Happy New Year!
For me, the new year is a time to do some organizing and get things done that I've wanted to get done for a long time, but I just haven't had the motivation.
This year, I'm motivated to write a few articles about things I've been thinking about lately.
It seems like a popular topic for Bloggers in the Real Estate and Mortgage industry to write about lately has been; "Tips for homeowners to remember when the Appraiser comes out to inspect their house."
I have a few things here for Homeowners to remember. These are all based on past experiences I've had doing inspections.
#1: Please pick up all the dog poop in your backyard. At the very least, please leave me a path to the rear of the backyard, where I can stand and take a picture of the rear the house, and a path that goes all the way around the house so that I can measure your house. While I will make every attempt to be as careful as possible, while I'm doing the "Backyard Poop Dance", please don't be surprised if I track something in.
#2: Please don't smoke so much marijuana right before I get to the house. It's not that I don't believe in your right to do what you want to do in your house, however when I get a contact high, just from doing my regular inspection on you house, it sets my whole day's schedule back because I have to find a 7-11 to pick up some snacks before my next appt. Also, I might forget about the valuable things I see in your house, like your gold plated kitchen faucet and fur lined toilet seats.
#3: Please don't turn the sprinklers on right when I get to the house for my inspection. I do have to walk all the way around the perimeter of the house to measure it. Slipping and sliding in the mud at eight o'clock in the morning is not my idea of a good time.
#4: I know that you are a love machine.... but please put away the toys, implements, bottles of lubricant, magazines, videos, whips, chains and even the tastefully done portrait nudes of you and your spouse in various positions, so I don't get distracted and forget my regular routine.
#5: Please make sure the locks to all the bedrooms in the house are unlocked. No matter how much you don't trust the rest of the people in your house, I still do need to inspect every room in the house.
#6: Please put the toilet seat down. New regulations, a few years ago, required that appraisers take a photo of every bathroom and include them in the appraisal. The open toilets that are recently flushed are bad enough. But those unflushed ones.....
#7: Clean and tidy up, even if just a little bit. At least leave me a small pathway to get through every room. I'm sure that the television series, Hoarders", was inspired by the experiences of appraisers in the field.
#8: Don't rebuild your Harley Davidson motorcycle in the family room. There just isn't any way to catch all of the oil and grease and I know I'm going to have to put in the appraisal, that there were grease stains on the carpet.
#9: Please don't tell us that the property is complete and ready for a reinspection when it's not. Having a stove sitting in the middle of the kitchen, the sink unplumbed, exposed concrete sub-floors and no paint on the walls, does not constitute a new kitchen.
#10: Please control your dogs. I know you told me Muffin, who is a 180 pound Pitbull/Presa Carnario mix, is as sweet as pie to your children, however I do get a little unnerved when Muffin is lunging at me, wanting to rip my throat out.
And please don't smoke in the house, with your babies in the same room.
Let's just follow all these simple rules, and the Appraiser's life, along with everybody else's, will be much easier.
The Apple Appraisal, Inc. Home Price Statistics page has been updated!
Please click on the link below to see what property values are doing in counties and markets throughout California.
http://www.appleappraisalinc.com/prices
Feel free to forward these statistics to your colleagues or any interested parties. You may also use these statistics in any marketing as you wish. Please give credit to Apple Appraisal, Inc. if you do so. Thanks :)
We are also happy to come out and speak to any groups, including Realtors, Account Executives or Loan Officers. We do a 30 to 45 minute presentation, generally held at sales meetings. We get some great feedback on these meetings and it's a great opportunity for you to ask an Appraiser questions or get clarification on how we do things. Are you a Loan officer that wants to provide added value to a group of Realtors? Are you a Wholesale Account Executive wanting to give that extra level of service to your Brokers?
Here are some topics we have addressed at some recent meetings:
FHA vs. Conventional. What does the Appraiser look for and what triggers a re-inspection.
New UAD requirements and how we categorize condition and quality
Can an Appraiser talk to a Realtor or Loan Officer about a property?
Permits; what is required and what Appraisers need.
If you would like us to come to one of your sales meetings just reply to this e-mail.
Apple Appraisal, Inc., in business since 1991, offers valuation services of all types to Lenders and Mortgage Bankers, Attorneys, Investors and the Public.
We are a licensed Appraisal Management Company, serving California.
www.goapple.com
(925) 313-5900
Dennis Kerns and I will be speaking at a real estate office next week.
We have spoken at this office in the past for our mortgage clients. This is been a very successful meeting as it gives Realtors and our mortgage clients a chance to have an appraiser in front of them, speaking on appraisal issues, talking about property values and what is happening in the current market and it gives the audience a chance to ask questions of Appraisers.
