7-3-20 Newz: New Fannie Update – Street Name Values – Converted Church

Fannie Mae Appraisal Update June 2020

Excerpts from Section on Impact of COVID-19 on appraisals

Through mid-May, about 15% of Uniform Collateral Data Portal® (UCDP®) appraisals completed after our announcement used the flexibilities, either desktop or exterior-only. As you know, circumstances vary widely across the country, and the uptake of the flexibilities reflects this. The highest percentages of appraisals using the flexibilities are around 40% in some northeastern states, while the lowest percentages are around 10% in some of the less impacted states…

We found that appraisers have used the flexibilities correctly about 90% of the time. Appraisers have done a great job identifying external obsolescence for desktops and exterior-only appraisals, as well as leveraging their local knowledge, maps, aerial photos, and other data sources. We’ve been pleasantly surprised to find that, although not required, about 35% of nontraditional reports include a sketch pulled from prior reports,

assessors records, or other sources. Also, the supporting comments in the nontraditional reports have been even better on average than those in traditional reports.

Worth reading. 5 pages and well written. Also includes comments on “one mile rule” and flood zones. To read more, click here

My comments: There are very few of these done in the Bay Area. 10% sounds about right. However, now we are now in a major virus surge in some states – opened too soon and people in some areas did not do social distancing, hand washing and wear face coverings. Use of the alternative reports may increase in some states, and decrease in the northeast.

These appraisals are not easy to learn how to do, and are very different than doing full 1004 with interior inspections. In the June issue of the paid Appraisal Today I have lots of information on them, including useful references. See the ad below.

Read more!!

6-26-20 Newz: Lot Size Mistakes – Reconsideration of Value- Unusual Mailboxes

Lot size mistakes 

By Ryan Lundquist

Excerpts: I’ve seen it happen twice lately where Tax Records lists the lot size, but it’s actually incorrect. In one instance Realist showed the lot was five acres when in fact it was only two acres. In another example it said two acres when it was less than one. Yikes.

My advice? Thankfully most of the time we can trust the lot size in Tax Records, but it’s still a good idea to quickly double-check just to be sure. After all, listing the wrong lot size in MLS or an appraisal could lead to litigation, right? What we can do is view the plat map to see if there is anything abnormal as well as try to piece together the lot size (easy to do if it’s a rectangle)…

To read more, click here

Short with good map illustrations. Plus many, many appraiser comments. I guess it is a hot topic!!

My comments: Also check out Ryan’s local recent market video for some good ideas on how to show market conditions. Plus, all his graphs illustrating his local market.

When I want to know the lot dimensions to determine lot size, I always get a copy of the legal description (usually from the recorded deed). Assessor’s office maps are for assessment purposes and do not always match the legal description. Google Maps is a good way to determine parcel size if the site boundaries are clear.

When an owner asks about lot dimensions and lot line locations (usually a dispute with a neighbor), I always give the same answer: “I Always Assume the Fences Are Not on the Property Line. Hire A Surveyor! ”

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5-29-20 Newz: Home Prices Up? – GSE COVID Requirements – Round House

May 27, 2020 By Ryan Lundquist

Excerpts: What are prices doing? That’s the question I’m getting asked the most. Here are some thoughts about how to look at prices during the pandemic. I also have two brand new price visuals.

1) Eggs in one basket: I recommend watching multiple price metrics instead of putting all our eggs in one basket. So in addition to the median price we can watch the average sales price and average price per square foot.

2) Pure pandemic data: When May stats come out we’re likely going to see 80-90%+ of those sales having gotten into contract after mid-March when the pandemic began to affect us. Thus May sales will be a stronger indicator of pandemic trends than April sales.

3) Seasonal rhythm: It’s key to understand the seasonal rhythm of the market because it helps us spot what is normal and not. For example, the median price usually increases from March to April, but this year we saw the median price dip instead. What does this mean? We need time to understand it. For now we’re recognizing something has happened that is less common. It’s worth noting we often see the median price climax around May or so, which means if we see prices soften in coming months we’re going to have to ask whether it’s a seasonal thing, pandemic thing, or something else.

