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News By Edition
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Valuation Review Edition
May 12, 2014
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Complying with lender expectations — Part One
Posted Date: Monday, May 5, 2014
In the residential appraisal industry, everything always trickles down from lenders to their third-party vendors.
Necessarily, as compliance requirements have become the hot-button issue for lenders in recent years, the need to conform to banks’ expectations has become paramount for appraisal management companies (AMCs) and independent appraisal firms, alike.
But what exactly are banks looking for from their third-party vendors in 2014? And why is third-party oversight any different now than in the past?
Valuation Review talked with a man uniquely qualified to answer those questions.
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Fannie Mae updates appraisal requirements
Posted Date: Wednesday, April 23, 2014
Fannie Mae has announced changes to the appraisal requirements in its Selling Guide for the mortgages it purchases or securitizes. The changes, which became effective April 15, were made after Fannie’s comprehensive review of its existing policies.
One of the changes now requires appraisers to take a photograph of the front of the subject property when completing the appraisal update portion of the Appraisal Update and/or Completion Report (Form 1004D). The requirement was mandated to ensure the appraiser at least inspected the exterior of the property when performing the appraisal update.
Additionally, Fannie now allows origination appraisals to be used for a subsequent transaction under the following circumstances:
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Fracking could drain home values
Posted Date: Wednesday, April 30, 2014
There is a healthy debate raging across the country regarding the merits, and potential pitfalls, of natural gas drilling, or “fracking,” as it is commonly known.
Proponents of the practice laud natural gas drilling as a way to expand the country’s energy resources within the United States. However, detractors point to studies that show fracking can lead to water and air pollution, and even potentially cause earthquakes.
One thing is not up for debate according to law firm Ballard Spahr: As talk of environmental consequences due to fracking persists, home values across the country will suffer in areas featuring natural gas drilling wells — something settlement services professionals need to be aware of.
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E-signatures a step towards increased efficiency, FHA director says
Posted Date: Wednesday, April 23, 2014
Just a couple months after the Federal Housing Administration (FHA) announced on Jan. 30 that it would be granting expanded authority to lenders to accept electronic signatures, or e-signatures, on mortgage-related documents, the acting director of program development at FHA spoke out about the rationale behind expanding the acceptance of e-signatures and what the shift means for the industry.
Although FHA has accepted e-signatures on some third-party documents in the past, such as on sales contracts, the new policy allows for e-signatures on origination, servicing and loss mitigation documents as well as on FHA insurance claims, REO sales contracts and related addenda.
FHA moved to accept e-signatures on a larger scale in order to increase efficiencies throughout the mortgage origination process.
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Fannie, Freddie could require up to $190B bailout, report shows
Posted Date: Monday, May 5, 2014
The Federal Housing Finance Agency (FHFA) released the results of its Dodd-Frank-mandated stress tests on April 30. The stress tests, which were instituted to gauge Fannie Mae and Freddie Mac’s ability to cope with different degrees of financial collapse, showed that the government sponsored enterprises (GSE) could require up to a $190 billion taxpayer bailout in the event of a financial meltdown.
The stress tests are projections based on “what if” scenarios where a variety of factors, such as GSE operations, loan performance, macroeconomic and financial market conditions and home prices are taken into account.
The stress tests reflected three hypothetical economic scenarios: a “base” climate, an “adverse” climate and a “severely adverse” climate.
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AMC announces partnership with high-volume lender
Posted Date: Wednesday, April 30, 2014
A nationwide appraisal management company announced that it now provides origination valuations to a lender that originates high volumes of residential real estate loans. The lender will now have access to the AMC’s hybrid valuation approach, which combines the assessment of skilled, experienced professionals with expert technology. Keep reading to learn more about the partnership.
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New representative member joins appraisal advisory committee
Posted Date: Wednesday, April 23, 2014
One of the nation’s largest independent providers of residential real estate appraisals has announced that its senior vice president and chief appraiser has accepted an invitation to serve as a representative member on the Appraisal Subcommittee Advisory Committee for Development of Regulations. This individual is one of only three members appointed as an advocate from the appraisal profession who will help guide regulations as they pertain to the operations of state appraisal and AMC regulatory boards. Keep reading to learn about the new member.
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Today’s most popular energy-efficient features
Posted Date: Monday, May 5, 2014
The National Association of Home Builders has released the results of its first quarter survey aimed at assessing today’s most popular energy-efficient features for homeowners. The survey was compiled by responses from residential remodelers tasked with calculating which “green” building products were most common in their home remodeling projects. Keep reading to see the features appraisers need to be familiar with.
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What does the future hold for home prices?
Posted Date: Monday, May 5, 2014
Veros Real Estate Solutions, a provider of enterprise risk management solutions, collateral valuation services and predictive analytics, has released the results of its Veros’ future home price index, which is a quarterly report that predicts home prices into the future. The index predicts how home prices will fluctuate over the next 24 months. Keep reading to see the two-year forecast, and to learn which cities stand to be impacted the most.
