Posts Tagged ANSI

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NOTE: Please scroll down to read the other topics in this long blog post on Desktops, Future of appraising, Cubicasa, ANSI, unusual homes, mortgage origination stats, etc.

PAVE Appraiser Bashing

By Ann O'Rourke on April 1, 2022 / ANSI, bias, desktop appraisals / Leave a comment

Tags: ANSI, bias, desktop appraisals, Fannie

PAVE Action Plan to Advance Property Appraisal and Valuation Equity

By McKissock, March 23, 2022

Two of the more controversial recommendations:

Excerpts:

Inform Federal Housing Administration (FHA) borrowers about the process to request a reconsideration of a valuation when the initial valuation is lower than expected.

Perhaps the most far-reaching recommendation for action is number 1.6, which states, “Develop a legislative proposal that modernizes the governance structure of the appraisal industry to improve transparency and public participation in the establishment of appraisal standards and appraiser qualification criteria, and to advance diversity in the profession.” Translation: Amend FIRREA to remove references to The Appraisal Foundation and transfer the Foundation’s authority to write appraisal standards and qualifications to the Appraisal Subcommittee or another federal government entity.

As of this writing, no proposed legislation related to the PAVE recommendations has been introduced. Because committees in both the Senate and the House are holding hearings, a bill (or, more likely, bills) can be expected very soon. Stay tuned.

Short and worth reading. To read more, including links to the full PAVE report and the summary, click here

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AEI’s Comments on PAVE Report

Excerpt: The Brookings and Freddie Mac studies are not based on rigorous data analysis. Most importantly, they conflate race with socio-economic status (SES), i.e. income, buying power, marriage rates, credit scores, etc. Race-based gaps found in the Brookings and Freddie Mac studies either entirely or substantially disappear when adjusting for differences in SES. Furthermore, our analyses show that similar gaps are present in majority White or White-only tracts across different SES levels, raising serious questions regarding a race-based explanation.

To read more, click here

My comment: American Enterprise Institute is a conservative “think tank” and has also supported the appraisers’ side on other issues.

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Congress Committee Meetings on Appraisal Bias

Strengthening Oversight and Equity in the Appraisal Process

Thursday, March 24, 2022

Senate Committee on Banking, Housing, and Urban Affairs

Appraiser Witness: James Park, Executive Director Appraisal Subcommittee

To watch, click here

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Devalued, Denied, and Disrespected: How Home Appraisal Bias and Discrimination Are Hurting Homeowners and Communities of Color Tuesday, March 29, 2022

House Financial Services Committee

Appraiser speakers:

Pledger M. Bishop, III, President, Appraisal Institute
David S. Bunton, President, The Appraisal Foundation
Dean Kelker, Senior Vice President and Chief Risk Officer, SingleSource Property Solutions, on behalf of the Real Estate Valuation Advocacy Association

To watch, click here

My comments: I was not able to watch either of these meetings before writing this newsletter.

Jonathan Miller attended the virtual March 24 meeting and had comments on the March 24 and 29 hearings. To read his comments, click here Scroll down to “James Park”

His blog post for today (usually sent around 11 AM EST) may have comments on the March 29 meeting. To read his comments, click here. Search for “devalued” (Hopefully, this link works.)

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Desktop appraisals – Lots of Info Available!

By Ann O'Rourke on March 25, 2022 / bias, desktop appraisals, Fannie, FHA / Leave a comment

Tags: ANSI, bias, desktop appraisals, Fannie, FHA

Desktop appraisals – Lots of Info Available
Fannie and Freddie started using Desktops on March 19, 2022

Both a floor plan and a building sketch with dimensions and GLA calculations are required. ANSI is not required.

