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

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.>

Why Appraisers Love Appraising!

Appraisal Business Tips 

Humor for Appraisers

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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 non-lender appraisals and liability, sharing comps, Fannie Update, unusual homes, mortgage origination stats, etc.

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Sculptural Home in Venice, CA, Hits the Market for $5.8M

 

Excerpts: The gated compound has four bedrooms and 3.5 baths, in 2,522 square feet of living space. Lot size is 2,701 sq.ft.

The unique, asymmetrical exterior is described as having “raw drama,” and that appraisal certainly fits. The home is built of concrete, glass, wood, and structural steel.

J. Stewart Burns, a TV writer and producer whose projects include “The Simpsons” and “Futurama,” purchased the wildly original Venice landmark in 2014 for $2,300,000, property records show. He recently listed the home for $5,800,000.

An outdoor bridge connects one wing of the home to another, allowing access to the spectacular rooftop deck. A bar, comfortable seating area, and expansive views make the deck one of the home’s many highlights.

The primary suite features remarkable wood built-ins, a closet, and a bath, where the windows and skylights are discreetly frosted.

To read more click here 

My comments: Fascinating interior photos!

To see the listing, click here

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Dos and Don’ts of Sharing Comparable Sales

By: McKissock

Excerpts: When real estate agents provide relevant comparable sales to appraisers, it certainly benefits both parties. Agents can ensure that appraisers are reviewing comparables that match their properties and, hopefully, meet the seller’s desired price. Additionally, while appraisers still must verify the information, it can save them time. Here are some dos and don’ts to follow as agents and appraisers work together on establishing comps for appraisal properties.

Don’t use comps based on price

If the agent has a predetermined value in mind, they will find comparable sales to support that biased opinion.

Do consider neighborhood attributes

To read more, click here

My comments: Some good tips when dealing with agent-supplied comps.

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Estate/trust appraisal liability advice from Peter Christensen

Here are some general pointers:

1. Never use a lending form (such as a 1004) for estate work. Yes, appraisers do this. While most of the time, appraisers get away with it (unless it’s an appraisal that goes to the IRS), it sometimes wreaks havoc for appraisers in discipline and claims.

2. Get the relevant date of value from the client or the client’s attorney. The date of value can be a legal issue, and the appraiser should not be the one accepting responsibility for whether the date of value is correct for whatever the use is (such as an estate tax return).

3. Keep the definition of intended users as narrow as possible. If an executor of an estate is hiring you, for example, just say the executor is your client and only intended user (add the IRS if it’s relevant). Do not say the intended users are all the beneficiaries of an estate or trust. Doing so potentially expands your liability to all those parties.

4. Keep your definition of intended use as narrow as possible to describe how your appraisal will be used by your client. For example, you don’t want your appraisal for the executor being used by a beneficiary down the road to sell the property to someone. So, don’t say something open ended like: “the intended use is to provide a fair market value of the property.” Say, instead, “the intended use of this appraisal is for the executor’s use in administrating the estate of . . . The appraisal should not be used for any other purpose.”

5. For non-lending work like estate work, you can use a good, protective engagement agreement. Be sure to get it signed. An unsigned agreement is basically worthless. In the agreement consider including limitations of liability and time limitations on claims.

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Things to Love (and Hate) About Appraising

By David Hyman

Excerpts: Is there a career with more inherent paradoxes than real estate appraising? It’s a highly social profession – and yet it’s solitary. Every appraisal decision we come to requires lots of verified data – but also our intuition and opinions. Our calendar fills up with orders when the real estate market heats up. But when the market nosedives, lenders need to reassess their portfolios – so, again, our calendar fills up with orders.

To be a real estate appraiser is to live with these strange contradictions every day. And here’s another one: There are things you’ll love – and absolutely despise – about this profession. Here are a few examples of both, at least from my standpoint, starting with things I love.

Meeting new people

This is my favorite thing about being an appraiser. I love talking to people, learning about their homes, but also about their jobs and lives. I’ve appraised properties for a professional surfer, a jeweler, a mortgage executive, a famous rapper, single people living alone, married couples with five kids in the house—you name it. And most of these people are eager to chat.

How many other professions let you spend quality time with such a wide cross-section of humanity?