This is an excellent chance for a mortgage broker or lender to provide an added value service to their Realtor clients by having Apple Appraisal speak at one of their Realtor office's sales meetings.
This is also a great chance for us to speak in front of loan officers, who will be dealing with the new uniform appraisal dataset requirements.
If you would like Apple Appraisal to come speak at one of your sales meetings, if you are a Realtor, loan officer, lender or anyone with an interest in appraisal issues, please e-mail Anthony Blackburn at ablackburn@goapple.com
Apple Appraisal Inc. has updated the California Home Price Statistics page on our website.
This time around volume has dropped dramatically from last month. I suspect much of it is related to consumer confidence in the inability of the state and federal governments to get their financial house in order. In July this is reflected in a nearly across-the-board 20% decline in sales volume. This may translate to weaker values in the coming months.
The Uniform Appraisal Dataset is almost upon us. Apple Appraisal, Inc. is already compliant and it has already delivered appraisals successfully in the UAD format.
While this is intended to standardize appraisal and appraisal delivery to Fannie Mae and Freddie Mac, it surely will result in confusion and delays when it is fully implemented September 1, 2011. If you have any questions about the Uniform Appraisal Dataset please do not hesitate to contact us.
In the meantime please click on the link below to see what property values are doing in counties and markets throughout California. Feel free to forward these statistics to your colleagues or any interested parties. You may also use these statistics in any marketing as you wish. Please give credit to Apple appraisal if you do so.
Apple Appraisal, Inc. is a licensed California Appraisal Management Company
Another month has passed and new statistics from the Apple Appraisal, Inc. Home Price Statistics page are up. These are statistics for home prices in selected markets in California. Spring has sprung and in most markets we are seeing increased sales and strengthening of prices. That is not to say that we are out of the woods yet, with regards to home prices, but there are positive signs on the horizon. Click on the attached link to see what home prices are doing in selected markets of California.
The Apple Appraisal, Inc. Home Price Statistics page has been updated. New counties have been added. Click on the link below.
If you don't see a county you are interested in, just ask and I'll see about getting it added.
The trends are very interesting. Significant declines in nearly all areas over the past two quarters, but we are seeing glimmers of a change in that trend.
Apple Appraisal, Inc. is a licensed Californa Appraisal Management Company.
HUD recently released 3 new MOrtgagee Letters
09-28 Appraiser Independence
09-29 Appraisal Portability
09-30 Appraisal Validity Periods
09-28, Appraiser Independence could be considered the most groundbreaking. It adopts much of the current HVCC standards and goes even further to protect the interests of consumers.
Prohibition of mortgage brokers and commission based lender staff from the appraisal process
This is very similar to the current HVCC rules. To ensure appraiser independence, FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.
Appraiser Selection in FHA Connection
FHA has found that, on numerous occasions, the name of an appraiser in the appraiser log-in screen is not the appraiser who actually completed the appraisal. Lenders who fail to assure that the FHA Connection reflects the correct name of the appraiser will be subject to administrative sanctions.
Appraisal and Appraisal Management Company (AMC)/Third Party Organization Fees
FHA does not require the use of AMCs or other third party organizations for appraisal ordering. To address several questions that have already been raised regarding compensation, this mortgagee letter corrects and expands existing fee requirements set forth in Mortgagee Letter 1997-46.
FHA-approved lenders must ensure that:
This is a very interesting issue. Appraisers have long held that if consumers knew how much AMCs were making for the service they provide and how much the appraiser is making, that there would be pressure on AMCs to increase fees to appraisers and decrease the fees they charge for managing the ordering process. I'm not entirely convinced that is true. Consumers care about their own bottom line, not someone else's. The current HVCC has not cause an upwelling of sympathy for appraisers, from consumers.
Who is going to determine what is "Customary and Reasonable"? The AMC's will argue that they have 'Customary and Reasonable" fees because appraiser's accept them. Appraisers will argue that a "Customary and Reasonable" fee is what the retail price of an appraisal is.
Currently, many AMCs send an invoice to a lender for $375+ and pay appraisers as low as $86. The fee on the invoice to the lender does not reflect the fees for the appraisal itself.
Now maybe lenders will start to question the value that they are getting from AMCs. Is it really reasonable for an AMC to take 40% of the appraisal fee just for looking up an appraiser in a directory and telling them to do an appraisal for lender X? Currently, there are several services like Ellie Mae and AppraisalPort that charge less than $25 to do that, leaving the rest of the fee for the appraiser.
