Appraisal Today 
 
NEWZ://Part time appraisers/Appraisal errors/Zombie-Proof houses
October 15, 2015
e&o insurance

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There is no appraiser shortage!
Another good commentary from Jonathon Miller
 
Excerpt:
 
Alternative title: There is a shortage of appraisers willing to work for half the market rate and submit to draconian demands of 24 hour turn around by 19 year olds chewing gum from outside your market area!
 
There is an insane discussion within banking circles today that there is now a shortage of appraisers to provide valuation expertise during the issuance of mortgages. Frankly it's an argument that is entirely self-serving to the banking industry and appraisal management company industry they rely on. The American Bankers Association held a meeting to address the appraiser shortage...
 
The American Bankers Association (ABA) premise that there is an appraisal shortage is completely misleading. They are only trying to keep the appraisal management company process relevant. Cost and speed are the only real appraisal priority to mortgage lending right now despite all the pain the mortgage industry has suffered as a result of not caring what the actual value of a property was during the last boom & bust housing cycle.
 
...
 
The amazing part of the ABA optics they are expressing to the world is that it is patently false. There are plenty of appraisers out there. But there is a shortage of those willing to work for 50% of the prevailing wage. It's that simple. Economics has taken over and the banking/AMC industries has run out of form-filling robots to perform appraisals for 50% of the market rate.
 
My comments: You may need to scroll down the page to read the full story. Scroll through the fotos of California's new drought landscaping - brown dirt!! I see this now at almost all open houses. Some have brown redwood bark. Few have lawns. When the rains come this winter, there will be a lot of weeds growing!!!

 
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How to Zombie-Proof Your Home (Just in Case)
 
Excerpt:
But of course your spouse is freaking out when he or she sees you drawing up blueprints for a moat surrounding your house. And he or she has a good point: How much would zombie fortifications cost? And what would they do for the value of your home?
 
Well, let's take a look. We'll consider the most critical zombie-proofing improvements you can make for your home, keeping in mind that CONOP 8888, the Pentagon's zombie-invasion plan (seriously, it made a zombie-invasion plan-don't worry, more as a thought exercise than for fear of an actual undead uprising ... we hope), estimates that any zombie outbreak wouldn't last more than 40 days. We're also assuming that we're dealing with slow, dumb "classic" George Romero-type zombies, rather than fast Danny Boyle-style zombies.
 
 
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5 Zombie-Proof Houses to Escape the Walking Dead
 
Excerpt:
House # 3. 3453 E Co 18 1/2, Yuma, AZ Price: $640,000
Why it's here: We ask you: Is there a better place to shoot a crossbow than from a battlement? This custom-built castle in Yuma is practically walking dead-proof, and we're willing to bet there are more than a few swords for up-close-and-personal encounters. The 3,380-square-foot castle comes with an automated drawbridge and a stone moat, which you might want to dig into an actual moat. See zombies-can't-swim info, above.
 
House # 4. Unlisted, Sausalito, CA Price: $380,000
Why it's here: One good place to be when the undead start getting the munchies: the coast of California. In case you didn't know, zombies can't swim, and taking a houseboat to an island paradise is a dream in a nightmare world. Is this quirky cottage houseboat made for sailing the high seas? Probably. Hopefully. Look, what else do you have to lose?
 
 
My comment: I love the Walking Dead tv series. I never watched zombie movies or tv before. I am addicted!!! The new season finally started this Sunday. My house is nowhere near zombie proof!! But, I live on an island and zombies can't swim so maybe there is some hope. We can raise the bridges, flood the tunnel, and watch for zombie boats trying to land ...
 
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Update on Impac Mortgage - Llano Financing Mass Litigation Against Appraisers, September 29, 2015
By Peter Christensen, www.liability.com
 
Excerpts:
As covered in prior posts, the litigation against appraisers concerning Impac's mortgages is an unprecedented legal and economic assault on the appraisal profession. For residential appraisers, the Impac/Llano lawsuits are far worse in frequency than the lawsuits filed by the FDIC following the mortgage meltdown and the FDIC's receivership of more than 500 failed banks. With the Impac/Llano situation, however, it's remarkable that all the litigation is coming from just one lending source -- Impac. 
 
...
 
New Case Filings.  In August and September, Impac/Llano concentrated new case filings in Illinois, Nevada and New Jersey. It has now filed 50+ cases in Illinois, 35+ cases in Nevada, and 20+ cases in New Jersey. Though the filing of new cases in Florida has slowed, Llano continues to file cases there and has now filed 150+ cases in Florida. Nationwide, Llano has filed 285+ cases for Impac.  Because many of its lawsuits name two appraisers, sometimes three, as defendants, Llano has sued more than 450 appraisers and appraisal firms to date. A large number of appraisers have been sued in more than one lawsuit.
 