Changing rules

A few years ago, appraisers could work directly for mortgage companies without any issue. Then… well, you know what happened… and now we can’t. A few years ago, the standard 1004 residential appraisal form was a handful of pages. Now, if my math is correct, it’s about 10,780 pages (front and back).

The rules governing the appraisal industry can swing wildly and often. And that can be frustrating…

To read more, click here

My comments: Short. Worth reading. What do you like and dislike about appraising? Does it change over time? I have been appraising for over 45 years and still love it! Every appraisal is a challenge. I really like being in the field, out of my office. Of course, I gave up residential lender appraising in 2005, before AMCs took over but I liked lender appraising except for the huge ups and downs in business. I have always loved non-lender appraising.

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25 Animal-Shaped Buildings from Around the World 0k 3-23

Just For Fun. We need it!!

A kindergarten shaped like a cat, a skyscraper shaped like an elephant, a hotel shaped like a crocodile — these are just a few of the forms that animal-shaped architecture has taken. Whether to reflect the role of the building, like a fisheries department shaped like a fish, or just for the sheer whimsy of it, like roadside attractions shaped like dinosaurs and whales, this “zoomorphic” style appears all over.

Here are a few:

Cat Kindergarden (Photo above)

Lucy the Elephant

Blue Whale

To read more, click here

My comments: Take a break and scroll through. Funny, strange, and sorta practical. And More. One of my favorite links!

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Fannie Mae March 2023 Update

Email dated 3-21-23

Email excerpts: Welcome to our March 2023 Fannie Mae Appraiser Update. Our focus in this edition is on recent changes to Fannie Mae policies and programs, and how they may impact you.

In March we announced a new collateral option called value acceptance + property data. Here we share ideas on how property data collection (PDC) may be a business opportunity for you.

In some cases, PDC may lead to a hybrid appraisal assignment, so we also share baseline requirements for completing hybrid appraisals.

Keep reading for an update on three new types of Appraiser Quality Monitoring letters and learn what you can do to avoid those deficiencies in your reports.

We also cover recent changes to the MH Advantage® program, other manufactured home reminders, and tips on what must happen to decommission an accessory dwelling unit (ADU).

To read the full report (PDF), Click here

My comments: Mostly discussion on hybrids, but good appraiser information on Appraiser Quality Monitoring (AQM) new letters. Worth reading. Fannie has not said much about AQMs for appraisers. Fannie keeps trying to “sell” hybrids to appraisers. I would probably not do them as Iike field appraising, but it may work for some appraisers, especially since business is slow now for lender appraisals.

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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. Some appraisers are very busy, and others have little work. Varies widely around the country.

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Mortgage applications increased 3.0 percent from one week earlier

Mortgage applications increased 3.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 17, 2023.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 68 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 36 percent lower than the same week one year ago.

“Treasury yields declined last week, driven by uncertainty over the health of the banking sector and worries about the broader impact on the economy. Mortgage rates declined for the second week in a row, with the 30-year fixed rate dropping to 6.48 percent, the lowest level in a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “However, mortgage rates have not dropped as much as Treasury rates due to increased MBS market volatility. The spread between the 30-year fixed and 10-year Treasury remained wide at around 300 basis points, compared to a more typical spread of 180 basis points.”

Added Kan, “Both purchase and refinance applications increased for the third week in a row as borrowers took the opportunity to act, even though overall application volume remains at relatively low levels.”

The refinance share of mortgage activity increased to 28.6 percent of total applications from 28.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.6 percent of total applications.

The FHA share of total applications decreased to 12.3 percent from 12.9 percent the week prior. The VA share of total applications decreased to 11.7 percent from 11.9 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.48 percent from 6.71 percent, with points decreasing to 0.66 from0.79 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200)decreased to 6.30 percent from 6.39 percent, with points decreasing to 0.55 from 0.61 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.32 percent from 6.58 percent, with points decreasing to 1.07 from 1.20 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.02 percent from 6.14 percent, with points decreasing to 0.60 from 0.77 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 5.58 percent from 5.69 percent, with points decreasing to 0.75 from 0.87 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.

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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

www.appraisaltoday.com

Appraiser Adjustment Tools

What Tools Do You Use to Support Your Appraisal Adjustments?