Again, the argument will come down to who defines what is "Customary and Reasonable". An Appraisal and an AMC will have far different definitions.
Affirming Existing Requirements
Prevention of Improper Influences on Appraisers
I have always thought this needs to be changes to "Prevention of Improper Mortgage Pressure" or P.I.M.P., but that is a whole 'nother issue.
Mortgagee Letter 1996-26 requires that FHA Roster appraisers avoid conflicts of interest and the appearance of conflicts of interest. In order to help appraisers avoid conflicts or the appearance of conflicts, no members of a lender’s loan production staff or any person (i) who is compensated on a commission basis upon the successful completion of a loan or (ii) who reports, ultimately, to any officer of the lender not independent of the loan production staff and process, shall have substantive communications with an appraiser relating to or having an impact on valuation, including ordering or managing an appraisal assignment.
This is similar to the current HVCC rules, but with the distinction that Loan Officers or anyone compensated by commission on closing a loan cannot order the appraisal.
I have always thought the interpretation by FNMA, of the current HVCC, to allow mortgage brokers and loan officer to actually place the order with an appraisal company is ludicrous. If they are supposed to be out of the appraisal ordering and controlling loop, then keep them out. It only has cause more confusion of and already confusing issue.
Appraiser Independence Safeguards
When FHA transitioned from rotational assignment of appraisers to “Lender Select,” Mortgagee Letter 1994-54 was issued to advise of the necessity for appraisal independence. Mortgagee Letter 1994-54 prohibited loan officers and loan production staff from supervising or directing appraisers and prescribed penalties for mortgagees that unduly influenced or pressured appraisers. Subsequent Mortgagee Letters enhanced the importance of appraiser independence, and clarified and supplemented Mortgagee Letter 1994-54. In Mortgagee Letter 1996-26, FHA directed that the mortgagee and the appraiser avoid even the appearance of a conflict of interest, which would include providing the appraiser with anything of value in consideration of returning the appraisal at a given value. With the release of Mortgagee Letter 1997-45, FHA instructed mortgagees that they may not condition continued selection of an appraiser on inflating values or disregarding repair requirements.
FHA is reaffirming these requirements by adopting language from the current HVCC.
Mortgagees and third parties working on behalf of mortgagees are prohibited from:
· Withholding or threatening to withhold timely payment or partial payment for an appraisal report.
· Withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser.
· Expressly or impliedly promising future business, promotions or increased compensation for an appraiser.
· Conditioning the ordering of an appraisal report or the payment of an appraisal fee or salary or bonus on the opinion, conclusion or valuation to be reached, or on a preliminary value estimate requested from an appraiser.
· Requesting that an appraiser provide an estimated, predetermined or desired valuation in an appraisal report prior to the completion of the appraisal report, or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report.
· Providing to the appraiser an anticipated, estimated, encouraged or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase must be provided.
· Providing to the appraiser, appraisal company, appraisal management company or any entity or person related to the appraiser, appraisal company or management company, stock or other financial or non-financial benefits.
· Allowing the removal of an appraiser from a list of qualified appraisers or the addition of an appraiser to an exclusionary list of qualified appraisers, used by any entity, without prompt written notice to such appraiser, which notice shall include written evidence of the appraiser’s illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice (USPAP) or state licensing standards, improper or unprofessional behavior or other substantive reason for removal.
· Ordering, obtaining, using, or paying for a second or subsequent appraisal or automated valuation model(AVM) in connection with a mortgage financing transaction unless: (i) there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such appraisal is clearly and appropriately noted in the loan file, or (ii) unless such appraisal or automated valuation model is done pursuant to written, pre-established bona fide pre- or post-funding appraisal review or quality control process or underwriting guidelines, and so long as the lender adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value; or
· Any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity or impartiality or violates law or regulation, including, but not limited to: the Truth in Lending Act (TILA) and Regulation Z and USPAP.
Services like AppraisalPort will become increasingly attractive to FHA lenders as they move to adopt the new ML 09-28. The role of AMCs could diminish and at the very least, HUDs adoption of the HVCC concepts considerably damage the attempts by CAMB and NAMB and other organizations that represent Loan Officers and Lenders, to put a moratorium on the current HVCC rules.
More on the other two ML letters later.
After increases in nearly all areas over the summer in average sales prices, home values seem to be stabilizing if not sputtering a bit.
It's good to see thing's stabilizing, but it brings up some interesting questions.
HUD releases Mortgagee Letter 09-09, requiring appraisers to include additional comparables and additional data for properties lovated in declining markets. I think it's clear that most markets in California have stabilized and many are increasing.
