Appraisal Scoop

Fannie Mae Announcement 09-14 Requires Submission of Electronic Appraisal Reports in MISMO XML Standard

In Announcement 09-14, New Data Delivery Requirements, Fannie Mae announced changes to the loan delivery file and the Uniform Residential Loan Application (Form 1003) to accommodate new data elements required by the Federal Housing Finance Agency (FHFA).

Download Fannie Mae Announcement 09-14-Electronic Appraisal Reports

These changes are intended to result in enhanced identification and accountability of key parties in the mortgage transaction and are another step in Fannie Mae’s ongoing efforts to improve loan quality.

In the coming months, Fannie Mae will announce a series of other policies intended to improve loan quality, including the implementation of a robust collateral valuation analysis process, enhanced credit policy guidance, improvements to Fannie Mae’s quality control processes, and additional guidance on lender quality control activities.

In support of the loan quality initiative, this Announcement includes information about the following:

• Submission of Electronic Appraisal Reports
• Enhancements to the Loan Delivery File Format
• Mortgage Fraud Reporting

 

Sarah Vetault of Tucson, AZ - www.ComplineGroup.com asked on the WinTOTAL Users Group:

"I just got this announcement from Fannie Mae requiring submission of electronic appraisal reports in MISMO XML format by 2010.  I wonder what this means from our end.  Is the good old industry standard emailed PDF going bye-bye, forcing us to use slice/dice/rip-the-data portals for mortgage work?  Or will the lenders rip the data themselves out of our pdf files for submission to FNMA?  We are definitely living in interesting times. "

What are YOUR thoughts?

Bank / AMC Appraisal Conflicts Could Continue Under New HVCC Rules

There's a MUST READ article on "The Mortgage Lender" Implode-O-Meter blog by Teri Buhl that sheds some light on

• What the GSE's knew (and when),
• What changes lenders and AMCs have made (if any) in their appraisal ordering practices
• Secret Blacklists and Whistleblower Traps
• Cuomo's "Chinese Wall"

Teri Buhl is an investigative journalist covering Wall Street who has written for the New York Post Sunday Business, HousingWire and Trader Monthly. Contact her at [email protected].

Assuring Accurate Appraisals, Part I: Perennial Pressure Continues

Appraisals have become yet another sticking point on the already viscous road to home ownership because perennial pressure on appraisers is proving bad for business, housing and consumers.

According to Broderick Perkins article Assuring Accurate Appraisals -

"During the height of the housing boom, appraisers were pressured to up the value of homes. Now, during the housing downturn, appraisers are being pressured to lower the value of homes."

Click Here for the full Realty Times article by Broderick Perkins

Next Week: What's a consumer to do? How consumers can play a leading role in the appraisal process.

Runt Rants - Dog Tags & Fallen Heros

A year ago I did a Runt Rant on the subject of Dog Tags. A friend of mine lost a son to the Iraq War. He honored me with a gift of his son's commemorative dog tag. I vowed to wear it every national holiday that honored our veterans.

This last month, April, was the anniversary month of his son's sacrifice for all of us. I determined on the actual anniversary date that I would wear the Dog Tag as a remembrance and honor. And so I did. That evening a year ago as I removed the Dog Tags from my neck, I wondered why I was removing them. What else would hang around my neck the next day? Nothing? If so, why?

It was then that I experienced a rare creative thought....I'm not very creative. I could wear the Dog Tags around my neck permanently, wherever I go, whatever I do. A reminder: to me, possibly to others who I come in contact with.

It is now a fixture. The Geezer wears dog tags. Occasionally someone will notice them and comment. It sparks conversations, leaves a thought behind that might not have been there before. A reminder that we have what we have, we enjoy what we enjoy, because others have sacrificed to ensure that we can.

This week is Memorial Day week. Many of us connect that with our big auto race.  That it is. But it's also to remind us of our service men and women, past and present. The gift they give us. The one we often take for granted. Freedom.

