Newz: Freddie Mac Insights, HUD Bias charges against Appraiser, Lender and AMC, ROV Guidance
July 26, 2024
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What’s in This Newsletter (in Order, Scroll Down)
- Judicial Appraiser Panels
- Appraisal Insights With Freddie Mac
- HUD Charges Appraiser, Appraisal Management Company, and Lender with Race Discrimination
- Agencies Finalize Interagency Guidance on Reconsiderations of Value for Residential Real Estate Valuations
- ‘Twisters’ Begs the Question: Can You Truly Tornado-Proof a Home? A Reality Check
- Southernmost House in Continental U.S. Is for Sale in Key West (It’s Next to the Buoy) for $18.5 million
- Mortgage applications decreased 2.2 percent from one week earlier
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Appraisal Insights With Freddie Mac
by Scott Reuter, Freddie Mac
One of the goals at Freddie Mac is to help lead the way toward a more transparent and equitable housing finance process. Across our many priorities, we’re committed to offering trends, best practices and insight to the industry. As strategies continue to develop and evolve, we believe it’s important to engage and communicate with stakeholders, so here are three key items we believe appraisers should keep top of mind in 2024.
1. More Objective Appraisals
An important component to transparency is ensuring that appraisal reports for loans sold to Freddie Mac are free of subjective or potentially biased language…
2. Market Conditions Analysis
Market conditions analysis is the backbone of an appraisal. It’s a necessary step in developing credible reports. This analysis is the study of market area conditions and the changes in price levels over time…
It’s important to note from a development perspective that market conditions must be analyzed on every appraisal assignment. Market adjustments should not be viewed as a filler adjustment. Market conditions adjustments are technically among the first modifications that should be made, before accounting for physical differences. Taking shortcuts here diminishes the reliability of the adjustments that follow and the overall credibility of the appraisal report.
3. Quality vs. Condition
While most appraisers demonstrate a solid understanding of the quality and condition ratings, Freddie Mac still sees inconsistencies in the way these are reported. As might be expected, most of the issues for reported condition fall between the definitional lines of C3 to C4 and C4 to C5.
Also, there seems to be a notion by some appraisers that a C3 condition is equal to “average.” Please be mindful that a C3 home is described as generally well-maintained and showing minimal physical depreciation from regular wear and tear. In contrast, a C4 condition applies to a home that’s adequately maintained, has slight deferred maintenance and minor physical wear and tear, and may need cosmetic or minor repairs.
The author, Scott Reuter is single-family chief appraisal officer for Freddie Mac. He is a certified general appraiser with more than 30 years of experience in valuation, appraisal and collateral risk management concerns.
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My comments: Well written and practical. Worth reading, with good tips and links for all the topics. If you do residential lender appraisals, read this article.