For more info and of lots of graphs click here

My comment: My big article on Fannie COVID changes, including recommended “disclaimers”, is in the June paid newsletter. See excerpts in the ad below. You MUST discuss market conditions in your appraisal. Ryan’s blog post, and his other posts, give you some good ideas of what to include.

Read more!!

5-22-20 Newz: Refis to Surge – Selling Over List – What’s Happening in Your Market?

Mortgage refinancings set to surge to a 17-year high

Lenders probably will originate $1.5 trillion in refis, a 51% jump from 2019, Fannie Mae says

Excerpt: Even as other parts of the economy tank, lenders will originate $1.5 trillion in refis in 2020, a 51% jump from 2019, according to the forecast. That would be the highest level since 2003 when $2.5 trillion of mortgages were refinanced, according to data from the Mortgage Bankers Association.

The lowest interest rates on record will bolster refis after the Federal Reserve began buying mortgage-backed securities to stimulate bond demand and grease the wheels of the credit markets. The average U.S. rate for a 30-year fixed mortgage fell to an all-time low of 3.23% at the end of April, according to Freddie Mac.

It’s probably heading even lower, according to the Fannie Mae forecast. The average rate probably will be 3.2% in the second quarter, down from 3.5% in the first quarter, and drop for the rest of the year.

To read more, click here

My Comment: And I thought my 3.5% rate loan was a low rate!! Everyone should refi!! Appraisers will be very busy!! Maybe more lenders will order external and desktop appraisals.

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Will Sex Sell? BDSM Dungeon in Arkansas Basement

Excerpts: A hidden door gives access to the dungeon, leading down a spiral staircase. At the bottom is a full nightclub, outfitted with an entertainer’s pole, along with custom-BDSM furniture Shayne made himself.

The couple says the neighborhood is quiet and an excellent place to raise a family.

Some of their neighbors know about the dungeon, and a few have been invited over. The space isn’t a dirty secret, and the couple is happy to talk about it with anyone who shows interest.

Despite the fact that the surrounding community is largely conservative, Shayne says the couple has had “zero negative feedback ”

For more info and lotsa fotos click here

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5-15-20 Newz: 700 Missing Sales – Comml Appraisals Down – 22 Unusual Homes

Weird or Wonderful? 22 Homes That Are Anything But Ordinary

JUST FOR FUN! TAKE A SHORT BREAK NOW. YOU DESERVE IT!!!

Excerpts: Homebuyers and renters who dare to be different often put down roots in alternative dwellings that others eschew. Even if your inner compass tells you to steer clear of the offbeat or the outlandish, you may enjoy window-shopping these eccentric estates with …

Here’s one – foto above:

Sky-high Single Family Home in Prescott, Arizona

Is it a bird? Is it a plane? No, it’s the Falcon Nest, a ten-story dwelling whose 124-foot stature makes it the tallest single family home in North America.

To read more, click here

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Fannie Appraiser Update

Undated. Received by email on 5-13-20

NOTE: This is about exterior only and desktops. These appraisals are NOT the same as the old “drivebys” where you assumed the inside was like the outside, no owner interviews, etc. The old Desktops (aka comp checks) are not the same now. Lots more research is required.

Excerpt: As Fannie Mae has begun to examine appraisals completed using our temporary appraisal flexibilities in Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, one issue we’ve observed is that some appraisals rely on assumptions about the subject property condition. Whether completing an exterior-only or a desktop appraisal, the appraiser must have a data source for all the relevant characteristics including interior condition. Obtaining that information, whether it be from homeowners or other sources, is not only encouraged, but is required. This is addressed in the FAQs regarding the temporary flexibilities (Q47):

As stated in Lender Letter LL-2020-04, the appraiser’s certification #10 was removed recognizing that the appraiser may have to rely on information from an interested party to the transaction (borrower, real estate agent, property contact, etc.) and additional verification may not be possible. The removal of this certification acknowledges this could affect the assignment’s results. If adequate information is not available to complete the appraisal, the assignment cannot be completed.