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March 2022 Fannie Mae Appraiser Update:

Link to March Appraiser Update, click here:

Link to “About Desktop Appraisals” PDF with 5 pages of information, click here Watch the Noble Appraiser explore the benefits of performing desktop appraisals:
The Desktop Appraisal Discovery Link to Noble Appraiser on desktops video, click here

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McKissock: Fannie Mae and Freddie Mac Desktop Appraisals: Your Questions Answered

Excerpts: In January 2022, Fannie Mae and Freddie Mac announced a desktop appraisal option that goes live in mid-March 2022. In various articles and opinion pieces, some claim that desktop appraisals will solve the appraiser shortage and modernize the appraisal process, while others claim that they will cause the demise of the appraisal profession.

Here are a few of the 16 questions answered

What is a desktop appraisal?
Does USPAP require me to complete an inspection?
What data sources are used for identifying the subject’s relevant characteristics?
Are there any state restrictions?
Must I be competent in the subject’s market area?
Are extraordinary assumptions allowed?
Does the limited scope of work mitigate my liability?
Won’t these types of valuations be risky for the lender

To read more, click here

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Bradford Software Webinar Floor Plans for Desktops – Discover Your Options with 7 Floor Plan Providers March 24, 2022 (1 hour, 34 minutes), with comments from Scott Reuter of Freddie Mac.

It was recorded and is available at https://vimeo.com/692030955

I did not have time to watch it yesterday.

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My comments on the above resources: What’s the best resource(s) for you?

Noble appraiser video is short (3 min. 34 seconds) understandable and very informative. Fannie Mae is “the source” for desktops. McKissock’s Q and A post is well written, understandable with short answers.

Bradford’s video has demos of 7 app providers for floor plans and sketches.

If lenders will use them much is very uncertain. The Covid desktops were never widely adopted. No one knows now which cell phone apps will be used, who will use them, and their accuracy (tested by an independent company). Minimum of an IPhone 12 Pro, with LIDAR camera. Appraisers who have tested them say the floor plans are good, but sketches with dimensions and floor plans may not be accurate on complicated home designs.

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Fannie ANSI Update – 19 New FAQs

By Ann O'Rourke on March 18, 2022 / ANSI, appraisal business, Fannie Forms, Reviews / Leave a comment

Tags: adjustments, ANSI, appraisal business, Fannie forms, reviews

Fannie ANSI FAQs Update

Updated Standardized Property Measurement Guidelines – 19 new FAQs, 5 Pages

Excerpt from the short Fannie email sent 3-15-22 at 8 AM (Pacific time): “…Are you ready? We’ve updated the Standardized Property Measuring Guidelines fact sheet to include more answers to your frequently asked questions. Thanks to all the appraisers, AMCs, and lenders who submitted questions.”

My comment: There are no changes to the first page, including comps measured differently and the exception process. Links are included for references in Fannie’s Selling Guide in the Guidelines.

FAQ topics include:

Q5. When common practice in the local market differs from the ANSI standard, can the appraiser modify the subject’s GLA to conform to local custom?

Q8. The ANSI standard specifically notes that the definition of above and below grade could cause some houses to have no above-grade finished square footage.

How should appraisers report GLA in this scenario?

Q9. How will lenders know that appraisers used the ANSI standard?

Q15. Will appraiser adherence to the ANSI standard cause confusion when the subject GLA differs from other sources such as MLS or public record?

Q16. How should appraisers account for rooms located in above-grade finished areas that do not qualify as GLA under the ANSI standard?

Q18. The GLA of comparables available to appraisers may not be based on the ANSI standard. How should appraisers manage this issue?

Q19. How should appraisers value finished areas that the ANSI standard does not include in GLA, such as where the ceiling height is less than 7 feet?

To download the PDF to read the answers and other FAQs, click here

My comments: Read This Document! I have been waiting for an update to the one-page original Fannie document since it was first released about 3 months ago. There are many, many issues when using ANSI for lenders and AMCs. Appraisers sent many questions to Fannie and made comments during webinars with Fannie.