McKissock Survey

Excerpts: Here’s a tally of the most popular answers—tools that were either selected or written in by multiple respondents. We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or software tool, because it was mentioned by so many appraisers.

In addition to the top answers listed above, we received many other write-in responses. Other methods and tools that our survey participants said they use to support appraisal adjustments include:

    • Market knowledge/research
    • Market extraction
  • Manual sales comparison
  • Regression analysis
  • Segmented market analysis

To read more, click here

My comments: First survey for this topic I have ever seen. Very interesting. Don’t miss the appraisers’ comments!

Read more!!

What is Your Appraiser Level? Why Does It Make a Difference?

What Level Appraiser Are You?

Beginner, Intermediate, or Pro?

By McKissock

Excerpts: How do we measure ourselves?

What is the mark of an appraiser who is at the top of his or her “game”? Is it the letters behind the name (MAI, SRA, etc.)?

The key is not the letters but the competency or skill. For example, are you competent to prepare an entire appraisal from start to finish? You might answer, “Absolutely!” But what if the appraisal form was completely blank with no boilerplate text? Do you still feel the same level of assuredness? What if you could not use the URAR form at all, but still had to produce an appraisal report that could stand up in court? Are your legs shaking? These questions help us to start to gauge our current level.

A Level 1 appraiser checks boxes. A Level 2 appraiser adds explanations, graphs, and charts to those boxes. And a Level 3 appraiser knows how to think outside the checkboxes altogether. A pro-level appraiser may use a form. However, she is not bound by it; she can prepare a narrative report if it is needed or preferred. In addition, he understands the principles of USPAP and never stops improving his craft.

To read more good ideas, click here

My comments: Most appraisers are not busy. Now is the time to increase your appraisal skill level. There are AMCs who want appraisers to do the “tough ones,” not just those with the lowest fees. They will pay good fees. Non-lender appraisals, with higher fees, also require a higher skill level.

Appraisal Errors from Reviewers and State Boards

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post – Bias, Cost cutting, slow business, unusual homes, mortgage origination stats, etc.

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What Appraisers Wish Real Estate Agents Understood

What Appraisers Wish Real Estate Agents Understood

McKissock Survey

Question: “What’s one thing you wish real estate agents knew about the appraisal process?

Top 10 most common answers

  1. The appraisal process is complex and takes time
  2. Appraisers do not assign value
  3. Appraisers are unbiased and must follow guidelines
  4. Appraisers need their input and cooperation
  5. How to select appropriate sales comps
  6. The importance of providing accurate and detailed info in their listings
  7. How to determine correct GLA (gross living area)
  8. How renovations and upgrades affect value
  9. How to prepare for the appraisal appointment
  10. FHA/VA/USDA guidelines

To read all the appraiser comments, click here

My comments: The appraiser comments are worth reading. I will always remember when, many years ago, a top local real estate agent asked me why I was driving around taking photos of homes. Of course, most people confuse real estate agents with appraisers. We have done a very poor job of telling the general public what we do and that we are are objective and unbiased. We need a good Appraiser PR Campaign!

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on AMC layoffs, adjustments, your business voicemail, unusual homes, mortgage origination stats, etc.

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Appraisal Profession Dying?

Bringing More People Into a Dying Profession?

By Dave Towne, Jan. 23, 2023

My comment: This only applies to residential lending appraisals, of course. My non-lender appraisals have changed very little with few, if any new “requirements”. I determine the Scope of Work.

Excerpts: Some people want to bring more people (primarily of color, which is great) into a dying profession. But the profession is being killed off by (mostly white!) people who think technology is the golden spoon to accurate valuations.

PAREA is being touted as the savior and the best appropriate way to get new people into this profession, especially people of color. Really? Let’s see. The education providers currently writing the PAREA courses have been indicating that the course cost will be up to 5 figures, roughly $10,000 or possibly more. That’s an outlay of significant cash BEFORE actually connecting with an appraiser who will put the PAREA-educated appraiser to work.

To read more, plus over 60 appraiser comments, click here

My comments: This only applies to residential lending appraisals, of course. My non-lender appraisals have changed very little with few, if any new “requirements”. I determine the Scope of Work.

