state appraiser regulators

Q3 Fannie Update – Concessions, Rural, Environmental Hazards

By Ann O'Rourke on October 4, 2024 / adjustments, Fannie, real estate market, state appraiser regulators / Leave a comment

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

Newz: Fannie Update, Concessions Are a Mess, State Board Complaints

October 4, 2024

What’s in This Newsletter (In Order, Scroll Down)

State Board Complaints and Renewal
Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards
$47 Million Ski Chalet With Private Tesla-Style Gondola, Bowling Alley, and Basketball Court
September 2024 Real Estate Market Update: What Appraisers Need to Know By Kevin Hecht
The hot mess of concessions in real estate By Ryan Lundquist
That A-Frame Life: What It’s Really Like To Live in These Triangular Houses

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Appraisal Business Tips

Humor for Appraisers

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Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards

Excerpts:

Rural

Worth reading with links to Fannie info, including a link to: Free Fannie online Rural Appraisal Challenges eLearning course. Plus other tips.

Environmental Hazards

While Fannie Mae does not expect the appraiser to be an expert in the field of environmental hazards, we do expect appraisers to analyze and report any information about environmental hazards that is available in the normal course of business…

If an appraiser has knowledge of or identifies an environmental hazard in or on the subject property or on any site within the vicinity of the property, we require the appraiser to…

Seller Concessions

The article about seller concessions in our December 2023 Appraiser Update generated a lot of questions and buzz.

First, we heard that some appraisers, in reaction to our article, adopted a practice of always adjusting dollar for dollar for seller concessions. While this may seem sensible from a theoretical perspective, it could have adverse unintended consequences (such as undervaluation) if the concession did not actually have a dollar-for-dollar impact on the price. Making either assumption (that there is no impact or that the impact is dollar-for-dollar) is not the correct approach…

PSAs – UAD, Bias with useful links to Fannie info

To read more, Click Here

My Comments: Read the concessions section to see what Fannie Mae says on this hot topic! Plus the useful info and links on other topics above.

See Ryan Lundquist’s post below on Concessions – A Mess

Appraisers Riding the Waves of Up and Down Mortgage Rates

Low Appraisal Fees in 2024

By Ann O'Rourke on June 7, 2024 / appraisal business, liability, real estate market, state appraiser regulators / Leave a comment

Tags: appraisal business, appraisal fees, appraisal management company, liability, real estate market, state appraiser regulators

CFPB Crackdown: Unfair Practices Hurting Consumers

This includes Appraisal payments to appraisers by AMCs

by Josh Tucker, June 5, 2024

Comments must be received on or before August 2, 2024

Excerpts: As we all know many AMCs are not paying Customary & Reasonable fee as required by TILA. They have consistently pushed down the pay of Appraisers while making undisclosed profit off consumers and prioritizing cheapest and fastest over quality and competency. The CFPB has been in communication with individuals behind the scenes and are concerned with what has been shown enough to include AMCs in their data collection process.

Now is the time to send them everything we have. To drive legitimate change, we must encourage as many appraisers as possible to submit all relevant information to the contact details provided below.

CONSUMER FINANCIAL PROTECTION BUREAU

[Docket No. CFPB-2024-0021] NOTE: USE THIS LINK TO READ THE DOCUMENT AND THIS NAME TO USE THE COMMENTS PORTAL BELOW.

Request for Information Regarding Fees Imposed in Residential Mortgage Transactions AGENCY: Consumer Financial Protection Bureau.

ADDRESSES: You may submit comments identified by Docket No. CFPB-2024-0021, by any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov . Follow the instructions for submitting comments. NOTE: THE SEARCH WAS NOT WORKING ON JUNE 6. MAY WORK LATER. CAN USE EMAIL.

Email: 2024-RFI-ResidentialMortgageFees@CFPB.gov. Include Docket No. CFPB-2024-0021 in the subject line of the message.

Mail / Hand Delivery / Courier: Comment Intake —Residential Mortgage Fees Assessment, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.

To read more, Click Here

My comments: DO SOMETHING. YOUR VOICE MATTERS. Let CFPB know about the amount of AMC fees for appraisers, plus other problems. In my opinion, AMCs are ruining residential lender appraising. I have never worked for an AMC, but I’ve been appraising for almost 50 years and understand the problems.