Excerpt:

My comment: Of course, a big problem is that few of them are being done now. I am sure this is the reason why there is so much confusion. They are a lot of work. You could decide just to turn them down if you get requests for very few of them.

Also, some clients order the “traditional” 2055, where you drive by, take a few photos, and assume the inside is like the outside. This is NOT acceptable for GSEs and VA. You MUST ask your client what type of 2055 they are ordering or, who are they selling the loan to. FHA does not use 2055s.

I sent out similar information last week. This is the “official” notice with references. You MUST take the time to learn about all the changes and do a lot more work than before. That is why you should charge the same for full appraisals, exterior, and desktops.

To read more, click here

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4-17-20 Newz: 7 Things to Watch in your Market – More Fannie Updates – Funny Fotos

NOTES TO READERS: To read my April 3 newsletter: Covid 19 Data Comps and-Values, with lots of science info relating to the pandemic, such as pandemics in the past, stages of a pandemic, personal tips, etc. go to www.appraisaltoday.com/coronavirus

For the previous two weeks I sent out two newsletters a week. Got too burned out. Only one newsletter this week, so it is long.

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Seven things to watch in real estate during a pandemic

April 14, 2020 By Ryan Lundquist

Excerpts:

1) Listings: We often think about listings increasing as a way to see the market changing, but right now many markets across the country are seeing fewer new listings. So at times change is best seen with less of something rather than more. It’s not a surprise to see fewer new properties during a pandemic, right?…

7) Prices: In real estate we are so obsessed with prices, but that’s really the last place to look to see the market. What I mean is change happens first in the areas above before showing up in sales stats a couple months down the road. In short, for now the slower pandemic trend hasn’t infiltrated sales price figures as of yet in Sacramento. This doesn’t mean the market is stable in every price range and location. All I’m saying is regional and county stats don’t show price declines right now. Normally I pull monthly price data, but I’ve switched to weekly in order to see the trend sooner rather than later.

To see the other 4 factors plus lotsa graphs and many appraiser comments , click here

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4-3-20 Newz: COVID-19: Data, Comps and Values

Download your FREE copy of the April paid Monthly Appraisal Today!!

Click here to download traditional 3-column format 12 pages

Click here to download the wordprocessing version. Read on your ipad or computer. About 24 pages.

NOTE: To find what you want, search (control – F) is useful. I use it myself all the time!

Why am I giving my newsletter to everyone? It is the right thing to do.

This newsletter discusses many topics in detail

Some of the topics:

  • It’s all about the data!! Limited testing data and what it means
  • The comps: current and past epidemics and pandemics
  • Being used for analysis of the future now.
  • Health and safety issues for appraisers
  • Masks, gloves, booties, etc.
  • When will we go back to our normal lives
  • Pandemics – the stages and what they mean
  • Immunity, Vaccines

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Everything is changing so fast, it is very hard to keep up!

For example, in the April issue I wrote a lot about the CDCs recommendation on masks (only for heath care workers) and why I thought lots of people should be wearing them and why. A few days ago, the CDC is saying maybe they should recommend what I was saying. Had to revise my April newsletter!! I am sure some of what I wrote will be changing soon (finished on Wednesday), or has already changed.

Read more!!

3-6-20 Newz: Refi Mania – Corelogic AMC – Coronavirus & Housing Market

CoreLogic attributes its 4Q growth from shift to an AMC

Excerpt: Organic growth trends accelerated during the quarter boosted by market share and pricing gains. One example of accelerated momentum on the organic growth front relates to our new collateral valuation services model.

As you know, we successfully completed our AMC transformation last December. Our new service model has attracted significant market interest and we’ve recently secured major new contracts with two of the top 10 US mortgage originators. These wins together with a host of other new contracts for our reimagined service model are expected to generate strong double-digit underlying AMC revenue growth with higher margins in 2020.