This week I'm wearing my dog tags outside my shirt. Sparking more conversations, more thoughts that might not have been there before.

Thanks guys and gals for protecting what I have, what we all enjoy!

AUTHOR: Ken Verrett is the owner of Acorn Appraisal Associates, a 24 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities in the greater Houston SMSA

Real Estate Statistics - Not Always What They Seem

Read enough about the Phoenix (or elsewhere) real estate market, and someone will start spouting statistics. And while market stats are important to understand, one must exercise extreme caution in interpreting them, or listening to others interpretations.

Let's take a look at "Days on Market" (DOM), or "inventory", or "months supply".  Whatever you prefer to call it, it is an oft-cited indicator of overall market conditions. And generally speaking, it's not a bad indicator. The supply of homes available for sale is a key component in understanding the overall real estate market conditions.

It is important to understand a few things though:

Our current market really consists of three major categories of inventory: 

1. Bank/lender owned homes (also known as REOs);
2. pre-foreclosure/ short sale properties; and 
3. "normal" properties (homes that are owner/investor owned and not in a pre-foreclosure status).

Real estate is local. And the Phoenix metro area is a BIG place. Any time statistics or price indexes are quoted for the entire Phoenix area, you have to understand that conditions across the Valley can vary dramatically. Even within a suburb, conditions can vary from subdivision to subdivision. Within a single large Master Planned Community, conditions can vary from neighborhood to neighborhood.

The supply of homes is a perfect example. The general consensus in the real estate industry is that a six-month supply of homes is considered a "balanced market". Less than a six month supply means we are in a seller's market and more than a six-month supply is an indicator that we are in a buyer's market.

At this moment in time, if you look at all the available inventory of homes across the Phoenix metro area, there is a 5.2 month supply of homes.

If you're a seller, you may be thinking, "Hallelujah! Phoenix is a seller's market!" and if you're a buyer you may be thinking, "Crap. I should have bought a home a couple of months ago when it was a buyer's market and I would have had more negotiating power."

Let's look at the categories of inventory that make up this number...

Click Here To Continue Reading . . . .

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“Until now, mobilizing a website was not easy and required a great deal of technical expertise. We made Mippin Mobilizer so that almost any blog or website could instantly create a mobile version of their site and reach people on the go in just a few steps,” said Scott Beaumont, Co-Founder, Mippin.

Look for the this logo at the top left of Appraisal Scoop . . .

Post-HVCC Implementation: Are you still feeling the pressure?

As most of you know by now, the Home Valuation Code of Conduct went into effect on May 1st. Its primary purpose is to insulate the appraiser from outside influences that would apply pressure to the appraiser to inflate values.

Unfortunately, I have been receiving complaints from our members (ICAP) regarding lenders and AMC’s asking appraisers to reconsider their values. Some of the lenders and AMC’s have even created a form for this purpose. It appears that these forms are being completed by lenders agent or the borrower in most instances. Clearly the borrower is unhappy with the value conclusion and they are looking for a higher value.

QUESTION: HOW IS THIS NOT PRESSURE

ANSWER: IT IS!

The HVCC allows the homeowner to now receive a copy of the appraisal before the closing.  I’m afraid this has added fuel to the fire. In some instances, the homeowner has a legitimate complaint if they feel the appraiser made an error or omission regarding the improvements, but others are going so far as to rewrite the appraiser’s sales comparison analysis to show the appraiser how to get a higher value. Although as appraisers we appreciate all the help we can get when gathering data, this is going a little too far.

I am also being told that certain AMC's are sending the appraiser a list of sales, calling them comparables, and asking the appraiser to write an explanation as to why they did not use any of these in the appraisal. This list usual shows up after the appraisal has been completed not before, so it is not part of the original scope of work, such as in relocation appraisals.

