Appraisal News and Business Tips

Posts Tagged FHA

12-6-18 Newz// Threshold Proposed Increases, Ancient Cave Homes

Proposed appraisal threshold increases keep coming – both residential and commercial !!

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House Republicans Push to Ease Property Appraisal Rules Before Giving Democrats Control
Verification of Real Estate Values Would Drop by More Than Half Under Proposal
Source: Costar

Excerpts:

Republicans in Congress and U.S. financial regulators are proposing to ease appraisal rules for real estate sales financed by credit unions, prompting critics to warn the move could recreate some conditions that fueled the financial crisis more than a decade ago.

The proposals are part of a larger push by the Republican leadership in the House, which will hand over control to the Democrats next month, to roll back financial industry regulations while the GOP is still in charge in that chamber. The National Credit Union Administration is accepting comments until midnight on Monday on its plan to increase the threshold for nonresidential sales to $1 million, which it said would boost the portion of sales not requiring an appraisal to two-thirds of all transactions from 27 percent. About 210,000 commercial property transactions were valued at $1 million or less in 2017, according to CoStar data.

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18 Appraisal Groups send letter opposing credit union new commercial threshold

Excerpt: The letter noted that the federal banking regulatory agencies – the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve Board – earlier this year approved increasing the commercial appraisal threshold from $250,000 to $500,000

“We are deeply concerned the NCUA proposal, if finalized at $1 million for commercial real estate transactions, will result in a regulatory ‘arms race’ between the Agencies and the NCUA,” the letter said. “This would result in the NCUA – the agency with the least direct experience in overseeing business and commercial real estate lending – effectively driving the appraisal policies for the entire financial regulatory system.”

The letter also noted that legislation adopted this year by the U.S. House (and awaiting action by the Senate) would link commercial appraisal threshold levels for two of the U.S. Small Administration’s most popular loan programs to those established by the federal banking regulatory agencies. “This (NCUA) proposal will likely impact not just credit unions and banks, but SBA lenders and risks associated with SBA loans,” the letter said.
The NCUA did not propose changes to the appraisal threshold for residential loans. “We support the NCUA’s proposal to maintain the $250,000 threshold level for residential real estate transactions,” the letter said.
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Sign the Petition!! (residential)

Written by Ryan Lundquist and Jonathan Miller
Almost 3,000 have signed the petition as of yesterday!!

Excerpt:

While the current administration clearly believes in deregulation, this doesn’t sound like a move to protect the American consumer and the United States housing market. As recent experience tells us, it’s going to cost us.

Please sign the petition to send a message to federal regulators that exposing the consumer and taxpayer to unnecessary mortgage risk is not supposed to be their role.
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11-29-18 Newz// Proposed $400k threshold for appraisals -The American Garage – a very strange room

$400,000 Proposed bank threshold for appraisals to be replaced by evaluations

Below are links to the proposed rule, what others are saying, and where to send your comments on the proposed rule.
OCC Issues Notice of Proposed Rulemaking to Exempt Residential Real Estate Transactions of $400,000 or Less from Appraisal Requirements
Excerpts: Rather than requiring an appraisal, the proposal would require that residential real estate transactions exempted by the threshold obtain an evaluation consistent with safe and sound banking practices.

Read what the OCC says in their announcement – one page www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-123.html

Comments will be accepted for 60 days from publication in the Federal Register.

Instructions in the full Full 69-page proposed rulemaking. Download the above link and search for comments

The word “evaluation” is included many times in the document. Google evaluation to see what it says.

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FDIC, OCC, Fed propose raising appraisal threshold for first time since 1994. Good analysis of how many loans would be affected:

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Push to cut back on home appraisals sparks controversy
By Ken Harney, long time nationally syndicated real estate writer who regularly writes about appraisal issues

Excerpt: The Trump administration wants to eliminate professional appraisals on a large number of home-sale transactions – a move that critics say could push the country back toward the see-no-evil days of mortgage lending that preceded the housing crash.