If you’re looking for a class, webinar, or other ANSI info, go to www.appraisaltoday.com/ANSI

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To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, new Fannie Form, stress, price per sq.ft., reviewer appraisal problems, mortgage origination stats, etc.

Fannie’s New Desktop Appraisal FAQs

By Ann O'Rourke on March 11, 2022 / ANSI, appraisal how to, bias, Clubhouse, desktop appraisals, Fannie / Leave a comment

Tags: ANSI, appraisal how to, bias, desktop appraisals, Fannie

Fannie’s New Desktop FAQs

Timeline and 19 FAQs From an email received 3-8-22

“Desktop appraisals will be offered in Desktop Underwriter® (DU®) for eligible transactions starting March 19. Are you ready?

We’ve updated the About desktop appraisals fact sheet with an expanded frequently asked questions section.

Thanks to all the appraisers, AMCs, and lenders who submitted questions, and please continue to Contact us with your appraisal related comments and questions.”

To read the FAQs, click here

My comment: Reading the original Fannie document is good, such as a timeline list, additional verifications, inspections, CU, etc.

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McKissock has an excellent blog post answering many practical questions, including some in the Fannie FAQs and many other questions.

Topics include:

What data sources are used for identifying the subject’s relevant characteristics?
Are there any state restrictions?
Must I be competent in the subject’s market area?
Are extraordinary assumptions allowed?
Does the limited scope of work mitigate my liability?
What is the difference between a sketch and a floor plan?
How do I get a floor plan?
Does the floor plan need to be verified?
Does the property need to be measured per ANSI measurement standards per Fannie Mae’s requirements?

To read more, click here

My comment: Read both the Fannie FAQs and McKissock blog post. How often will desktops be used? It will take a while before they may be widely adopted. See last week’s newsletter. When are we going to get some ANSI FAQs????

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NOTE: Please scroll down to read the other topics in this long blog post on bias, appraisal how to, ANSI, unusual homes, mortgage origination stats, etc.

Fannie Requiring Appraisal Floor Plans Coming?

Fannie Wants Desktop Appraisals with Floor Plans

By Ann O'Rourke on March 4, 2022 / ANSI, AVMS, bias, Clubhouse, desktop appraisals, Fannie / Leave a comment

Tags: ANSI, AVM, bias, CLUBHOUSE, desktop appraisals, Fannie

Fannie Mae and Freddie Mac to launch remote desktop appraisals in 2022

Desktop appraisals with floor plans

Excerpt:

Beginning March 19, 2022, Fannie Mae and Freddie Mac will accept remote desktop appraisals nationwide on eligible transactions without the appraiser ever stepping foot on the subject property, the Federal Housing Finance Agency (FHFA) announced.

To read more, click here

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Link to FHFA announcement 10/18/21 with more information,click here

My comments: When they submit loan applications, lenders receive a list of appraisal types available for their loans, including waivers. Lenders did not widely choose the desktop Covid appraisals. They preferred full appraisals.

I ran an ad for Cubicasa (floor plan app) on Tuesday this week and got some appraiser complaints. I will be testing it soon and hopefully will be able to use it in my appraisals.

Many anticipate that lender adoption will be slow, including Lyle Radke from Fannie and a group email posting from an appraiser who recently attended a state Mortgage Bankers’ meeting. He said:

“I was on a 4 appraiser panel with +/-60 LO’s representing 20 different lenders. I asked for a show of hands-on how many would be offering Desktop or Hybrid appraisals on March 19… There was not a single hand raised. “

“When we discussed the Desktop and Hybrids, most had no idea about the differences in the two products… All 4 of us thought that the turn time “might” be reduced by 1-2 business days. So, based on a small sample, this may not be as much of a problem as some appraisers think. “

Fannie Wants Desktop Appraisals

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ANSI Z765-2021 Resources for Appraisers

1004MC or 1004 ANSI

By Ann O'Rourke on February 25, 2022 / ANSI, appraisal forms, liability, real estate market / Leave a comment

Tags: ANSI, Fannie, liability, real estate market

1004MC or 1004 ANSI

By George Dell, MAI

Excerpt: The 1004MC “market conditions” appraisal addendum was created by Fannie Mae and Freddie Mac to require a form-based market analysis. This added to the traditional practice to collect a handful of ‘comps’ to opine and foretell market price. There are problems and unintended consequences.

