFHA (National Fair Housing Alliance) Rescinds Multiple Appraisal Related Policies Funding Dries Up. Appraiser lawsuit.
- Fannie, Freddie board shakeups bring conservatorship exit closer to reality
- FHA Rescinds Multiple Appraisal Related Policies
- Federal Reserve leaves rates unchanged. Two rate cuts may be coming this year.
- MBA – Mortgage applications decreased 6.2 percent from one week earlier
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The Hidden Risks of Appraisal Waivers: What Homebuyers and Homeowners Need to Know
March 4, 2025 By Tom Horn
Excerpts: Imagine this: You’re buying a home, and your lender offers you an appraisal waiver. You’re told this will save time, reduce hassle, and even cut costs. It sounds like a great deal, right? But what if I told you that skipping the appraisal could lead to overpaying for your home, financial headaches down the road, and even market distortions that could affect entire neighborhoods?
6 Reason You May Not Want an Appraisal Waiver
1. You Might Overpay for the Property
2. Refinancing or Selling Could Become a Problem. Even if overpaying doesn’t seem like a big deal at the time of purchase, it can come back to haunt you when it’s time to refinance or sell.
3. Hidden Property Condition Issues Could Go Undetected
4. Appraisal Waivers Contribute to “Data Cancer” in the Housing Market. What is Data Cancer? “Data cancer” is a term used to describe the gradual corruption of real estate valuation data due to repeated reliance on flawed or incomplete information.
5. You Lose a Key Protection Against Market Volatility. A professional appraisal acts as a check and balance in the homebuying process. Without it, buyers are left vulnerable to shifting market conditions.
6. 6. Lenders Benefit More Than You Do. Appraisal waivers aren’t offered to help buyers—they’re offered to help lenders.
To read more, Click Here
My comments: Worth reading. The first article I have seen showing why appraisal waivers can be bad for borrowers. Appraisal waivers are increasing. Per the GSEs they save borrowers money on appraisal fees.
When the new URAR is required starting in late 2026, waivers will have much more data from appraisals to allow waiver use increase by the GSEs
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Palm Desert California Home With Its Own Shark Tank Hits the Market for $59 Million
Excerpts: 7 bedrooms, 10 baths, 2 half baths, 6 kitchens, 20,667 sq.ft, 7.67 acres
A sculptural California mansion with three pools and a shark tank is coming on the market for $59 million, about $17 million more than its last sale price three years ago.
In the main house, a hallway runs through an aquarium full of exotic fish and beneath an overhead shark tank. Evans (seller), who bought the house with the shark tank already in place, said he prefers the fish. “The exotic fish in the side tanks are the cute ones,” he said.
Set on about 7.7 acres in the private Bighorn Golf Club community, the 32,000-square-foot estate was designed with curved, copper roofs and asymmetrical walls by the contemporary architect Guy Dreier.
Includes feature such as Panther Slate from India, natural woods, titanium fasciae, copper roof and French limestone.
To read more plus see lots more photos, including the Shark Tank Click Here
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Relocation Appraisals: The Power of Market Analysis
Excerpts: For those unfamiliar with this type of assignment, here’s a quick primer: Relocation companies help corporations transfer employees quickly by managing the headaches of selling their homes and moving. Those companies will hire one or more appraisers to forecast the property’s likely sales price in a certain timeframe — say, 90 to 120 days.
So one main difference between traditional lender appraisals and relocation appraisals is the forecasting aspect: whereas lender appraisals determine a current market value, relocation appraisals try to project what the sales price WILL be. The good news is that there’s no pressure from the client to hit a specific number — the relocation company genuinely wants to know what the asset is worth.
A crucial tool in this process is the ERC report, which was standardized in the 1980s to make it easier to evaluate relocation properties. The ERC (Employee Relocation Council) report… is a standardized appraisal report form designed to streamline the evaluation process for relocation properties. It was established by the Worldwide ERC, a professional association for relocation and workforce mobility.
To read more, Click Here
Employee Relocation Council: www.directory.talenteverywhere.org/
Relocation Appraisers and Consultants: https://www.rac.net/
My comments: Relocation appraisals are my favorite house appraisals! Every appraisal is a test on my appraisal accuracy. When I did them two appraisers were hired. If they did not come within a certain percent a third appraiser was hired.
I also advised the relocation companies about what fixup should be done in the area. For example: almost all homes are staged.
I was also graded on how close I came to the sales price. Sometimes it would sell for less than my appraisal. I would think something like: “They messed up my stats. They should have replaced the old carpets like I recommended!”
Home owners completed reviews of appraisers. You definitely needed to be “nice”, not rush through the inspection, dress professionally, etc.
Unfortunately I was not located in an area with many corporations who moved employees. My amount of work was much less than other places such as New York and Chicago. After a while, rules were changed and fewer appraisals were needed.