Includes comments from appraisers Ryan Lundquist and Pat Turner plus Appraisal Institute.
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Link to Appraisal Institute letter
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Get rid of appraisers while nobody’s looking
By Ryan Lundquist

 

Excerpt: I’m guessing these “evaluators” will be real estate agents who do BPOs, employees at banks and data firms, and probably some appraisers who need the work at $75-$100 a pop.

Read it here, plus the appraiser comments, of course.
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My comments:
– FIRREA increased the deminimus from $200,000 (1989) to $250,000 in 1994, but appraisals were still done. Why? Fannie and Freddie’s investors wanted them. FHA, VA, etc did not adopt the deminimus.
– What is an ‘evaluation’ and who does them? Hopefully, someone will tell me what is an evaluation?
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10-19-18 Newz: ;Beach House Survives – FHA Appraisal Problems – Buy This Book!

Among the Ruins of Mexico Beach Stands One House, Built ‘for the Big One’

Excerpts: The elevated house that the owners call the Sand Palace, on 36th Street in Mexico Beach, Fla., came through Hurricane Michael almost unscathed…

As they built their dream house last year on the shimmering sands of the Gulf of Mexico, Russell King and his nephew, Dr. Lebron Lackey, painstakingly documented every detail of the elevated construction, from the 40-foot pilings buried into the ground to the types of screws drilled into the walls. They picked gleaming paints from … a palette of shore colors, chose salt-tolerant species to plant in the beach dunes and christened their creation the Sand Palace of Mexico Beach.

Very interesting. Worth reading. The aerial photos of the beach are striking – one intact beach house left.
For lots more info, photos and videos, google Sand Palace of Mexico Beach

My comment: I am so glad I live on the Left Coast. Most of it is elevated, with the beaches at water level. Plus, no big areas of rivers and streams draining into the ocean causing flooding. Much colder ocean than the East Coast. Of course, for us the Big One is a major earthquake, which I try not to think about ;>
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Mortgage-industry layoffs are picking up

Excerpt: JPMorgan Chase & Co. and Movement Mortgage this month were the latest companies to announce layoffs of hundreds of mortgage workers due to a downturn in business. Many more people in the industry can expect to lose their jobs in the coming months, Fannie Mae says.

“I do believe you will see more layoffs,” Fannie’s chief economist, Doug Duncan, said during a telephone interview. Hiring in the mortgage business has traditionally been boom and bust. Companies add staff during refinance booms and then lay off workers when the rates tick up. Given the cost to hire and fire people, the companies tend to wait and see if the downturn is permanent, Duncan said. There is usually a six-month lag before the layoffs pick up steam.

That time has arrived, Duncan said.

 “We are at the beginning of that I would say,” he said. “It is a cyclical business and it is driven by the cyclical behavior of interest rates. So, none of that should be a surprise to anyone. The only thing different in this cycle was that it was policy that drove rates, so they were so low for so long.”

https://www.scotsmanguide.com/News/2018/10/Mortgage-industry-layoffs-are-picking-up/

My comment: Looks like appraisers are finally thinking about doing non-lender work. An ad for my paid newsletter was sent out by workingre today, with twice the number of new subscribers as compared with the typical response. Appraising is cyclical as it depends on mortgage lending…
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8-16-18 Newz//Market starting to tank? ;Unusual Homes ;Public Trust Failed?

Bye-bye 1004MC, Hello Analysis

By Rachel Massey, SRA, AI-RRS
Excerpt: What does this mean to the residential practitioner operating in the mortgage space? It means that the requirement for analyzing the market remains, and it is now up to the practitioner to support their opinion, without the benefit of a flawed format. Appraisers can now choose how they present their analysis, which may include multiple sources to support an opinion. Fannie Mae is clear that the one-unit housing trends section should reflect properties that are directly competitive with the property being appraised. The following information relates to several different ways to support trends, but is not an exhaustive list.

Read the full article here:

My comment: FHA and VA still require 1004mc, plus some lenders and AMCs. Freddie is expected to drop the requirement.
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4-26-18 Newz//Tristar Waivers Denied, Fannie Update, FHFA Paper on Value of AMCs Questioned

Technology or Human Logical Analysis? Who Wins?