The ANSI requirement is that residential appraisers measure houses according to the ANSI (American National Standards Institute) method. This constraint can have good long-term results for consistency, if it is adopted by the full universe of participants. The requirement would have to include tax assessors, building permit agencies, real estate agents, investors, insurance companies, architects, contractors, and unlicensed appraisers. This part might take years, if ever.

We can take a quick look at some similarities, some differences, and where things may go…

To read more, click here

My comments: George and I talked about this and agreed to disagree. He is not the only one with doubts about ANSI. Most are appraisers, like George, who have never used it. I finally found a somewhat negative post about ANSI, instead of social media rants ;>

My opinion: This Standard is better than no standard. Appraisers have been using ANSI since 1996. I did not hear about problems with using it or with lender clients. Change is hard.

See the end of this newsletter for info on Appraisal Institute’s New 4 hour online ANSI class and an excellent ANSI webinar this Monday with Lyle Radke from Fannie being grilled by three appraisers! Two of them had negative comments.

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Appraisal Obsolete? Now or in the Future?

Appraisal Comps in Lopsided Markets

By Ann O'Rourke on February 11, 2022 / ANSI, appraisal, liability, USPAP / Leave a comment

Tags: ANSI, appraisal how to, liability, USPAP

Different colorful shapes wooden blocks on beige background, flat lay. Geometric shapes in different colors, top view. Concept of creative, logical thinking or problem solving.

Choosing comps in a lopsided market

By Ryan Lundquist

Excerpt: QUESTION: With so many listings receiving offers above list, and people having to pay the shortfall between the appraised value and the contract price, how do appraisers look at comps? If a property sold at $580,000, but it actually appraised for $547,000, and the buyer paid the difference, which number do you use? $580,000 or $547,000?

ANSWER: Here are a few things on my mind.

1) Weigh the comps:

In any market (not just today), we have to weigh the comps. Or another way to say it is, we have to appraise the comps so to speak. What I mean is if something clearly sells for too much, it’s reasonable to give that property less weight in our analysis. Likewise, if a property sells for too little, we might also give less weight to that sale. Granted, selling for too little isn’t as common lately, but in past markets we regularly considered whether short sales or bank-owned sales sold below market value.

2) One sale doesn’t make or break the market:

It’s important to note one sale doesn’t make or break the market. This means one lofty “lone ranger” sale doesn’t all of a sudden mean the rest of the market will go to that level. This would be like saying that record-breaking $7M sale in Shingle Springs from August will pull the rest of the market up. Nah, I don’t think so. Or Zillow buying a house for $40,000 more than the comps will cause the rest of the market to rise. Nope. If one sale closes at $580,000, but the rest of the market is below $550,000, we won’t arbitrarily accept $580,000 as the new neighborhood price threshold. The same would hold true if a different house sold at $450,000. This one “low ranger” (sorry) won’t automatically drag the rest of the market down.

To read more plus lots of comments, click here

My comment: Some good comments and tips for this crazee market!!

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NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, surplus vs. excess land, ANSI, USPAP, Liability, mortgage origination stats, etc.

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Appraisal Obsolete? Now or in the Future?

AMC Mergers and Acquisition for Appraisers

By Ann O'Rourke on February 4, 2022 / AMCs, ANSI, appraisal business, appraisal management company, waivers / Leave a comment

Tags: AMC, ANSI, appraisal business, waivers

AMC Mergers and Acquisition – Someone has a positive view of residential lender appraising!