I finally quit doing them when the “other appraiser” obviously did not know how to appraise very well, including getting the correct square footage. AMCs started ordering also: a significant minus.
I got on the ERC’s appraiser list. For many years after I quit doing relocation appraisals, I still get occasional inquiries.
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Mortgage Interest Rates from 1900 to 2024 and Forecast for 2025
In the February 2025 issue of Appraisal Today
Excerpts: Volatility of mortgage rates is a significant factor in lender appraisals. This article shows you how much they vary over time.
The highest and lowest rates
The lowest weekly average mortgage rate for the conventional 30-year,
fixed-rate mortgage was recorded at 2.65% in January of 2021.
The all-time high of 18.63% occured in March of 1981. I purchased my
duplex in December 1986 and got a “low” rate of 15%. The price was $120,000.
Today my duplex value would be over $1,000,000. I would not want to pay the significantly higher monthly payment.
The O’Rourke Mortgage Rate Forecast
Rates will stabilize as more people realize those recent low rates are not
coming back. They will accept 6-7%. Of course, no one knows when the rates will go down or finally stabilize.
When did real estate appraisal start?
The first appraisers were surveyors. A young George Washington began a
career as a land surveyor in 1749 after accompanying a surveying trip to the
western frontier. Peter Jefferson, along with his son Thomas Jefferson, were land surveyors for the crown.
The first real estate appraisal in the United States was performed in 1626,
when the Dutch West India Company appraised land in New Amsterdam (now
New York City). The appraisal was performed to determine the value of the land for tax purposes.
First mortgage loans in late 1870s
The first real mortgage loans in America weren’t issued until the late 1700s,
after the formation of the first commercial banks. By the late 1800s, banks and mortgage loans were common, but still unlike the mortgage loans we see today. At that point in time, balloon payments were common and the mortgage loan terms offered by lenders were a lot shorter than you’d expect-making it tough for buyers to utilize them or even qualify.
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NFHA (National Fair Housing Alliance) Funding Dries Up
The National Fair Housing Alliance (NFHA) has found itself in a precarious position as their funding well runs dry, jeopardizing their ongoing legal battle against Maryland appraiser Shane Lanham. This development is a ray of hope not only for Lanham, who has been unjustly accused of racial bias in his appraisals, but for the entire appraisal community who have been unfairly targeted by NFHA’s relentless smear campaign.
The National Fair Housing Alliance (NFHA) has found itself in a precarious position as their funding well runs dry, jeopardizing their ongoing legal battle against Maryland appraiser Shane Lanham. This development is a ray of hope not only for Lanham, who has been unjustly accused of racial bias in his appraisals, but for the entire appraisal community who have been unfairly targeted by NFHA’s relentless smear campaign.
While the battle may not be over yet, the tide is turning in favor of justice, fair play, and the truth for hardworking appraisers across the nation who have been unjustly maligned by NFHA’s deceptive and defamatory campaign.
To read more, Click Here
Scroll down to see links to other blog posts from appraisersblogs below this post.
My comments: For more information, google Shane Lanham, appraiser. Many appraisers, including myself, are hoping the Trump Administration will cause fewer bias accusations. This is one step. How many lender appraisers are thinking about retiring or quitting so their names don’t appear in the media as biased?
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Fannie, Freddie board shakeups bring conservatorship exit closer to reality
March 19, 2025
Bill Pulte now heads both the Federal Housing Finance Agency and the Fannie and Freddie boards
Excerpts: The bombshell report late Monday that Bill Pulte, the new head of the Federal Housing Finance Agency (FHFA), had replaced 14 board members at Fannie Mae and Freddie Mac and installed himself as chairman of both boards came as a shock to many in the mortgage and housing industries.
The FHFA oversees those government-sponsored mortgage companies, so Pulte’s new roles give him even more control over the direction of Fannie and Freddie.
What does Pulte’s power play mean for the future of Fannie and Freddie? Marty Green, a principal with the law firm Polunsky Beitel Green LLP, thinks that the board shakeups will accelerate Fannie and Freddie’s departure from FHFA conservatorship.
“I think it increases the odds fairly significantly that we see Fannie and Freddie exit conservatorship at some point during the next four years,” Green said. He added that he expects the process to start before the 2026 midterm elections.
Pulte’s background as a former board member of homebuilding company PulteGroup Inc. will translate well to his new role.
“We think that overall he will be a friend to the housing industry just because of his history with Pulte Homes,” Green said
To read more, Click Here
My comments: Wide differences in opinions about GSE privatizations. Here are two: “Mark Zandi estimates that without an explicit or implicit government backstop of the mortgage giants, mortgage rates could rise by by 60 to 90 basis points. Proponents of privatization like Calabria say it wouldn’t raise rates, and could even make them go down.”
To read some of the opinions Google “GSE Privatization”.
I have no idea what it would mean for GSE appraisals, waivers, etc.
