Newz update: IL backs down on cancelling registration for 70 AMCs after a day or so. On one side, it lets AMCs know that appraisers have power and are needed for their businesses. On the other hand, IL appraisers did not like having their business from the AMCs shut off... I don't know what it means, but it was a great news story!!

I couldn't find any "official" statements, but this was posted by IL appraisers online and I received several emails about it.

Background and data on IL AMC registration in May IL newsletter at:

http://www.idfpr.com/realestate/ILLAppr/IllinoisAppraiserMay2015.pdf

----------------------------------

15 Head-Scratchers From Real Estate Listings

 Something funny - what we all need!!!

Excerpt:

It's time for another tour through the strange things discovered by our dedicated fans in the real estate world. If you want to laugh, or just shake your head in bewilderment, you'll find something here. Remember to take your camera with you when touring (or appraising) homes. You never know when you'll find treasures like these.

My comment: How to turn a negative into a funny joke. Written for real estate agents, but even more funny for appraisers!! You know how those comments in listings are... sometimes ;>

http://lightersideofrealestate.com/real-estate-humor/fail/15-glorious-head-scratchers-from-the-wild-and-crazy-world-of-real-estate 

-------------------------------------------------

Mortgage rates up later this year?

Excerpt:

As predicted by many economists, the Federal Reserve is indeed considering raising the Federal Funds Rate later this year, Fed Chair Janet Yellen said Friday.

In a speech at the Providence Chamber of Commerce in Providence, RI, Yellen said that the Fed is seeing widespread economic improvement and expects that improvement to continue. And if the economy improves as expected, she believes it will be "appropriate" for the Fed to raise the Federal Funds Rate this year, which in turn, would affect mortgage interest rates.

My comment: refi mania will continue for awhile. Rates are still at historic lows. I don't know why everyone who can doesn't refi. It is a mystery to me.

Make money while you can! The paid Appraisal Today regularly has articles on "getting more appraisals done in the same amount of time" and will have an article on the topic in the June 2015 newsletter.

http://www.housingwire.com/articles/33981-yellen-if-economic-improvement-continues-fed-will-raise-rates-in-2015 

-------------------

Appraiser Shortage Could Gum Up the Works at Mortgage Lenders

Excerpts:

Mortgage lenders are facing a potential threat to their business that has nothing to do with new regulations or the uneven economic recovery: a persistent shortage of home appraisers.

Since the height of the housing boom in 2007, the number of individuals certified or licensed to do home appraisals has declined by 23,000, or 28%, according to the Appraisal Institute.

Age is perhaps the biggest reason why the industry is facing a talent shortage; many existing appraisers are between 50 and 55 and looking to retire within the next decade. But many younger appraisers are being driven from the industry by a combination of lower pay and heavier workloads and more stringent certification requirements that took effect in January have raised the bar for becoming an appraiser, experts say.

Industry experts suggest that these bottlenecks will only get worse as mortgage volume picks up and the number of appraisers continues to shrink. Schroeder estimates that as many as 30% of the roughly 61,000 nation's certified and licensed residential appraisers are no longer in the business but just haven't surrendered their licenses. Another 20% to 30% are "grumbling about retiring, so the actual number of working appraisers could be cut in half," he said.

http://www.nationalmortgagenews.com/news/origination/appraiser-shortage-could-gum-up-the-works-at-mortgage-lenders-1051403-1.html

My comments: As we all know, AMC Scope Creep and low fees are primary factors. Old appraisers is nothing new. When I started my appraisal business in 1986, after 5 years of 18%+ interest rates, the average appraiser age was the low 50s, similar to now. (The data was from an Appraisal Institute member survey.) After I got my MBA in 1979 I worked in corporate real estate during that period as there were few appraisal jobs and they did not pay very well. I started appraising again in 1986. There was no licensing then, so you could easily go in and out of appraising. Now, once you give up your license, you probably will not come back.

Plus, the baby boomers, a large percent of the working population, are getting older and retiring, or cutting way back on work. I am no longer willing to work those 60-80 hour weeks during the boom times. My $3,100 per month Social Security makes it easier, of course. (I started at age 70.)

The Appraisal Institute data, widely used in the media, shows a decline of 28%, in licensed appraisers mostly. This seems a bit strange as the number of certified appraisers is dropping significantly in many states. In California, the total number of appraisers has dropped almost 50%.

Prior to over 20 years ago, pre-licensing, most appraisers worked for lenders and were hired and fired when demand went up and down. Now, that method of handling demand is gone as lenders will not allow the use of trainees and fee appraisers don't want to hire trainees. The college degree requirement limits the number of people available. Having to work for low income for a few years is another significant problem. When the AQB first decided to require college degrees awhile ago, I was one of the few appraisers asking "What about residential appraising, with the boom and bust cycles?"

What's the answer? The easiest is for lenders to accept appraisals from trainees. That is the only way to manage large increases in mortgage lending. Much harder is to raise AMC fees and reduce Scope Creep so experienced appraisers will stop quitting the profession. When rates go up and appraisal business declines, many more will leave.

-------------------------

Appraiser Treated As Elementary School Students: Automating Quality and Regulating Expertise

by Jonathon Miller

Some interesting comments from Jonathon Miller on the appraiser shortage

Excerpt: Take the debacle near and dear to my appraiser's heart, the robotization of the appraisal part of housing process - since the financial crisis. [Read the following with sarcastic tone>] Let's reduce the fees paid to appraisers by 50% and force impossible turnaround times and submit the appraiser to a barrage of phone calls by 19-year old gum chewing clerks checking status and then we'll have more appraisers than we'll know what to do with because we can automate quality and regulate expertise.