Nationwide Property & Appraisal Services purchased by investment firm Arcapita Group Holdings

Excerpts: The deal gives Arcapita an AMC that serves mortgage lenders in all 50 states, has a network of over 15,000 licensed appraisers, and grossed $144 million in revenue in 2021.

“We were attracted by Nationwide’s highly cash generative business, experienced management team, and strong base of clients across the country,” Arcapita CEO Atif Abdulmalik said in a statement. “Close to 50% of Nationwide’s customers have maintained their relationship with the company for over six years, highlighting the longevity of its customer relationships, and the company benefits from a free cash flow conversion rate of over 99%.”

The AMC has acquired five other companies since Corridor bought a stake in Nationwide in 2016. In June, Nationwide acquired Portland, Oregon-based First Choice Appraisal Management, expanding its reach into the Pacific Northwest.

Other large financial firms are also putting money into the appraisal management space, which is highly fractured.

In October, private holding group StoicLane acquired control of the appraisal management company Lender’s Valuation Services (LVS).

To read more, click here

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Class Valuation purchases Metro-West

Excerpt: In a press statement, Class Valuation said Metro-West, founded in 1987, is the largest independent residential appraisal firm in the country, with staff appraisers in over 80 U.S. metros.

Class Valuation, which itself is owned by private equity firm Gridiron Capital, said the acquisition of Metro-West would fit into its larger strategy of fusing tech tools such as automation and 3D measurements to help clear the well-documented capacity issues in appraisal.

“One area of focus for us has been the growth of a staff appraiser network and building out a nation-wide trainee program,” John Fraas, CEO of Class Valuation, said in a statement.

This is the fifth acquisition Class Valuation has made in the last 12 months, and the seventh in recent years. In September, Class Valuation acquired Kansas City, Missouri-based Pendo Management for an undisclosed sum.

There’s been a surge in private equity investment in the U.S. appraisal space over the last two years.

To read more, click here

My comments: The investors see money to be made in appraisals. What will they think when it inevitably crashes again, like it always does. I wish I had an AMC I could sell to investors ;>

If you work for any of these AMCs, keep close track of your billings, so they don’t get lost in any accounting mergers. No one knows, of course, if their appraisal management will change.

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Neighborhood Boundaries for Appraisals

By Ann O'Rourke on January 28, 2022 / adjustments, ANSI, appraisal classes, appraisal how to, bias / Leave a comment

Tags: adjustments, ANSI, appraisal how to, bias, Fannie, mortgage lending

Gentrification, neighborhood boundaries, and bias

By Ryan Lundquist

Excerpts: Photo used with permission (thanks, Vicky).

Sometimes, crossing the street can make all the difference for value. In short, if we don’t understand where a neighborhood starts and ends, we might choose the wrong comps.

Q&A #3 How do we know neighborhood boundaries?

Okay, this is a big question, and it could easily be a dissertation. For starters, let’s consider what Fannie Mae says about neighborhoods:

Fannie Mae: “The appraiser should provide an outline of the neighborhood boundaries, which should be clearly delineated using ‘North,’ ‘South’, ‘East,’ and ‘West’. These boundaries may include but are not limited to streets, legally recognized neighborhood boundaries, waterways, or other natural boundaries that define the separation of one neighborhood from another. Appraisers should not reference a map or other addendum as the only example of the neighborhood boundaries.”

Other thoughts (mine): I think sometimes we focus only on major streets, but let’s also consider school boundaries and even how neighborhood associations or city websites define areas. But also, where would residents themselves draw the lines? And where would buyers be hunting for a home before shopping somewhere else? All these things could be clues.

To read more and see lots of maps and graphs, click here

My comments: Excellent analysis of specific neighborhood boundaries with maps and graphs, of course. Worth reading. The Jan. and Feb issues of the monthly Appraisal Today has this article: Does my neighborhood really need to be analyzed? Parts I II By Tim Andersen, MAI. The best neighborhood explanations I have ever read!!

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NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, ANSI, bias, smells, mortgage origination stats, etc.