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Dreaded FNMA Letter - Condition Ratings
Excerpt:
And then it happens, the moment we all know is coming - the dreaded certified letter from Fannie Mae. My door bell rings and the mailman is standing on my porch with pen in hand. Now don't get me wrong, we have all been warned. They have the super computer comparing all of us and if you are the outlier you're getting notified! If a majority of Appraisers give a specific house a certain rating and you disagree, you must be wrong - BOOM - letter. I assume this is the case as I take the letter opener and slice through the very thick "Certified Mail" label. I remove and open the letter. Much to my dismay it does not say I have disagreed with my peers. Instead of attaching the entire letter to this article I will give you the highlights and a few quotes
My comments: I have been hearing about this for awhile from appraisers. My advice is to reply to the letter politely (no ranting) and explain what you did. Hopefully, this will be in your file at Fannie. In my market, almost all sales are through the MLS and are fixed up for sale, so they are very similar in condition. If a refi, the subject may need new carpets, paint, etc. There would be a condition adjustment, but I don't think they would be a different condition rating than the subject.
If you get a letter, don't stress over it. Fannie's computer is not an appraiser and only identifies what it sees as a problem. Fannie is very concerned about "boilerplate" appraisals where all the subject properties are rated the same. I suspect that that is one way to get two $250 appraisals a day done - make all the subjects "vanilla" and not address any issues such as location or condition. This was very common in the mortgage broker days to keep getting work. Now, it allows you to cut way back on requests for correction and spend a lot less time on an appraisal. But, it could cost you your appraisal license or get published citations from your state appraisal regular.
If you have received a letter, please post your experience at the link below so we will all know what is happening. And, please post any advice on how appraisers should reply to the letters.
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PAID APPRAISAL TODAY NEWSLETTER!!
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How many appraisals per week and how much time to complete an appraisal report?
This month I want to discuss three recent polls dealing with how much time it takes to complete appraisal reports and how many hours you end up working to get them all done. In the first poll, we asked "On average, how many "interior inspection" appraisals reported on a 1004 do you normally produce in a week?" This poll was very popular with 4945 responses. There was a clear winner with the response of "4-6 appraisals per week" pulling in 44 percent of the vote. The next most popular answer of "7-9 appraisals per week" took quite a drop and only pulled in 20 percent vote. The last two available answers were those at either end of the scale and they were almost tied. A few appraisers really crank out the orders because 16 percent responded that they do "10 or more" appraisals per week. On the opposite end were those representing 17 percent of the vote who only complete "1-3" appraisals per week. My guess is that many of the people in this group may be semi-retired but like to keep active in the profession while making some extra money. Of course, any individual's volume is going to depend a great deal on their specific geographic area and general complexity of their assignments.
In the next poll we asked: "On average, how long does it take you to complete a 1004 interior inspection appraisal report including inspection time (excluding driving time)?"
This was another popular poll with 4836 responses. The winner here was "4-5 hours" with 39 percent of the vote. Not far behind was "6-7 hours" with a 29 percent share of the vote. From here the numbers dropped substantially with 13 percent of appraisers going with the response of "8-9 hours". That is really getting to be painful when it's taking that long to finish each assignment. The most extreme answers both received the lowest number of votes. "More than 9 hours" was the choice of 8 percent of the appraisers with the final 10 percent going for the answer of "2-3 hours". My guess is that the appraisers in that final group really have their system down to a science and fully utilize all the available technology.
Finally, we asked "On average, how many hours per day do you spend working on appraisals and appraisal related business?" This poll was the most popular of the three with a total of 5451 responses. The winner was "9-10 hours" with 37 percent of the vote. The second most popular answer with 23 percent pushed the level up to "11-12 hours". The old standard work day of "7-8 hours" came in a distant third gathering only 17 percent of the vote. Not far behind were the 15 percent who really "burn the midnight oil" working "13 or more hours" per day. Only 9 percent work "6 hours or less" each day with most of these appraisers reporting at least 5-6 hours worked per day. It's clear, and not at all surprising, that most appraisers are working very long hours there days.
My comment: Appraisers are working long hours now because appraisal volume is way up. If you are willing to work for low AMC fees you can get as much work as you want. I would have liked to see how many hours per week. I suspect many appraisers are working 6-7 days a week. I did, during previous boom times. These polls do not include time spent on revisions. I have some data below on that. Plus, the amount of time returning update requests - answering phone calls and emails.
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How much time is spent on revisions?
From the November 2014 Appraisalport newsletter
On average, how much time do you spend making and delivering requested revisions on any given appraisal?@ We had a total of 4870 responses to this poll. Nearly half (48%) of those chose the response of A10-30 minutes.@ This would seem about right for most minor to moderate revisions. Many must be making pretty minor revisions because the second most popular response with 24 percent of the vote was AUnder 10 minutes@. Another 18 percent are having to take a bit more time and went with the choice of A31-60 minutes.@ A smaller group of 7 percent is having to invest some real time to make the revisions and picked the response of AOver an hour.@ The final 3 percent selected the answer of AI don=t make revisions.@ I=m not sure if that means they are doing an amazing job on every report and never get a request or if they just refuse to do any revisions!
My comment: Lots of appraisers complain about excessive revision requests, but this poll indicates that appraisers aren't spending much time on them. The time may have increased since 11/14.
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How often have you received revision requests that have no contributory value to the report, or were already addressed in the report commentary?" Sept 7 poll - www.fncinc.com received 3,273 votes
WHAT DO YOU THINK ABOUT TIME FOR REPORTS, REVISIONS, AND AMOUNT OF TIME PER DAY ON APPRAISALS? PLEASE POST YOUR COMMENTS, AND READ OTHER APPRAISERS' COMMENTS AT WWW.APPRAISALTODAYBLOG.COM !!
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Mortgage applications increased 25.5 percent from one week earlier
WASHINGTON, D.C. (October 7, 2015) - Mortgage applications increased 25.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending October 2, 2015.
The Market Composite Index, a measure of mortgage loan application volume, increased 25.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 26 percent compared with the previous week. The Refinance Index increased 24 percent from the previous week. The seasonally adjusted Purchase Index increased 27 percent from one week earlier. The unadjusted Purchase Index increased 27 percent compared with the previous week and was 49 percent higher than the same week one year ago.
"The number of applications for purchase and refinance mortgages soared last week due both to renewed rate volatility and as many applications were filed prior to the TILA-RESPA regulatory change. The average loan size of applications in the weekly survey increased by 6.9 percent, driven by a 12.1 percent increase in the average size of refinances," said Lynn Fisher, MBA's Vice President of Research and Economics.
The refinance share of mortgage activity decreased to 57.4 percent of total applications from 58.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.6 percent of total applications.
The FHA share of total applications decreased to 12.7 percent from 13.8 percent the week prior. The VA share of total applications decreased to 9.2 percent from 10.3 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.99 percent, the lowest level since May 2015, from 4.08 percent, with points increasing to 0.46 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.89 percent, the lowest level since April 2015, from 3.96 percent, with points decreasing to 0.25 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.80 percent, the lowest level since May 2015, from 3.87 percent, with points increasing to 0.35 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24 percent, the lowest level since May 2015, from 3.29 percent, with points decreasing to 0.38 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs increased to 2.96 percent from 2.95 percent, with points decreasing to 0.32 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
If you would like to purchase a subscription of MBA's Weekly Applications Survey, please visit www.mba.org/WeeklyApps or contact mbaresearch@mba.org.
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.
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