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The End of Mortgage Appraisals?

December 4th, 2012 by Bill Collins Leave a reply »

Were The Mayans Predicting The End Of The World In 2012-Or Just The End Of Mortgage Appraisals?

On November 21st, MortgageOrb featured a report by Stuart A. Feldstein, president of SMR Research Corp., titled “The Coming Crash in Mortgage Originations” in which the author summarizes his extensive research on the recent history of mortgage lending and what the future holds.

Mr. Feldstein reviews the past two decades of mortgage loan origination and discusses the factors which led to “booms” and “busts” during this period.  He states that: “The first big refi boom was in 1993. That year, there were two refis produced for every purchase loan. Interest rates rose in 1994, and the total U.S. mortgage production in 1995 (refinances plus purchase loans) sank 46% below the 1993 level.  In 1999, we also saw the end of a refi boom that had peaked in 1998. By year 2000, total mortgage production dipped 33% below the 1998 totals. It would have been worse, but the purchase market was stronger”.

Mr. Feldstein notes that we have now gone through a more extended period of refinancing and that refis now outnumber purchase mortgages by more than three to one which he calls “unprecedented”.

The article cites information in SMR’s property records database which indicate that more than 1/3 of all current mortgage borrowers have loans with interest rates less than 5% and more than 1/2 of borrowers have loans less than 6% with these percentages continuing to increase.  SMR’s July study reported that approximately 3/4 of all current mortgage borrowers were “unlikely future refinancers” due to low interest rates and other factors.  By the end of 2013, Mr. Feldstein states that “the universe of unlikely future refinancers” will increase to 80% or possibly 90%.  He notes that even increases in the purchase loan market ($480.7 billion in 2011) would not come close to making up for the decline in the refi market (projected to reach approximately $1.5 trillion this year).

A link to the entire MortgageOrb article (which cites several positive possibilities amidst the gloom for mortgage-dependent appraisers) is found here:

The Coming Crash in Mortgage Originations

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Appraisers Approaching License Renewal: McKissock’s 7 Hour 2012-2013 USPAP Online Course is Now Available in Most States

McKissock Education, the official provider of the Appraisal Foundation’s online 2012-2013 USPAP courses, is now available in most states. Last year, the Appraisal Foundation and McKissock announced their partnership and the online course is now available in most states. See if courses are available in your area and save up to 20% on course fees by going to our Online McKissock Portal.

Start saving up to 20% off of your continuing education course fees today with McKissock and Appraiser Help! 2012-2013 USPAP Courses Now Available!

Bye-Bye to Drive-Bys?

Fannie Mae Credit Risk Analyst, Scott Douglas, announced at the recent Appraisal Summit & Expo that Fannie Mae would not be accepting exterior-only appraisal reports except for some unusual circumstances.  It is not yet clear what future impact this may also have on mortgage appraisal volume.

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Sandy’s Impact on Appraisers

The ferries are running to Fire Island again for the first time since Sandy and my Long Island based appraisal firm has been out to five communities on this barrier beach off the mainland. 

It is shocking to see large sections of communities in which I’ve visited and appraised for many years reduced to rubble.  After Katrina, I remember speaking with several Louisiana appraisers who were trying to survive their own storm related difficulties as well as carry on their appraisal business.  I now truly understand what they told me at that time about the challenges faced when simple, everyday tasks become major obstacles (i.e. getting from one destination to the next) along with the transformation of simple appraisal jobs into complex assignments (i.e. how will prospective purchasers view-in dollar adjustments-one location damaged by a storm surge with another two blocks away which went unscathed).

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AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.

Start saving up to 20% off of your continuing education course fees today with McKissock and Appraiser Help! 2012-2013 USPAP Courses Now Available!

Recent Real Estate Reports

CoreLogic released their National Foreclosure Report yesterday which showed 58,000 completed foreclosures in October, down 17% from the 70,000 foreclosures reported in October of 2011.  CoreLogic also noted that this represented a 25% decline from the previous month’s upwardly revised figure of 77,000.  In their footnotes, CoreLogic stated that this “larger-than-usual” revision from the previously released September figure of 57,000 was a result of the annual auction of delinquent tax properties in Wayne County, Michigan.    CoreLogic also reported that approximately 1.3 million homes nationally were in the foreclosure inventory, approximately 3.2% of all homes with a mortgage.  This is down from the 1.5 million homes (3.6% of all homes with mortgages) reported in October of 2011. 

CoreLogic also reported that the five states with the highest number of completed foreclosures during the past year were California (105,000), Florida (95,000), Michigan (68,000), Texas (59,000) and Georgia (54,000); these five states accounted for 49% of foreclosures during the past year.   Conversely, the five  with the lowest number of completed foreclosures during the past year were South Dakota (19), District of Columbia (64), Hawaii (452), North Dakota (511) and Maine (643).