To read more, click here

NOTE: Long article. Search for amc (21 references)

My comment: More staff appraisers? google corelogic AMC for more info.

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Giant Roadside Curiosities

Just For Fun and Escape!!

Excerpts: American highways have something for everyone. Lots of litter. License plates galore. And, if you take the right route, a dinosaur car wash, or a supper club in the biggest fish you’ve ever seen.

To read more, click here

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1-30-20 Newz: Tax Records SqFt. – Weird SFR Zoning – 5 ft. Wide Home

13516718 – white wood texture with natural patterns

Tax Records is not the definitive source for square footage!

By Ryan Lundquist

Excerpt:

Why is the appraiser saying it’s only 1,400 sq ft? Tax Records shows the home is 600 sq ft larger. This issue comes up ALL the time, so let’s talk about it.

The truth: The Assessor’s records are generally reliable, but I’m just saying sometimes they’re not. Why is this? At times it’s as simple as the original builder not turning in accurate information when a house was built. Or maybe an owner took out permits but official records were never updated. Of course we’ve all seen instances where the tax roll shows two units on one lot, but there’s really just one house nowadays. Let’s not forget sometimes owners do an addition without permits, so the Assessor might actually be correct even though the house is technically larger or has even sold on MLS as a larger home. For reference, here are ten reasons why an appraiser’s sketch might be different.

For lots of comments and more info, click here

My comment: This one of the main reasons that AVMs will never be very successful for all homes. Over and over again, statistical analysis shows GLA is the most important physical feature overall.

Also, how bedrooms are determined varies a lot, depending on the local market and can vary over time. The assessor number of bedrooms may not match the appraiser’s. For example, tandem rooms. Finished basements can vary also.

I started appraising at a CA assessor’s office in 1976. In CA, State Board of Equalization regulated county assessors offices, so the procedures and terminology are very similar all over the state. However, GLA from the assessor may have different requirements than other sources, such as ANSI.

Proposition 13 passed in 1979, which only allowed an annual 2% increase in assessment per year, unless there was a sale or improvements (determined by permits). Over time, the information has become more and more out of date.

Data is not available for smaller counties if the assessor says it is confidential. Until the 90s, my county did not release any data, so I had to “guesstimate” on square footage for sales and listings. We finally got it when an MAI was elected assessor.

In the early 90s, I researched assessors records around the country. In some small rural counties the records were kept at the assessor’s home. They were not digitized and available for purchase by data companies.

Appraisers need to know which areas are not accurate. Someties GLA is “political”. Within a city, accuracy can vary. In my city the least accurate records are in the “Gold Coast” with many of the city’s larger, historic homes. In other nearby cities, some properties have low GLAs to keep the property taxes lower.

Read more!!

1-17-20 Newz: Appraisal Creep – Spot Value – MLS Most Popular Words – Competency

Appraisal Creep – The Hidden Reason Why House Prices Are Too High 

Excerpts: Appraisal values should not be influenced by the price of the listing, but could a bias exist that proves otherwise? “Does the typical appraisal protect you from overpaying for a house?” asks John Wake in his article, The Hidden Reason Why House Prices Are Too High (And Income Growth Is Too Low) — Appraisal Creep.

The study looked at houses where two appraisals were done, one after they were foreclosed on and Fannie took ownership, and a second appraisal when they were under contract. Both appraisals were done within 6 months of each other and no repairs were made to the houses in the meantime. After adjusting for general house price appreciation between the first and second appraisals, the study found the second appraisals were 4.2% higher than the first appraisals…

The study made a few suggestions. The one I mentioned in the Forbes.com piece was not giving the appraiser the contract price. On one hand, the contract price holds a lot of information in it. On the other hand, releasing the contract price seems to skew the resulting appraisals a lot.

Appraisal Buzz short interview To read more, click here

Read lots more analysis and graphs in his very good Forbes article, To read more, click here

Read more!!