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Appraisal Fees & Value: Lessons from Picasso & Steinmetz

By “Apex Appraiser” June 3, 2024

The Appraisal Institute has been a source of frustration and criticism within the appraisal profession for quite some time. I must admit that I have also expressed my dissatisfaction with them. Nevertheless, I must acknowledge that the new CEO, Cindy Chance, appears to be a positive change and is making some valuable points about our profession from her new position. In particular, she recently discussed appraisal fees in a piece she wrote.

In this excerpt, she shares two stories that provide valuable insights. These stories, one involving art and the other science, highlight the fact that appraising is a combination of both.

First is the story about a young woman who encountered Pablo Picasso one spring day, in a park, sketching. She begged him to sketch her. He graciously agreed, and following a few moments of study and drawing, handed her a sketch of herself. When she asked what she owed him, Picasso answered “$5,000 madam.” “But it only took you five minutes.” “No, madam, it took me my whole life.”

To read more, plus many appraiser comments, Click Here

My comments: Worth reading, plus the appraisers comments. I have been following CEO Cyndi Chance since she started working for AI. It’s definitely a “breath of fresh air” for the AI!

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NOTE: Please scroll down to read the other topics in this long blog post on state appraisal boards, liability, appraiser insurance, price per sq.ft. up 50%, sea level rise, unusual homes, mortgage origination stats, etc

Tools To Support Appraisal Adjustments

By Ann O'Rourke on May 17, 2024 / data, liability, real estate market, state appraiser regulators / Leave a comment

Tags: adjustments, appraisal how to, non-lender appraisals, real estate market

What Tools Do You Use to Support Your Appraisal Adjustments?

By McKissock

As part of our monthly survey series, we asked our community of real estate appraisers, “What tool(s) do you use to support your appraisal adjustments?” Respondents were allowed to make multiple selections and write in their own answers as well.

Popular tools include Synapse by Spark, Solomon Adjustment Calculator, and Redstone by Bradford Technologies. The majority of respondents said they use a combination of various tools and methods, such as paired sales analysis.

We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or appraisal software tool, because it was mentioned by so many appraisers.

A few sample appraiser comments:

“I am capable of determining the adjustments without any software. I look at the MLS data and am able to determine appropriate adjustments. I would need to know all of the assumptions the software takes into consideration before I would trust the adjustment with my signature.”

“I use Synapse by Spark for typical property adjustments and Solomon for more complex properties.”

In addition to the top answers, we received many other write-in responses. Sample responses:

Allocation method

Depreciation

Cost to build

Sample appraiser comments

“Due to rural location, there are no algorithmic tools to be utilized for adjustment data. I utilize paired and grouped data analysis and experience and knowledge.”

To read more, Click Here

My comments: Short, well written, and Very Interesting, especially the appraiser’s comments! I quit doing adjustments a while ago. I always do market conditions adjustments (or explain why not) and for views and other factors that significantly add to value.

I have never used any of the appraisal software listed above. I use Excel and MLS data. I often go back in time for comps with views, etc. I also interview agents to see what they say. Not for a number, but about marketability.

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NOTE: Please scroll down to read the other topics in this long blog post on Geographic Data and Comps, effect of renovation on value, very low foreclosures now, current real estate market, unusual homes, mortgage origination stats, etc.

Appraisers Riding the Waves of Up and Down Mortgage Rates

By Ann O'Rourke on November 24, 2023 / appraisal business, state appraiser regulators / Leave a comment

Tags: appraisal business, liability, va

The Surfing Appraiser

Riding the Waves of Up and Down Mortgage Rates

By Mark Buhler

Excerpts: Riding the waves of the appraisal profession can result in a range of outcomes and emotions over time. Appraisers, and surfers, have varying levels of experience, and experiences. Most appraisers have been through some extremely busy seasons that have been very positive. Those same appraisers have gone through droughts, where appraisal orders dried up.

Appraisers have been blessed to have the independence and autonomy to create whatever they want for themselves. Most workers in America do not have the same opportunities for success and advancement that appraisers have. Look at this lull as a time of opportunity. A time to finally work on and execute a plan for your business.

During the refinance boom of the early 2020’s, the majority of appraisers did not have time to come up for air. The waves of work kept them down, and every time they got a chance-they grabbed the next order (or wave) and maximized the opportunity while it was there. Appraisers were busy cranking out appraisal reports. Now appraisers are not busy, but they should be. Do not get out of the water and put your surfboard away. Stay out there, splash around in the calm ocean, there are waves coming.