I haven't seen HUD release any info stating ML 09-09 doesn't need to be followed anymore.
Maybe if someone sends HUD this blog, HUD will think about it...;)
You can see California's Home Price Stats at:
Yesterday, on April 1, 2009, the 1004 MC became a required addition to all appraisals. This includes single family, condo and 2-4 unit appraisals.
The Market Conditions Addendum (Form 1004MC) is designed to enhance the transparency of the market trends and conditions conclusions made by the appraiser. This requirement applies to loans delivered to Fannie Mae, however, even on loans not intended for delivery to FNMA, many lenders and investors are requiring it. This form is now a requirement on all FHA appraisals as well.
Check with your lenders and investors for thier requirements regarding this form.
Apple Appraisal will include this form on all appraisals only if the person that orders it, requests it.
Be careful, because if you have to order it as a condition, the fee for the form is $75, as opposed to $50 if you order it up front, with the appraisal.
As always, we are here to help make the appraisal process smooth in these turbulent times.
Apple Appraisal does appraisals in CA, AZ and WA. Shoot us an email for fees and turnaround times.
Dennis and Went to the East Bay CAMB Marketplace event at Crow Canyon Country Club yesterday. It was pretty well attended. We saw lots of old faces now in new places. Several that had gone from wholesale to retail. Our question of the day revolved around the HVCC. "What has your company done to prepare?" Surprisingly little has been done by lenders to prepare for this. I think part of the problem is the huge amount of speculation and flat out dis-information. Lets face it, the HVCC is one of the most poorly written documents I've seen in a long time. And it impacts so many people, all the way from the consumer to the investor on the secondary market. But, we have to live with it. I don't think the NAMB lawsuit is going to stop it. Maybe it will slow it, but it won't stop it. The best we can do as industry participants is educate ourselves about it. To that end, I'm reposting a portion of a document created by the Appraisal Instute about Myths and Realities of the HVCC.
MYTHS AND REALITIES OF THE HVCC
Myth: The HVCC requires lenders to use Appraisal Management Companies.
Reality
Myth: Mortgage sellers cannot achieve compliance without outsourcing the appraisal function.
Reality: Sellers may achieve compliance by establishing meaningful risk management practices, including separation between risk management (appraisal) and loan production. The Code requires that loan production staff not be involved in ordering the appraisal. This separation is currently required under existing federal bank regulation.
Myth: "Loan Correspondents" or "correspondent lenders" are the same as mortgage brokers and they too cannot order appraisals.
Reality: Unlike mortgage brokers, loan correspondents fund loans in their own name and, therefore, have "skin in the game." They are allowed to order appraisals on loans sold to Fannie Mae and Freddie Mac like other sellers that fund loans in their own name or with their own funds. Mortgage brokers no longer will be able to engage real estate appraisers directly.
Myth: Sellers cannot maintain the appraisal function internally (as an in-house operation), without loan production involvement.
Reality: There are several ways in which sellers may staff appraisal functions internally without outsourcing the function to a third party, so long as they maintain separation between risk management functions and loan production staff. To achieve compliance the appraisal function should report to an individual or department outside of loan production. Some examples of eligible individuals or entities within institutions include, but are not limited to, the following:
For many institutions, the HVCC will not require any changes. However, whether the appraisal function is a fully staffed appraisal department or an individual assigned with the appraisal responsibility, the function can be maintained internally where the reporting line is to someone other than loan production (e.g., any of the entities listed above). Sellers also should make sure that their policies are in compliance with any applicable federal bank regulatory policies by contacting their appropriate bank regulatory agency.
Myth: Loan Production staff is prohibited from communicating with appraisers.
Reality:
Myth: Use of third party vendors ensures the use of competent appraisers.
Reality: Lenders traditionally have been responsible for ensuring the competency of the appraisers and reliability of the appraisals they use for credit decisions. However, the competency of an appraiser is not measured by scoring compliance with seller servicer guidelines. Processing appraisal orders is a separate function that does not specifically include a review of competency. The function of competency review is best performed by individuals with significant education in appraisal standards and theory. In fact, here at Apple Appraisal, Inc., we think that implementation of the HVCC could make appraisals MORE unreliable. With AMCs popping up all over, forming new relationships with appraisers and trying to grind the appraiser down on thier fees, the appraiser will only naturally not put as much work and effort into the appraisal. Lastly, with so many new appraisers over the past few years and the poor nature of training in the appraisal industry, just try giving an appraiser an assignment with no estimated value. Values will be all over the place on a given appraisal, especially the more complex ones.
That's enough for now, back to work. More later.
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