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"Tips on dealing with AMC engagement letter fine print
and report clutter - USPAP, MLS sheets, etc" By Doug Smith, SRA 
In the Current issue of Appraisal Today 

Below are some of the tips covered in Doug's article

    Engagement letters are expanding exponentially and include items that must be carefully considered that have serious business consequences such as a blanket request to include a copy of the typical E&O binder. 
   There are many issues handling the ever increasing demands of AMC and how they relate to USPAP and good business practices. For example, the Cost Approach is not required by USPAP or Fannie for all appraisals. But, many AMCs require it on all appraisals. You must conform to USPAP requirements if you do them. 
   The use of aerial maps, MLS sheets and other copyrighted material is analyzed. For example, "assuming that inclusion of MLS sheets is permissible, there are other major considerations. MLS sheets represent raw data and within a report, this data is reconciled in the verification process by cross-checking public records and interviewing market participants."
   Engagement letters are a big issue as they keep getting changed.  "Once the appraiser has accepted
the engagement letter, it is almost too late to ask for revisions in the scope of work. Appraisers must review the engagement letter and its implications before accepting the assignment. The first step when receiving a call for an AMC order is always log in order inquiries noting any requirements in the initial order form."
   Fast turn around times, such as 48 hours, are very important to lenders, AMCs' clients. "With the increase in scope of work and verification demands, the appraiser must consider whether tight turn times allow for the preparation of a credible report. More important, are there USPAP considerations regarding whether the twenty-four, or for that matter the forty-eight hour turnaround, is an acceptable assignment
condition?"

Lots of appraisers complain about AMCs, but only Doug Smith gives you the tips that have taken him many years to learn. Doug has a successful appraisal business in Montana and has been working for AMCs since long before Dodd-Frank. 

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Geographic competency - more lender Scope Creep?
 
Going the Distance in USPAP, published 5/15/15
By Brian Weaver, Coordinator Editor of IllinoisAppraiser, Appraisal Management Company Coordinator for the Illinois Department of Financial and Professional Regulation (IDFPR) Source Illinois Appraiser Newsletters - Volume 8, Issue 2
 
Excerpts:
What does USPAP say about geo- competency? Specifically...nothing. With regard to Competency in general:
'The appraiser must determine, prior to accepting an assignment, that he or she can perform the assignment competently. Comment: Competency may apply to factors such as, but not limited to, an appraiser's familiarity with a specific type of property or asset, a market, a geographic area, an intended use, specific laws and regulations, or an analytical method. If such a factor is necessary for an appraiser to develop credible assignment results, the appraiser is responsible for having the competency to address that factor or for following the steps outlined below to satisfy this COMPETENCY RULE.'
 
AMCs that draw arbitrary circles around appraisers without knowing what the appraisers understand about a market area or segment are misleading their own clients on their vetting process. Aside from that, they run the risk of enforcement action in Illinois. AMCs need to qualify their panels appropriately and thoroughly. If the distance between the appraiser and the subject is an issue, then perhaps the distance between an AMC and their appraiser should be called into question. Let's all use common sense.

Click here to read the full commentary
 
My comments: Very few appraisers work a very small geographic area. Appraisers are probably most knowledgeable in the city, or neighborhood, where you live, assuming you follow the price trends, proposed development, etc. But, maybe, until recently, you lived for many years in a city 15 miles away (or 100 miles away) and keep up on what is happening there. For the past two years, I have been working only in my small town. But, I worked for the previous 28 years in a county that was large. I have not forgotten what I learned there. Commercial appraisers typically work a very wide geographic area. On another topic, I live in a developed area, the San Francisco Bay Area. Why do AMCs send appraisers from over 40 miles away, an area with mostly tract homes, to my city with many homes built prior to 1910 when there are hundreds of other appraisers much more familiar with older cities? Low fee I assume. Why do appraisers drive so far to do difficult appraisals? Fear (afraid will never get another appraisal) and Greed (want to make as much money as possible doing low fee appraisals).
  
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Common appraisal errors that State boards see
Source: Appraisalbuzz.com. Interview with Ted Whitmer, MAI, J.D.
 
Excerpt:
Some common errors are:
- The neighborhood statistics are not supported from an objective MLS run
- The zoning is not exact
- There is no summary of the determination of highest & best use
- The cost approach is not supported (often the appraiser quotes Marshall but has never owned it and the land value has no support)
- Canned statements are used with no report or workfile backup (statements such as "the following land value is derived from either sales, or tax values or abstraction..." gets the appraiser in real trouble.)
- Sales are not the best locationally, physically or functionally. This often happens because the appraiser believes they must "bracket" sales. An appraiser should never substitute a good sale for one to simply bracket. In fact, the appraiser should appraise the property first, then if they must use other sales to bracket, put them in a report and give those sales NO weight.
- Failing to show the results of the analyses of any history of the subject (the requirement is not to merely report the history but report the results of the analysis of the history.),
- Failing to support adjustments.
- Finally, strange properties should be red flags to appraisers.
 