To read more, Click Here

My comments: Read the full article! This article uses surfing as an excellent illustration. In my 20s, I lived in my van for a few years and parked it near my surfer friends’ house in Santa Cruz, CA. They surfed every morning when the waves were good (Steamer Lane), cold or raining. When the waves were low, they stayed home or went over to see if there were any changes. I watched and listened to them talk about it and learned a lot. A very good analogy to appraising.

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NOTE: Please scroll down to read the other topics in this long blog post on , , VA changes, State Appraisal Board problems, gratitude for appraisers, unusual homes, mortgage origination stats, etc.

Data Collectors: Appraisers vs. Uber Drivers

NAR Member Survey on Appraisal Data Collectors

By Ann O'Rourke on September 22, 2023 / appraisal business, appraisal how to, non-lender appraisals, real estate market, retirement, state appraiser regulators / Leave a comment

Tags: appraisal business, appraisal how to, Fannie, real estate market, state appraiser regulators

NAR Member Survey on Data Collectors

Excerpts: In May 2023, NAR surveyed its members pertaining to data collectors in the appraisal process. Here are a few of the many survey results.

Survey respondents

Sales agents accounted for the largest proportion, with 45% of participants holding this license. Brokers followed with 24%, and appraisal-certified professionals comprised 14% of the respondents. Broker-Associates and Appraisal Licensees accounted for 13% and two percent, respectively, while the remaining two percent reported holding other types of real estate licenses.

According to the survey responses, the majority of participants (76%) perceive the quality of property data collected by data collectors to be lower than that collected by appraisers themselves. Conversely, 23% of respondents believe that the quality of data collected by data collectors is comparable to that of appraisers.

The survey findings indicate that 30% of respondents reported that a data collector had given them the impression that they were the appraiser or had a role other than merely collecting property data.

Fifty-one percent of respondents expressed safety concerns with the data collection process.

To read more, click here

My comments: Now we know what NAR members think about it. Not very positive. I was surprised at how negative they were. Read the full report. Very interesting. I am working on an article on Hybrid Appraisals for the November issue of Appraisal Today. To me, the big issue is who is doing the inspections. Only appraisers do the appraisals. I see very different levels of inspectors.

Before Covid, I talked with various AMC upper-level managers who were testing it. What they were doing about inspectors had a wide range. They included appraisers, real estate agents, and someone with a week, a month, or online video training. They should definitely not be paid the same. An AMC can offer different levels to their clients, depending on how much reliability their lender customers want or need.

On a more positive side, I have done thousands of drive by appraisals since 1986. I drove by the house and looked at what was nearby, etc. For example, I’m appraising a Victorian built before 1910. There is no way to know what the inside looks like or the foundation (many are brick). Using MLS photos is a joke, as real estate agents don’t take photos of defects. A buyer gets a seller’s disclosure statement for that information. I would be more comfortable if someone used an app that was set up to take specific photos, do floor plan, etc. At least I would have some independent photos.

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NOTE: Please scroll down to read the other topics in this long blog post on Fannie and state regulators, appraiser inspection training, real estate market, unusual homes, mortgage origination

Appraiser Countersues Alleged Discrimination

By Ann O'Rourke on July 7, 2023 / Fannie, non-lender appraisals, real estate market, state appraiser regulators / Leave a comment

Tags: Fannie, non-lender appraisals, real estate market, state appraiser regulators

Appraiser Countersues Black Plaintiffs Who Alleged Discrimination

by Isaac Peck, Publisher WorkingRE

There are now a number of lawsuits facing appraisers where the primary allegation is racial discrimination.

Tate-Austin v. Janette Miller, filed in California in Dec. 2021, was one of the first (and perhaps the most publicized). But since late 2021, a number of similar lawsuits have popped up—from North Carolina to Maryland.

Connolly & Mott v. Shane Lanham et al. is one highly publicized lawsuit covered at length by mainstream media–CBS News, The New York Times, NBC, CNN, ABC News, and more.

Filed in August 2022 in the U.S. District Court of Maryland, Connolly and Mott allege that Lanham discriminated against them and violated professional appraisal standards because of his allegedly “racist beliefs” (among other things).

Mr. Lanham is now countersuing Connolly and Mott for labeling him a racist, making false and defamatory accusations, and causing severe harm to his business, his reputation, and his well-being. Alongside his counterclaim, Lanham has also filed a Motion to Dismiss Connolly and Mott’s initial claim, arguing that they have failed to show any facts that support he discriminated against them.