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FHA Rescinds Multiple Appraisal Related Policies
FHA Mortgagee Letter (ML) 2025-08
March 19, 2025
Today, the Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2025-08, Rescinding Multiple Appraisal Policy Related Mortgagee Letters, to immediately rescind the policy guidance published in the following MLs:
ML 2024-16, Extension to the Effective Date of Appraisal Review and Reconsideration of Value (ROV) Updates, dated August 6, 2024;
ML 2024-07, Appraisal Review and Reconsideration of Value, dated May 1, 2024; and
ML 2021-27, Appraisal Fair Housing Compliance and Updated General Appraiser Requirements, dated November 17, 2021.
Editor note: The Background section explains why the changes were made
The provisions of this ML are effective immediately and will be incorporated into a future version of Handbook 4000.1.
Additionally, all other prior supporting communications related to the three rescinded MLs — such as FHA INFOs and training — have been removed from hud.gov.
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New or revised topics include:
Ordering Second Appraisal (II.A.1.a.iii(B)(9))
(a) Second Appraisal by Original Mortgagee
Property Acceptability Criteria (II.A.3.a)
vi. Appraisal Review
The Mortgagee must review the appraisal and ensure that it is complete, accurate, and provides a credible analysis of the marketability and value of the Property.
Property Acceptability Criteria (II.A.3.a)
ix. Reconsideration of Value
The underwriter may request a reconsideration of value when the Appraiser did not consider information that was relevant on the effective date of the appraisal. The underwriter must provide the Appraiser with all relevant data that is necessary for a reconsideration of value. The Appraiser may charge an additional fee if the relevant data was not available on the effective date of the appraisal. If the unavailability of data is not the fault of the Borrower, the Borrower must not be held responsible for the additional costs. T
To read the letter, Click Here
My comments: If you do FHA appraisals, it may be worth reading. The background section on ROVs and FHA policies explain the issues, including rescinding and restoring previous versions. My first FHA appraisal was in 1986 when I started my appraisal business. My last was in 1987. Too many inspection requirements as compared with conventional lending appraisals.
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Federal Reserve leaves rates unchanged.
Two rate cuts may be coming this year.
The Fed remains cautious, but expects to cut rates by half a percentage point this year
Excerpts: As expected, the Federal Reserve on Wednesday kept interest rates unchanged at the current range of 4.25% to 4.50%, but there still may be two cuts coming later this year.
Mortgage Bankers Association Senior Vice President and Chief Economist Mike Fratantoni said the most significant change in policy at today’s meeting was the decision to markedly slow the pace of quantitative tightening beginning in April, dropping the pace of Treasury runoff from $25 billion to $5billion per month.
“A slower pace of quantitative tightening will prevent further liquidity strains in financial markets,” Fratantoni said. “In the near term, we expect mortgage rates to remain in a fairly narrow range, between 6.5% and 7%, which should support the spring housing market.”
Despite Powell’s positive words, many observers were concerned about the Fed’s position. William Dudley, former president and CEO of the Federal Reserve Bank of New York, told Bloomberg News that Powell gave a reassuring performance, but there are a lot of unknowns facing the Fed, including the inflationary impact of tariffs. He said the risk for the Fed is not taking the necessary actions at the right time.
“They are flying blind right now,” Dudley said of the Fed policymakers.
Bloomberg correspondent Michael McKee, who attended Powell’s conference, was even more blunt in his assessment of the Fed’s problems, saying “they don’t have any idea what is going on.”
To read more, click Here
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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 decreased 6.2 percent from one week earlier
WASHINGTON, D.C. (March 19, 2025) — Mortgage applications decreased 6.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 14, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 6.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 13 percent from the previous week and was 70 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 1 percent compared with the previous week and was 6 percent higher than the same week one year ago.
“Mortgage rates increased for the first time in nine weeks, with the 30-year fixed rate rising to 6.72 percent. This increase in rates led to a decrease in refinance volume. However, purchase application volume inched up to its highest level in six weeks, led by a 3 percent increase in FHA purchase applications,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Overall, purchase application volume is up 6 percent compared to last year at this time. Growing inventories of homes on the market and steadier mortgage rates are supporting homebuying activity thus far this spring.”
The refinance share of mortgage activity decreased to 42.0 percent of total applications from 45.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.7 percent of total applications.
The FHA share of total applications increased to 16.5 percent from 16.1 percent the week prior. The VA share of total applications decreased to 14.6 percent from 15.9 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.72 percent from 6.67 percent, with points increasing to 0.64 from 0.63 (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 $806,500) increased to 6.78 percent from 6.68 percent, with points decreasing to 0.38 from 0.48 (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 6.40 percent from 6.34 percent, with points decreasing to 0.72 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 15-year fixed-rate mortgages increased to 6.08 percent from 6.04 percent, with points decreasing to 0.59 from 0.68 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs increased to 5.84 percent from 5.81 percent, with points decreasing to 0.38 from 0.72 (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.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
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