I have been corresponding with Fannie Mae regarding some of the new problems that the HVCC has created.I would like to provide them with examples of this latest form of pressure aimed at appraisers. I can only assume that lenders are trying to skirt around the requirements of the HVCC by having their agents or their clients (the borrower) engage the appraiser. In politics this is known as plausible deniability.

The lender should be filtering this information and determining what should be passed along to the appraiser. Requests to an appraiser for corrections, additional comments, more explanation and additional market data in the form of sales, listings, etc. has always been acceptable practice.

However, I am concerned about the lender, AMC or homeowner who is sending the appraiser sales data and asking the appraiser to consider using them in the appraisal and if not, provide an explanation as to why the appraiser did not use these sales instead of those reported in the appraisal.

Please email any value dispute/reconsideration of value forms you have received to [email protected]  and I will pass them along to Fannie Mae. We need to work together as an industry to stop this before it gets out of hand.

AUTHOR: TJ McCarthy, SRA - Tim (TJ) McCarthy serves on the Illinois Real Estate Appraisal Board This email was originally sent to members of the Illinois Coalition of Appraisal Professionals – ICAP.

UPDATE: Illinois Appraisal Bill" HB 1015 - Makes Appraiser Licensing/Certification MANDATORY in Illinois

Thanks to Scott W. DiBiasio, Manager, State and Industry Affairs, of the Appraisal Institute for this UPDATE on Illinois Appraisal Bill" HB 1015 Passes Unanimously.

"Thanks for the information on Illinois HB 1015 in Appraisal Scoop. It is something that we have been following very closely. I think you did a nice job summarizing the provisions of HB 1015. However, I think you missed one of the MAJOR components of the legislation…the fact that it makes appraiser licensing/certification MANDATORY in Illinois, rather than voluntary."

Previously, licensing/certification was only mandatory in connection with federally related transactions. It will now be mandatory for any appraisal service.

Here is the section from the law that makes this change.

Old law

Sec. 5-5. Necessity of license; use of title; exemptions. (a) Beginning July 1, 2002, it is unlawful for a person to act, as a real estate appraiser, to engage in the business of real estate appraisal, to develop a real estate appraisal, to practice as a real estate appraiser, or to advertise or hold himself or herself out to be a real estate appraiser in connection with a federally related transaction without a real estate appraiser license issued under this Act. A person who violates this subsection is guilty of a Class A misdemeanor.

New law

Sec. 5-5. Necessity of license; use of title; exemptions.(a) It is unlawful for a person to (i) act, offer services, or advertise services as a State certified general real estate appraiser, State certified residential real estate appraiser, or associate real estate trainee appraiser, (ii) develop a real estate appraisal,(iii) to practice as a real estate appraiser, (iv) advertise or hold himself or herself out to be a real estate appraiser, or (v) solicit clients or enter into an appraisal engagement with clients without a license issued under this Act.  A person who violates this subsection is guilty of a Class A misdemeanor for a first offense and a Class 4 felony for any subsequent offense.

Scott W. DiBiasio

Manager, State and Industry Affairs

Appraisal Institute

122 C Street, NW, Suite 360

Washington, D.C. 20001

T  202-298-5593
F  202-298-5547
[email protected]
www.appraisalinstitute.org

Zaio's NEWCO - A National Coalition of Appraisers Announce Agreement May 13, 2009 - Offers "Z System" to Financial Services Industry

A National Coalition of Appraisers announced today that an agreement has been reached with Zaio Corporation (a Canadian public corporation) and the elected US Zone Appraiser representatives for the development of residential valuation products in America.

Under terms of the agreement, the network of American zone owners will create a new company (“Newco”) that will formalize a license agreement with Zaio to develop, control and manage the United States market.

Under the License, Newco will offer appraisal, valuation, and market analysis products (the “Z System”) to the financial services industry. The Z System is the innovative software that Zaio has been developing in conjunction with the network of 350 appraisal firms operating in most major cities across the country.