I definitely prefer “profession” to “business”. I have always been a professional appraiser. I quit doing residential lender appraisals in 2005. I had good clients but did not like the dramatic volume changes. It has gotten very bad since AMCs took over.

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on Costar and residential, non-lender appraisals., Humor, Zillow, unusual homes, mortgage origination stats, etc.

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FHA Handbook 4000.1 Appraisal Changes

FHA Handbook 4000.1 Appraisal Changes

By Dan Bradley

Excerpts: On January 18, 2023, HUD issued an announcement regarding revisions made to Handbook 4000.1. According to the announcement, the revisions included “enhancements and revisions to existing guidelines and various technical edits.”

The most significant of these revisions was the elimination of the requirement to include the 1004MC form as an attachment to the appraisal report.

Changes to the Handbook also include several other minor, but nevertheless meaningful, edits and clarifications to FHA appraisal requirements, including:

Under “Attic Observation Requirements,” a clarification was made regarding the appraiser’s obligation to “safely” access the attic. The language requiring a minimum “head and shoulders” access into the attic was deleted.

Under “Crawl Space Observation Requirements,” significant revisions were made, including removal of a bullet point list of MPR/MPS criteria for the crawl space. Also, language requiring a minimum “head and shoulders” access into the crawl space was deleted.

The changes outlined in the Handbook may be implemented immediately but must be implemented for FHA cases assigned on or after April 18, 2023.

To read more, click here

My comments: Many thanks to McKissock for telling us what we need to know. Includes a link to the “redline” version of 4000.1 so you can skip over most of it. Scroll down to “Updates, Revisions, Notifications” to get the redline versions.

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Revised FHA Handbook 4000.1 effective 9/14/15. Are you ready for the changes? Get the facts!!

Appraisal Business Tips 

Humor for Appraisers

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Top Ten Reasons Why It Is Great to be an Appraiser!

Top Ten Reasons Why It Is Great to be an Appraiser!

10. Dazzle your friends with your knowledge of external obsolescence.

9. The wonderful world of rats, bats, and spiders.

8. Be a part of the profession blamed for the collapse of the savings and loan industry.

7. See places in people’s houses that usually require a search warrant to access.

6. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.

5. Chance to really irritate annoying real estate salespeople.

4. Walk around holding a clipboard just like “Skip” down at the Jiffy Lube.

3. Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway.

2. See that some people really do hang those black velveteen pictures of Elvis on their living room walls.

1. Be one of a handful of people who know that USPAP is not a medical term.

Many thanks to reader Joe Ibach, MAI, for this great list! He doesn’t know the source…seems like it is one of those email/send/resends now floating around the Internet!

Appraisal Business Tips 

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Appraiser Scam – Be Careful!

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!!

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

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on all cash sales, bad bank, FHFA/Fannie, speaking at real estate agent meetings, unusual homes, mortgage origination stats, etc.

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VA Required to Encourage Hybrid Appraisals

  • VA Required to Encourage Hybrids – Senate Passes HR 7735

    By Dave Towne December 21, 2022

    Excerpts: The U.S. Senate has announced the passage of HR 7735, the Improving Access to the VA Home Loan Benefit Act of 2022.

    Under the terms of HR 7735, sponsored by Sen. Dan Sullivan and Rep. Mike Bost, the VA will be required to:

    • Issue certification requirements for appraisers;
    • Execute minimum property requirements;
    • Review the process for selecting and reviewing comparable sales;
    • Implement quality control processes;
    • Establish the Assisted Appraisal Processing Program; and
    • Establish the use of waivers or other alternatives to existing appraisal processes.

    This is not yet ‘law,’ but likely will be in the not too distant future. Has passed House and Senate. Needs Biden’s signature.

    To read more, click here

    My comments: Read the appraisers’ comments. The law is not surprising. The mortgage industry has been wanting this for a long time. I still recommend VA to appraisers as they are the only mortgage organization that wants to help the borrower instead of making as much money as possible

Where VA loans are soaring. Are you doing VA appraisals?

Appraisal Business Tips 

Humor for Appraisers

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Appraisal Risk and Modernization

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.

Fannie New Appraisal Form Modernization

Appraisal Business Tips 

Humor for Appraisers

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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.

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