The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were Florida (11.1%), New Jersey (7.7%), New York (5.3%), Illinois (5.0%) and Nevada (4.8%).  The states with the lowest foreclosure inventory as a percentage of all mortgaged homes were Wyoming (0.5%), Alaska (0.7%), North Dakota (0.7%), Nebraska (0.8%) and South Dakota (1.0%).

CoreLogic reported that since the financial crisis in 2008, the total number of completed foreclosures had reached 3.9 million. They also noted that prior to the decline in the real estate market, completed foreclosures averaged 21,000 per month during the period from 2000 through 2006. 

Additional information from CoreLogic can be found by going to:

Last Thursday, the National Association of Realtors (NAR) reported that pending home sales increased 5.2% in October from the previous month and 13.2% from October of 2011.  The NAR news release noted that with the exception of “a few spikes during the tax credit period” pending home sales were at their highest point since March of 2007.

All regions of the country showed increases from the previous year in the NAR report but activity was down from the previous month in the West along with the Northeast where it was noted that Hurricane Sandy had some dampening effect on sales, the full impact of which will be seen in future months.

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Rates & Dates

Mortgage interest rates were essentially unchanged in the weekly reports issued by both Freddie Mac and the Mortgage Bankers Association (MBA).

On November 29th, Freddie Mac reported that 30-year fixed-rate mortgages rose from the previous week’s rate of 3.31% to 3.32%. They also noted that last year at this time the 30-year rate was 4.00%. 

Freddie Mac’s vice president and chief economist, Frank Nothaft, stated that: "Mortgage rates were virtually unchanged this week amid growing concerns around the fiscal cliff. Although low mortgage rates failed to boost new home sales in October, year-to-date sales are up 20 percent compared with 2011 volumes, and there are growing signs of a turnaround in house prices. The S&P/Case-Shiller® national home price index (seasonally adjusted) rose 5.2 percent over the first three quarters of this year. In addition, all 20 of the city indices (seasonally adjusted) had positive growth over the first 9 months, led by a 17.9 percent increase in Phoenix. More recently, the Federal Reserve’s November 28th regional economic review, known as the Beige Book, noted that 10 of the 12 districts reported the market for single-family homes continued to improve leading into mid-November."

The MBA in its most recent Weekly Mortgage Applications Survey released November 28th, for the week ending November 23rd, reported that 30-year rates with conforming loan balances ($417,500 or less) decreased to 3.53% from the previous week’s rate of 3.54%.  The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) also declined, from 3.76% to 3.75%.  Rates for FHA backed mortgages remained unchanged from the previous week at 3.36%. 

In their press release of November 28th, the MBA reported a decline of 0.9% in mortgage applications.  Refinance applications represented 81% of all applications, unchanged from the previous week. 

Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac

Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association

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AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers build their practices. Please consider supporting us today by seeing what we have to offer.

The All New, Fully Revised Directory of AMCs and National Appraisal Companies is now available for download! Please visit our website to learn more. Current members of our Appraiser Directories are eligible to receive their copies FREE!

Ask Angie

We would first like to congratulate our most recent winner: Vern Meyer, SRA, IFA of Superior Appraisal Services in Payson, Utah.  Vern was the first to answer correctly that Jimi Hendrix was the author of the quote "And so castles made of sand fall into the sea, eventually”; Jim Wallis said "Sometimes it takes a natural disaster to reveal a social disaster"; and Phyllis Diller commented that "My cooking is so bad my kids thought Thanksgiving was to commemorate Pearl Harbor ".

Today’s questions:

1. Who Said: "Most of the things worth doing in the world were said to be impossible before they were done."

a) Louis Brandeis
b) Steve Jobs
c) Albert Einstein
d) Isaac Newton
e) None of the above

2. Who said: "All important events in the world-whether admirable or monstrous-are always spearheaded in the realm of words."

a) William Shakespeare
b) Vaclev Havel
c) Winston Churchill
d) Salman Rushdie
e) None of the above

3. Who said: “I once wanted to become an atheist, but I gave up – they have no holidays."

a) Groucho Marx
b) Woody Allen
c) Henry Youngman
d) Jerry Seinfeld
e) None of the above

The first person to respond with the correct answers wins a choice of one of the following:

One Free Regular Listing on

A Free Copy of the Directory of Appraisal Management Companies (Available Now to Members of and FREE!)

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We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: with your thoughts!

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We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at


Bill Collins, Appraiser Help Inc.

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