By George Dell, MAI, SRA, ASA, CDEI
Excerpt: There is evidence that human judgment WINS – the appraiser opinion beats the AVM and other valuations based on technology. In fact, I have often heard that the qualified appraisal, based on the human logical analysis – is the “gold standard” for the industry. This appears to be true of client groups, and appears to be recognized in administrative law, our federal and state and “quasi-governmental” bodies such as Fannie Mae, Freddie Mac, and the Appraisal Foundation.

Even as we say this, the human model, the appraiser, continues to lose market share to other technologies and other “non-appraiser” value providers.

Worth reading at:

My comment: George Dell’s weekly blog posts are great, but short, as is appropriate for blogs. The May issue of the paid Appraisal Today newsletter will have a much longer article by George, “Will another profession replace appraisers?”

Uredd Rest Area (Ureddplassen)

Norway has built what may be the world’s most beautiful public toilet.

Just For Fun!!

Excerpt: Norway’s newest landmark is a place of absurd beauty. The redesigned rest area, situated along a section of the Norwegian Scenic Route, overlooks stunning views of the fjords and the open sea, and is a popular spot for visitors and locals to watch the northern lights in winter and the midnight sun in summer.

Now this picturesque place is quickly gaining a stranger kind of fame, for being home to what may be the most beautiful public toilet the world over.

Check out the Fantastic Photos and short description at:

My comment: Wow!! What do I use in the field? Fast food, bushes, etc. ;> Sometimes a crummy restroom or smelly portable toilet in a public park… Please hit reply of you know any other great public restrooms…

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12-14-17 Newz, Underground Digs, AirBnB values, FHA loan limits and PACE

Digging into our drive to tunnel, bore, and head underground.
Just For Fun!!
Excerpt: The deepest tunnelers among animals, crocodiles that can burrow 39 feet down, cannot compete with us at all. Humans have traveled, in the deepest mine in the world, almost 2.5 miles underground (to say nothing of our boreholes, which go nearly three times deeper). The longest and deepest traffic tunnel in the world, the Gotthard Base Tunnel, makes it possible to cross the Alps in 40 minutes or less. The world’s major cities are criss-crossed by tunnels carrying water, sewage, wires, and people. Montreal has an entire subterranean city for its residents to navigate in the cold winter.

My comment: Fascinating!! I have not appraised any properties with tunnels, but I have seen many (and traveled through some) over the years. Railroad and mass transit trains, abandoned tunnels to nowhere, underground parts of cities (mostly abandoned), old mining tunnels, etc. I have seen (and appraised) lots of basements though, some way below ground ;>

How much is Airbnb driving up home prices and rents

Excerpt: The researchers looked at rents and home prices in the 100 largest metro areas in the U.S. between 2012 and 2016. They found that a 10% increase in Airbnb listings leads to a 0.39% increase in rents and a 0.64% increase in house prices.

“That may sound minuscule, but between 2012 and 2016, rents rose by about 2.2% annually [on average in the 100 areas], so a 0.39% increase in that context isn’t very small at all,” says Dr. Edward Kung, an assistant professor of economics at the University of California Los Angeles and one of the study’s authors. The same is true for home prices, which rose by an average of about 4.8% annually in the 100 areas, he adds.

My comment:

Seems like Airbnb rentals are all over, such as my small city, not just in popular vacation spots. From an appraisal point of view, Airbnb rentals are tricky. More cities are regulating them. A lot more hassle than renting out an ADU for a year, for example. Tax issues for owners. To me, seems like it is business value rather than real estate value. Very confusing!!

Appraiserville from Jonathan Miller’s Housing Notes

Check out the topics below
– The Appraisal Industry Needs Better PR
No one knows what we do.
No one appreciates what we do.
– More on Tristar Bank in TN (you know, the one that shouldn’t be in the mortgage business)
– Loan origination graph 2006 to 2017
– The Next Appraisal Bombshell: Economic Growth Regulatory Reduction and Consumer Protection Act

Scroll down the page to Appraiserville, and maybe make a few stops along the way ;>

Read more!!

8-3-17 Newz// Forest Guitar, Wells Fargo-no AMCs, Creepy Scope

Forest Guitar made of trees, dedicated to a man’s lost love.

