3-17-16 Newz .Pulling permits .Fannie FAQs .Refi revival

Appraisal and Property Related Frequently Asked Questions (FAQs)

February 12, 2016

This FAQ document provides responses to common questions related to Fannie Mae’s property eligibility and appraisal policies. Following the FAQs, the Attachment on page 10 provides Guidelines for Using Market Conditions Addendum to the Appraisal Report (Form 1004MC).

https://www.fanniemae.com/content/faq/appraisal-property-report-faqs.pdf   

My comments: This document does not have a lot of new material, but it is always good to read this so you can cut and paste some of Fannie’s comments into your reports as an explanation. In this month’s paid Appraisal Today I had two articles on the 1004mc form:

1004MC – the good, the bad, and what Fannie says

Statistical errors in the 1004MC by George Dell, MAI, SRA – He has been fighting with Fannie since the form was first required in April 2009

 More articles are coming soon in the paid Appraisal Today on how to handle the issues.

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Tiny ‘Harry Potter-looking’ homes under construction in North Texas

Excerpt:

Builder Rudy Rivas’ newest house would fit inside the master bedroom of the custom homes he constructs in North Texas.

The average new home being built in America is more than 2,700 square feet – the biggest ever.

So why’s a Dallas custom builder starting a 180-square-foot house?

Read more!!

3-10-15 Newz – Pulling permits, Fannie FAQs, Refi revival etc.

Appraisal and Property Related Frequently Asked Questions (FAQs)

February 12, 2016

This FAQ document provides responses to common questions related to Fannie Mae’s property eligibility and appraisal policies. Following the FAQs, the Attachment on page 10 provides Guidelines for Using Market Conditions Addendum to the Appraisal Report (Form 1004MC).

https://www.fanniemae.com/content/faq/appraisal-property-report-faqs.pdf

My comments: This document does not have a lot of new material, but it is always good to read this so you can cut and paste some of Fannie’s comments into your reports as an explanation. In this month’s paid Appraisal Today I had two articles on the 1004mc form:

1004MC – the good, the bad, and what Fannie says

Statistical errors in the 1004MC by George Dell, MAI, SRA – He has been fighting with Fannie since the form was first required in April 2009

More articles are coming soon in the paid Appraisal Today on how to handle the issues.

Read more!!

AQB – possible changes to college degree, practicum, alternative experience, etc.

AQB wants comments on possible changes to college degree, practicum, alternative experience, etc.
Comments deadline March 31, 2016
College degree – alternative for licensed upgrade to certified
My comments: I keep hearing from appraisers that college graduates have lots of high paying opportunities. But, these types of jobs are only for engineering, computer science, etc. jobs. Some with business degrees from highly rated schools can get “Wall Street” jobs. Not for the vast majority of graduates with degrees in English, psychology, etc. I don’t know how realistic it is to offer a route from Licensed to Certified with no 4 year degree required since few lender clients will accept licensed appraisers and their numbers have dropped significantly.
Practicum – alternative experience up to 50%
My comment: I studied science in college and spent many afternoons in labs. When I graduated I was ready to go to work and needed no training. This is a significant problem for appraisers.
The only appraisal class I ever had with practical experience was a junior college appraisal class taught by a real estate agent. We all appraised his home using Fannie forms. A practicum was offered awhile ago by the AQB but was too difficult to set up and none were ever offered. Hopefully, these new requirements will be easier and, more important, include hands-on appraisal experience.
Click here to read the full document
My comments: Lender appraising has been a boom and bust business since Fannie and Freddie started securitizing loans in the 1960s, requiring armies of new appraisers during the booms with most laid off during the busts. Everyone seems to forget this. The current licensing system does not consider it.
Of course, the biggest problem today is lenders not allowing trainees to sign on their own. Lenders can solve this problem now. The draft recognizes this problem. But, AMCs (low fees and  Scope Creep) are the most significant reason for the “brain drain” of experienced residential appraisers leaving the profession since 2008. Retiring baby boomers is another factor.
Who is worried about an appraiser shortage? The Appraisal Foundation’s income will go down. AMCs will have fewer appraisers to broadcast cheap fees. Finding appraisers in rural areas will be more difficult, but this has always been a problem. Lenders are hoping maybe they can use AMCs or “alternative products” because of the shortage. Of course, not much of this applies to commercial appraising, only to residential AMC work.

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Part time appraisers – how many and why?

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Part-time appraisers – how many and why?

Statistics from data on appraiser licenses from www.asc.gov, and other sources, do not identify how many are doing appraisals part-time or not at all.