Hey, hold on a second.

That's not what's happening. There's a different kind of gum in the headlines: Appraiser Shortage Could Gum Up The Works At Mortgage-Lenders. There are fewer licensed appraisers since the financial crisis and from my front line observations, there are much fewer appraisers that are competent.

Also read Miller's comments:

It's Just Weird: Of Cats and Turtles

How do valuation analytics pick up things like this?

Why lenders need appraisers - data analysis does not always work well in real estate valuation. Somehow AVMs just don't pick up what's happening on the street.

Scroll down the page at:

http://us6.campaign-archive1.com/?u=47540980899c1d755b4cddc48&id=a147c565bc&e=e758e759fb

 FHA Announces Electronic Appraisal Delivery (EAD) Portal Implementation - effective 6-27-15

 Web-based Platform for Mortgagee Submissions of FHA Appraisal Data and Reports

March 26, 2015, the Federal Housing Administration (FHA) published Mortgagee Letter 2015-08, Electronic Appraisal Delivery (EAD) Portal for FHA-Insured Single Family Mortgages.  This Mortgagee Letter announces FHA's implementation of its EAD portal, and provides information about the portal and its mandatory use with FHA case numbers assigned on and after June 27, 2016. The EAD portal will make it easier to do business with FHA by offering process and technology efficiencies that streamline appraisal data transmission, promote quality up-front appraisal data, and reduce post-endorsement appraisal data corrections.

The EAD portal will allow transmissions to FHA of only those appraisals that comply with FHA's Single Family Housing Appraisal Report and Data Delivery Guide. When submitting an appraisal, the portal provides a confirmation of a successful submission, or information regarding required corrections that may need to be made before resubmitting and transmitting to FHA.

Once an appraisal report is successfully transmitted to FHA via the EAD portal, data sharing between the portal and FHA Connection (FHAC) will allow for the population of certain data fields on the FHAC Appraisal Logging screen. As referenced in the Mortgagee Letter, mortgagees should note:

· Appraisals submitted through the EAD portal remain subject to a review for compliance with FHA appraisal requirements.

· Mortgagees remain responsible for proper underwriting of the appraisal and for ensuring the property meets FHA's minimum property requirements and standards for serving as security for the FHA-insured mortgage.

· The appraiser remains accountable for appraisal quality, credibility, and compliance with FHA appraisal requirements.

When an individual appraisal is submitted-whether through the EAD portal or through the existing process until the mandatory effective date-the appraisal submitted becomes the appraisal of record.

Link to full Mortgagee letter - PDF

http://portal.hud.gov/hudportal/documents/huddoc?id=15-08ml.pdf 

-----------------------------

Protect Yourself with a Limitation of Liability Clause

By Peter Christensen, Liability Insurance Administrators, www.liability.com

Excerpt:

In a recent case on the West Coast, a certified general appraiser was sued for professional negligence by a commercial lender. The lender had made a high-interest, short-term loan to an  investor/developer for the purchase of a large parcel of land that the borrower planned to subdivide and sell as mini-ranches. The property was appraised for approximately $5 million in 2007, and the lender had loaned $3.2 million. Within months after closing, the borrower's project began sputtering because of the financial crisis, and by early 2009, the borrower was in default. The property sold at foreclosure for $1.8 million in 2010, leaving the lender with a deficiency of more than $1.5 million in unpaid principal and interest.

In its lawsuit, the lender contended the appraiser made a serious error by incorrectly determining zoning, reporting the land to have subdividable agricultural zoning when it allegedly had agricultural/preservation zoning that prevented subdivision. The lender contended that the zoning difference made the property worth millions less than appraised and was the reason for the large deficiency. Moreover, the lender contended it would not originally have made the loan if the appraiser had accurately reported the zoning. The lender's $1.5 million damages demand exceeded the appraiser's E&O limit.

....

Why was the catastrophic loss avoided? The appraiser had an engagement agreement with a limitation of liability clause that specified the appraiser's maximum liability would be no more than the appraisal fee received for the assignment - in this case $7,500. While the case didn't settle for that small an amount, the liability cap proved to be enough of a defense that the lender was forced to settle for much less than its earlier demand.

My comment: read the full article if you are concerned about this issue. Some appraisers worry about it and others don't.

http://appraisersblogs.com/appraisal/protect-yourself-with-a-limitation-of-liability-clause

-----------------------------------------

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, go to www.mbaa.org

Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to http://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com  . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

Mortgage applications decreased 1.6 percent from one week earlier

WASHINGTON, D.C. (May 27, 2015) - according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 22, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.6 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 2 percent compared with the previous week.  The Refinance Index decreased 4 percent from the previous week.  The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index was essentially unchanged compared with the previous week and was 14 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 51 percent of total applications from 52 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 6.4 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.07 percent from 4.04 percent, with points increasing to 0.35 from  0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.06 percent from 4.04 percent, with points increasing to 0.29 from 0.25 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.83 percent from 3.80 percent, with points increasing to 0.16 from 0.06 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.29 percent from 3.26 percent, with points decreasing to 0.24 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.04 percent from 2.99 percent, with points increasing to 0.48 from 0.45 (including the origination fee) for 80 percent LTV loans.  The effective rate increased 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.