Excerpt: Breaking up the flat agricultural areas of Argentina’s Pampas is a guitar formed entirely out of trees. Stretching for 2/3 of a mile, the multi-colored instrument was created by one Argentine farmer to memorialize his wife who tragically died at the age of 25.
My comment: Just for Fun ;> Fascinating photo and brief writeup.

Scope Creep Causes Creepy Scope

By George Dell, MAI, SRA

Excerpt: …scope creep has turned into scope running. I’m sure many appraisers, particularly residential people will agree. He (David Braun) points out that as the reviewers ask for more, appraisers are finding ways to not be specific. This has turned into a self-perpetuating loop:  “As the providers, users, and enforcement bodies have differing opinions on the proper level of the scope required . . .”

My comment: Interesting blog post. Short. Worth reading.

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4-6-17 Newz .VA Appraisers Congress Hearing .Appraiser and Timeshare Scam .Fourth Approach

Assessing VA Approved Appraisers and How to Improve the Program for the 21st Century – House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity April 4, 2017

Link to video of hearing: https://youtu.be/uoVmYOq4HQY  (scroll forward past the logo)
Witnesses included:
– NAR 2016 Real Property Valuation Committee Chair
– Vice President, Appraisal Institute
– Chief Revenue Officer, Clear Capital

My comment: I have always been surprised that so few appraisers are interested in doing VA appraisals. Guess they like working for AMCs with hassles and low fees. Every week, at the bottom of every free email newsletter, I include the MBA origination stats, including VA, which is similar in volume to FHA. This week FHA and VA are very similar – around 11% of originations.

I wrote an article about the plusses and minuses of VA appraising in my Paid Appraisal Today newsletter, available to paid subscribers (see below). What I really like about VA is that you are helping veterans, not a lender trying to make a deal however they can. I noticed that a Representative O’Rourke was one of the first speakers in the video ;>
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Federal Court Permanently Bars California Man From Preparing Property Appraisals

Appraiser prepared thousands of appraisals in conjunction with timeshare donation scheme

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1-5-17 Newz .The Two Americas and Real Estate .McMansion Hell

FHA handbook 4000.1 quarterly update

No Changes to policies but it is always best to have the latest version when trying to figure out what FHA wants and underwriter/reviewer hassles.
The Federal Housing Administration (FHA) published the quarterly update to its Single Family Housing Policy Handbook 4000.1 (SF Handbook). This update incorporates previously published Mortgagee Letters into both the online and portable document format (PDF) SF Handbook.
http://www.allregs.com/tpl/public/fha_freesite.aspx  for Single Family Housing Policy Handbook 4000.1 December Update
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McMansion Hell!!
 Lots of interesting stuff. Go to the link below and look at some of the pull down links in the upper left for lots more info!!
This link is for one of the many pages – McMansion in Bentonville County, Arkansas
Cannot be described. Lots of photos with sometimes snarky comments. Just gotta see it  ;>

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12-8-16 Newz .Beautiful libraries .Roundabouts .Sales contract amendment

Beautiful and unusual places

What are the most popular links in these newsletters? Weird properties, very expensive homes, etc. Plus Appraiser goes to jail (not many of these today), Freddie and Fannie no-appraisal loans. LIA’s Claudia Says ads are also very popular. Sorry, USPAP, ASB, AQB, ASC etc. are not very popular but I put them in just to let you know what is happening, even if you don’t care much ;> Here are two:

10 of the Most Beautiful Libraries on Earth

Take a break and a look at these beautiful and unusual libraries!!

From all over the world, including the Chicago Public Library

Excerpt:

Chicago Public Library, by SOM

Chicago’s new Chinatown library branch has no sharp edges. The pebble-shaped building is wrapped in glass and marked by solar-shading fins that are meant to reduce heat and glare. The library’s curvy, three-sided shape is built around feng shui principles and designed to align with the avenues outside the building. Inside, the two-story structure is centered around a light-filled atrium.

No links for more info, but you can google the names.

https://www.wired.com/2016/09/settle-10-beautiful-libraries-earth

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Carmel, Indiana, America’s King of Roundabouts

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