My comment: I have known Ted Whitmer for many years. He is an excellent speaker and teacher, plus an attorney who defends appraisers who have state board complaints.
 
Check out the relatively short full interview at:

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Part time appraisers - how many and why?
 
Statistics from data on licenses from www.asc.gov, and other sources, do not identify how many are doing appraisals part time or not at all.
 
Why does it seem like there is an appraiser shortage in some areas? Of course, it is probably a shortage of appraisers willing to work for low fees. But, this also spills over into non-AMC work as few appraisers are available as they are cranking out AMC appraisals and won't accept non-AMC work. 
 
I keep speaking with more and more appraisers who are no longer working long hours. There is almost unlimited demand from AMCs, but most of them do not work for AMCs. Or, work for a few AMCs that pay well and give them occasional work. Or, refuse to work for lower fees, so don't get much AMC work.
 
Why do appraisers work part time?
- The median appraiser age is getting higher. Older appraisers (and non-appraisers) are no longer willing to work 60-80 hours per week. They often don't need as much money as before. Children graduated from college, collecting social security, home mortgage paid off or have a low rate on mortgage, spouse retired, etc. I suspect that this is the primary reason.
- Fee appraisers are self employed. Many baby boomers that are employed want to work part time but their employers won't allow it. One of my brothers started working in the printing business when he was 18. For the past 30 years he has been doing on-site printer repairs for national companies. He is 67 and would love to cut back to part time as he does not want to do a lot of driving, which his job requires. When he retires this year, there is no one to replace him. There are no new people coming into printer repairs, which requires expertise in computer software and printer hardware, and many years of experience. His employer says "no" to part time work.
- Self-employed appraisers, as we get older, can gradually cut back on how much time we spend on appraising. That is one of the best features of having an appraisal business. Also, if we start another business or get another job, we can often continue part time appraising.
- Not working but keeping license as a backup. Hard to get license back. Sometimes do an occasional appraisal. I always recommend keeping your appraisal license as long as you can. You never know when you will need extra income.
- Don't work for AMCs and don't get a lot of work from non-AMC clients.
 
I just look in the mirror. I limit the amount of work I accept. I don't do any lender work and turn down non-lender work every week. I am 72, downsized my home, no children to support, collect Social Security of $3,000 per month since I turned 70. I worked very long hours appraising for 25 years, but 5 years ago I started cutting back on the hours I spend appraising. (I typically worked about 60 hours per week.) I get also income from my paid newsletter and ads for this free email newsletter. Most important, I need more time for my experimental music and videos, another big motivator ;>
 
I do appraisals and work on my appraisal business about 15 hours per week. My sfr fees are at, or slightly above, non-AMC C&R fees. I have little driving time as have been working only in my small city for the past two years - 10 minutes to go from one end to the other. I have an assistant that proofreads, invoices, etc. My typical time to writeup an sfr is about 2 hours. Total time is about 4 hours plus 1 hour for my assistant. There are few tract homes here.
 
What does this mean for you?
If you stay in the appraisal profession, even part time, you will have lots of work in the future. Baby Boomers are leaving the workplace, or cutting way back, in large numbers for all types of work. 
 
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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 mailto:[email protected] . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

Mortgage applications decreased 27% in the past week
WASHINGTON, D.C. (October 14, 2015) - , according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending October 9, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 27.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 27 percent compared with the previous week. The Refinance Index decreased 23 percent from the previous week. The seasonally adjusted Purchase Index decreased 34 percent from one week earlier. The unadjusted Purchase Index decreased 34 percent compared with the previous week and was 1 percent lower than the same week one year ago.

"Application volume plummeted last week in the wake of the implementation of the new TILA-RESPA integrated disclosures, which caused lenders to significantly revamp their business processes, and as a result dramatically slowed the pace of activity. The prior week's results evidently pulled forward much of the volume that would have more naturally taken place into this week. Purchase volume for the week was below last year's pace, the first year over year decrease since February 2015, while refinance volume dropped sharply even with little change in mortgage rates," said Mike Fratantoni, MBA's Chief Economist.

The refinance share of mortgage activity increased to 61.2 percent of total applications from 57.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.5 percent of total applications.

The FHA share of total applications decreased to 12.6 percent from 12.7 percent the week prior. The VA share of total applications increased to 11.5 percent from 9.2 percent the week prior. The USDA share of total applications decreased to 0.5 percent 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) remained unchanged at 3.99 percent, with points increasing to 0.53 from 0.46 (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) remained unchanged at 3.89 percent, with points increasing to 0.41 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 3.82 percent from 3.80 percent, with points increasing to 0.39 from 0.35 (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 decreased to 3.20 percent from 3.24 percent, with points increasing to 0.39 from 0.38 (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 3.00 percent from 2.96 percent, with points increasing to 0.46 from 0.32 (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.


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Ann O'Rourke, MAI, SRA, MBA

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