“Plaintiffs cannot transform allegations of incompetence or a breach of appraisal industry standards into racial discrimination by baldly alleging that Mr. Lanham believed that Plaintiffs did not belong in their neighborhood and that their home was worth less than other homes because of their race. There are no facts alleged in the First Amended Complaint, and none can be alleged with good faith, that Mr. Lanham treated Plaintiffs any differently than homeowners of other races,” the motion reads.

To read more, click here

My comments: Long article and worth reading. Discusses many issues and lawsuits. I don’t write about this topic much. My opinion is that everyone is biased against something. I learned I was biased against young Black men when I was on a criminal jury many years ago.

When a young Black man, the defendant, walked into court, I immediately thought he was guilty. I sent a note to the judge who excused me publically in court. I was very, very embarrassed. But it would have been a lot worse to stay on the jury and vote to convict him. My parents raised us not to be prejudiced against anyone. But I grew up in Tulsa, OK, next to Greenwood, an area of successful Black residents prior to 1921. The Tulsa race massacre occurred on May 31, 1921. I never heard it mentioned by anyone. Older people, who knew about it, never spoke of it. Some newspaper issues were destroyed.

I assume that since I had been appraising in high crime neighborhoods, I became prejudiced. I work hard not to show it. I don’t cross the street when I see a young black man coming towards me, and I smile when we pass, but I do get a little nervous. What is most important is recognizing and not acting on your prejudice.

I have been tempted to lower a value when an owner’s large do dog jumps on me or tries to bite me. But I know I don’t like aggressive large dogs and don’t let it affect my value.

Of course, some appraisers could be biased. But, for residential lender appraisers, there is no advantage to coming in “low” on any residential lender appraisal. You may lose a client.

In the past, appraisers were trained by FHA to redline, with lower values in Black neighborhoods. Appraisal textbooks and classes included this. But, it all changed in the mid-1970s, when I started appraising and was no longer allowed. Hopefully, I would not have become an appraiser working for residential lenders before then because of the obvious bias.

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NOTE: Please scroll down to read the other topics in this long blog post on AirBnB, state board complaints, real estate market, non-lender appraisals, unusual homes, mortgage origination stats, etc.

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Appraisers – The Past and The Future

What Are Fannie’s New Appraisal Online Formats?

By Ann O'Rourke on May 5, 2023 / appraisal business, Fannie Forms, state appraiser regulators / Leave a comment

Tags: appraisal business, appraisal fees, bias, Fannie forms, non-lender appraisals

Fannie’s New Appraisal Online Formats

By Brent Owen

Excerpts:

To Be Or Not To Be (a form), That Is The Question

The first thing to notice is that the ‘form’ isn’t really a form anymore. It is more of a complex decision tree or flow chart, where ‘yes/no’ questions trigger new sections and required data and supplements. For instance, answering ‘yes’ to a question about noted deficiencies will create a new section where details are needed regarding the deficiency which include further questions about whether or not repair is required and if so, the estimated costs of those repairs and section to provide a photo of the deficiency. All of that is integrated into the URAR itself. It is through the use of this decision tree model that the GSEs are able to use the same ‘form’ for almost any residential property type conceivable.

The Never-ending Story

It is also apparent that the report will be far longer than its predecessor. Appendix D-1 contains a sample URAR of a simple single family residence with no site value, cost approach, or income approach, with only 3 sales and very limited commentary and no additional addenda (with photos, maps, and graphs integrated into the URAR). The report was 21 pages, and would still be at least double the length of the current URAR without the integrated photos, map, and graphs.

That in and of itself isn’t necessarily a problem. After all, my typical reports are more than 40 pages long. It’s not the length of the report which is of ultimate importance, it is the time necessary to develop the appraisal that is key. My sense so far is that there will be some additional time necessary (beyond the expected additional time necessary to become proficient with the new format and associated technology).

To read more plus appraiser comments, click here

My comments: Read this article! A good analysis in one location. I have read lots of very short comments, but this one is much longer. Unfortunately, Fannie has not provided separate information for appraisers. The announcement included many pages as it was for everyone: appraisers, forms vendors, lenders, AMCs, etc., with lots of very detailed information.

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NOTE: Please scroll down to read the other topics in this long blog post on Appraisal Institute President, non-lender appraisals, Changing state appraisal laws, Fannie modernization, unusual homes, mortgage origination stats, etc.

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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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NOTE: Please scroll down to read the other topics in this long blog post on Fannie Modernization, non-lender appraisals, liability, lender bias, 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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NOTE: Please scroll down to read the other topics in this long blog post on State board complaints, non-lender appraisals, mortgage forecast, real estate market changes, unusual homes, mortgage origination stats, etc