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Foreclosure report shows ‘slow-but-steady progress’
Posted Date: Wednesday, April 30, 2014
CoreLogic has released its March National Foreclosure Report, which provides data on completed U.S. foreclosures and foreclosure inventory. According to the global property information and analytics provider, the report shows that while the housing market continues to gain strength, it is far from fully recovered.
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Homeownership drops to lowest level since Clinton Era
Posted Date: Wednesday, April 30, 2014
The percentage of Americans who own their own homes has dropped to its lowest level in nearly 20 years, according to new data from the Census Bureau.
The homeownership rate dropped to 64.8 percent in the first quarter, down from 65.2 percent in the fourth quarter of 2013. The first quarter percentage marked the lowest rate of homeownership in the U.S. since 1995, when the rate was 64.7 percent. By comparison, the homeownership rate was as high as 69 percent as recently as 2006.
The drop in the number of homeowners can be attributed to escalating home prices and interest rates.
The S&P/Case-Shiller 20-City Composite, released April 29, showed that home prices in 20 major U.S. metros had jumped 12.9 percent year over year in February after rising 13.2 percent year over year the month before.
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Mortgage banks turning to less creditworthy borrowers
Posted Date: Wednesday, April 23, 2014
Richey May & Co has released its fourth quarter 2013 Trend Report for Independent Mortgage Bankers, which was based on information provided by 29 independent mortgage banking firms. The information shows that more banks have been willing to roll the dice on less creditworthy borrowers in order to supplement lower production. Keep reading to see what kind of homebuyers banks are opening their doors to.
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Michigan appraiser not liable for grossly overstated valuation
Posted Date: Wednesday, April 30, 2014
An appraiser and his appraisal company were not liable for grossly overstating the market value of a residence that went into default after purchase, a federal court in Michigan has ruled.
The case is Lehman Bros. Holdings Inc. v. O’Leary (No. 12-CV-14344).
The plaintiff, Lehman Brothers Bank, loaned $512,000 to Jose Hernandez for the 2006 purchase of a home in Shelby Township, Mich. The defendant, Stephen O’ Leary, provided the appraisal in connection with the purchase.
In the appraisal report, O’ Leary found the residence to have a market value of $651,000.
The borrower defaulted on the Lehman loan soon after, and a new appraiser was hired to conduct a review appraisal of the property. The new appraiser found that on June 25, 2006, the loan origination date, the Shelby Township residence had a value of $450,000 — over $200,000 less than O’Leary’s valuation.
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Fannie’s changes to UCDP will more rigorously flag appraiser violations
Posted Date: Monday, May 5, 2014
Fannie Mae has announced that it is in the process of changing its proprietary message system in the Uniform Collateral Data Portal (UCDP) in order to help lenders better spot potential problems in the appraisal review process.
Fannie instituted proprietary messages in the UCDP in January 2013 that were aimed at alerting lenders when inconsistencies were detected in appraisal data. The severity status of 21 of these messages will be revamped between the fourth quarter of 2014 and the first quarter of 2015 to force lenders to address flagged inaccuracies, rather than just suggest these inaccuracies be looked at.
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Analytical tool allows better risk assessment for lenders
Posted Date: Monday, May 5, 2014
CoreLogic, the global property information, analytics and data-enabled services provider, announced on May 1 that it has augmented the CoreLogic Home Price Indices and CoreLogic HPI Forecasts with the addition of Market Condition Indicators, enhanced analytics that identify individual geographic markets as “overvalued,” “at value” and “undervalued.” Continue reading to see how the new analytical tool can be leveraged to better assess lending risk.
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Appraisal Institute seeks comment on new valuation standards
Posted Date: Wednesday, April 30, 2014
The Appraisal Institute board of directors has announced it is seeking comment from valuation professionals on its second exposure drafts of the Proposed Appraisal Institute Standards of Valuation Practice and the Proposed Appraisal Institute Code of Professional Ethics. The proposed standards are one facet of the institute’s previously announced three-pronged strategic initiative. Keep reading to learn about the new standards.
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Building a defendable appraisal report — Part Two
Posted Date: Wednesday, April 23, 2014
An appraisal report is often boiled down to a single number: the appraised value.
That number is the crux of the report, of course, but it is far from the only thing of importance in assessing a report’s credibility.
Being able to defend one’s conclusions in an airtight manner, in other words, being able to produce a credible report, is what clients are looking for from the appraisers they work with.
Essentially, being able to craft a defendable report is the calling card of a quality appraiser.
Appraisers who can complete assignments in a timely manner and who have a diverse skillset are sought-after commodities, but if an appraiser’s report cannot hold up under scrutiny, the appraisal report isn’t worth the paper it’s printed on.
Valuation Review talked with Scott Robinson, vice president of the Appraisal Institute, about the four steps that appraisers need to take to ensure they are producing credible reports that can be easily defended. In Part One, Robinson talked about the need to get adequate background on your clients and being geographically competent.
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AMC announces new name, new technologies
Posted Date: Wednesday, April 23, 2014
A nationwide appraisal management company has changed its name as part of a rebranding initiative that supports the company’s focus as a customer- and vendor-centric organization. The company’s rebranding initiative includes the introduction of two new technologies. Continue reading to see what all the new changes entail.
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