Why does it seem like there is an appraiser shortage in some areas? Of course, it is probably a shortage of appraisers willing to work for low fees. But, this also spills over into non-AMC work as few appraisers are available as they are cranking out AMC appraisals and won’t accept non-AMC work.

I keep speaking with more and more appraisers who are no longer working long hours. There is almost unlimited demand from AMCs, but most of them do not work for AMCs. Or, work for a few AMCs that pay well and give them occasional work. Or, refuse to work for lower fees, so don’t get much AMC work.

Why do appraisers work part-time?

– The median appraiser age is getting higher. Older appraisers (and non-appraisers) are no longer willing to work 60-80 hours per week. They often don’t need as much money as before. Children who graduated from college, collecting social security, home mortgage paid off, or have a low rate on the mortgage, spouse retired, etc. I suspect that this is the primary reason.

– Fee appraisers are self-employed. Many baby boomers that are employed want to work part-time but their employers won’t allow it. One of my brothers started working in the printing business when he was 18. For the past 30 years, he has been doing on-site printer repairs for national companies. He is 67 and would love to cut back to part-time as he does not want to do a lot of driving, which his job requires. When he retires this year, there is no one to replace him. There are no new people coming into printer repairs, which requires expertise in computer software and printer hardware, and many years of experience. His employer says “no” to part-time work.

– Self-employed appraisers, as we get older, can gradually cut back on how much time we spend on appraising. That is one of the best features of having an appraisal business. Also, if we start another business or get another job, we can often continue part-time appraising.

– Not working but keeping a license as a backup. Hard to get a license back. Sometimes do an occasional appraisal. I always recommend keeping your appraisal license as long as you can. You never know when you will need extra income.

– Don’t work for AMCs and don’t get a lot of work from non-AMC clients.

I just look in the mirror. I limit the amount of work I accept. I don’t do any lender work and turn down non-lender work every week. I am 72, downsized my home, no children to support, collect Social Security of $3,000 per month since I turned 70. I worked very long hours appraising for 25 years, but 5 years ago I started cutting back on the hours I spend appraising. (I typically worked about 60 hours per week.) I get also income from my paid newsletter and ads for this free email newsletter. Most importantly, I need more time for my experimental music and videos, another big motivator ;>

I do appraisals and work on my appraisal business for about 15 hours per week. My sfr fees are at, or slightly above, non-AMC C&R fees. I have little driving time as I have been working only in my small city for the past two years – 10 minutes to go from one end to the other. I have an assistant that proofreads, invoices, etc. My typical time to writeup an sfr is about 2 hours. The total time is about 4 hours plus 1 hour for my assistant. There are few tract homes here.

What does this mean for you?

If you stay in the appraisal profession, even part-time, you will have lots of work in the future. Baby Boomers are leaving the workplace, or cutting way back, in large numbers for all types of work.

How many appraisals per week and how much time to complete an appraisal report?(Opens in a new browser tab)

 

Appraisal Today newsletter

How to stem appraiser "low tide"

By Alan Hummel, Chief Appraiser Forsythe Appraisal

Excerpt:

The topic may seem peculiar at a time when mortgage originations are down from the heyday of the early 2000s, but if the issue isn’t addressed now, a shortage of qualified residential appraisers could have a dampening effect on the mortgage market at precisely the moment when it is trying to regain its past vibrancy.

The decline in the numbers of appraisers entering the profession can be attributed to many factors including (but not limited to): qualifications and licensing requirements, the economics involved in training, and unwillingness on the part of some financial institutions to allow trainee appraisers to perform services. The most significant obstacle for many trainee appraisers is completing the 2,500 hours of required experience to achieve Certified Residential status, after the education component has been completed.

My comment: The only answer is for lenders to allow trainees to “sign on their own”.Hummel proposes a training program. But, I don’t see this happening on a large scale.  Since Fannie and Freddie started loan securitization in the 1970s, the volume of appraisals needed has been very, very cyclical. Before licensing, most appraisers were employees of lenders. Lenders solved the problem by hiring armies of trainees during boom times and then laying them off when volume dropped. Few appraisers are employees of lenders now. Fee appraisers have been expected to train new appraisers. Lenders paid them a salary and experienced salaried appraisers were the supervisors. But, fee appraisers are not set up for it – no time, minimal supervisor training, little economic incentive, etc.

Read the full article at:
http://www.housingwire.com/articles/31233-how-to-stem-appraiser-low-tide

Appraisal Today newsletter