Brad Stinson, CEO of Zaio Corporation stated

“Negotiations took five months to complete. What bound us together was the belief that the Z System offers an effective, unique and valuable data base from which to provide appraisal, valuation, and market value research complied by local licensed appraisers.”

Randy Kass, CPA, Chairman of the elected Zone Appraiser Advisory Council, led the negotiations for Newco. Mr. Kass explained, “Our zone owners are recognized by major financial institutions as valuation and appraisal experts employing over 750 licensed appraisers and operating in 23 of the most populous states. We are convinced that the Z system offers a revolutionary software platform through which appraiser certified data can be provided in combination with local market expertise, in a manner that will offer significant improvements in valuation products and service to the financial community.”

Mr. Stinson noted that the Zaio’s near term focus will be the completion of specific technical tasks, overseen by Newco’s Technology Committee. Mr. Kass stated that the formation of Newco and the election of Directors are expected to be completed by the end of May, 2009. 

The Zaio Knowledge Warehouse consists of a data base of 76 million parcel records throughout the USA which Newco will now manage. The Zone Owners will continue to verify the data, combine the sales history of each parcel into the data base and use the Zaio valuation software aides known as Valytics to develop individual property valuation data and trends for the each of the neighborhood markets in which they operate.

Newco plans to offer its first four appraisal products to the market in the fourth quarter of 2009.

Mr. Stinson and Mr. Kass stated “We are pleased that the new agreement has been reached and believe that the Z Concept will offer attractive appraisal, valuation, and market analysis services to the financial industry which will benefit lenders, portfolio investors, and individual homeowners for years to come.”

For more information on Newco contact Ken Verrett at [email protected]

Zaio Corporation trades on the TSX Venture Exchange under the symbol “ZAO”.

Illinois "Appraisal Bill" HB 1015 Passes Unanimously

After three years of trying, it finally took a new Governor and a persistent ICAP to get Appraisal Bill - HB1015 passed. The Bill passed in the Senate yesterday unanimously! It will now go to Governor for signature.

This is not a new law, but an amendment to the existing law.  Brian Weaver will be covering many of the changes the new law brings to the appraisal industry in Illinois at ICAP's summer seminar.

You can read the bill as introduced here: http://tinyurl.com/oh9ec4

The following is a brief Synopsis of some of the changes.

Synopsis As Introduced Amends the Real Estate Appraiser Licensing Act of 2002.

• Makes changes throughout the Act that mark the transfer of authority to administer and enforce the Act to the Department of Financial and Professional Regulation (rather than the Office of Banks and Real Estate).
• Makes appraiser licensing/certification MANDATORY in Illinois, rather than voluntary.  Previously, licensing/certification was only mandatory in connection with federally related transactions.  It will now be mandatory for any appraisal service.
• Replaces "associate real estate appraiser" with "associate real estate trainee appraiser" throughout the Act.
• Changes the Real Estate Appraisal Board to the Real Estate Appraisal Administration and Disciplinary Board.
• Provides that a person who violates certain licensure provisions for a second or any subsequent time is guilty of a Class 4 felony.
• Sets forth additional education requirements for licensure under the Act.
• Removes a provision allowing a person who holds a valid license as a licensed real estate appraiser, issued pursuant to a predecessor Act, to convert that license to an associate real estate appraiser license.
• Removes a provision concerning licensed real estate appraiser's licenses issued pursuant to a predecessor Act and provides that an associate real estate trainee appraiser license may not be renewed more than 2 times.
• Adds a provision concerning temporary license suspension.
• Provides that an education provider may use an instructor who is a faculty member in good standing with an accredited college or university or community college or who is an approved appraisal instructor from an appraisal organization that is a member of the Appraisal Foundation. Imposes conditions on any rulemaking authority.
• Makes other changes.
• Repeals a Section concerning identifying a client. Effective Immediately

Source: http://www.ICAPweb.com

Approved Bill (Mark-up) Download IL Real Estate Appraiser Licensing Act HB1015