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October 7th, 2013 by Bill Collins Leave a reply »


Federal Government Shutdown Impacting the Mortgage Appraisal Business

Along with the dramatic rise in interest rates (until the past several weeks), the governmental shutdown promises to further impact the mortgage appraisal business.

It is reported that the USDA program is shut down (see “Rates & Dates” below). On Friday, the FHA announced that while loan originations will still be taking place (except Home Equity Conversion Mortgages and Title 1 loans), the overall loan process appears to potentially offer more pitfalls than normal.

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Appraiser Shutdown (A Personal Story)

In mid-September, I had a heart attack.  Not recognizing it as such, I continued working for Appraiser Help along with my Long Island based appraisal company, including making two property inspections.  Thankfully, family and friends much wiser than I insisted that I see a doctor who immediately called for an ambulance resulting in hospital admission and quadruple bypass surgery on Monday September 23rd.  This is why did not go out on the following day, only the second time in the past five years in which it failed to go out as scheduled.

While I have nurses in my family (including my sister and daughter in law), I have never been in a hospital and have little knowledge of the medical profession.  The dedication and professionalism of the doctors, nurses and other hospital staff was quite an eye opener.  I am forever grateful for all those who took care of me during this difficult time and helped me on a path to a speedy recovery.

During my time in the hospital, I reflected on the differences between the medical profession and the appraisal profession.  I say appraisal “profession” and not “industry” because it seems appropriate, I must say I forget the arguments made by others who say it is not a profession.  While appraisers do not directly deal with matters of life and death, the valuation conclusions we are called on to make on a daily basis impact the lives of many deeply and professional appraisers take this responsibility seriously.

Lessons learned: At age 63, it is time to take weekends off and cut back on the hours worked during the week.  Learn to delegate better.  Get organized.  Spend more time with my sons, granddaughters and family with the time saved.

For two weeks, I did not look at emails (which amounted to several hundred, not counting solicitations or spam).  I also did not check in with my office for messages and am extremely grateful to my staff and associates for their fine work in my absence.

When I finally reviewed my emails, I was struck by one from a California based firm inquiring about my interest in performing “BPOs” (Broker Price Opinions).  Nothing terribly unusual about this, I am just continuously amazed that these dirty little appraisal substitutes are still utilized.  Perhaps our activist New York State Attorney General Eric Schneiderman will lead a crusade to end BPOs in the state?  It seems unlikely that our current governor Andrew Cuomo will do so, his interests appear more aligned with the real estate brokerage community than with the appraisal profession.

One other email I received was striking: an offer from a (different) California based appraisal management company (AMC) to perform an appraisal in Sagaponack, New York for $265.  The client is Chase and the first request was received on September 27th, followed by new emails on September 30th and October 1st; no other appraisers had accepted this assignment (which was broadcast to a number of area appraisers). 

The Village of Sagaponack has consistently been at or near the top of studies regarding the most expensive real estate in the U.S.  Appraisals in Sagaponack not only involve a great deal of time when compared with other areas of Long Island (i.e. extra time involved in measuring and sketching a very large dwelling, difficulties in obtaining truly comparable sales, etc.) but carry more responsibility (as well as potential liability).

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What Did Chase Know and When Did They Know It?

This is not the first time that we have asked this question.  I personally have nothing against Chase, my Dad worked for Chase for 35 years until his death from a heart attack at age 62.  I have also performed appraisals for Chase having been engaged by other AMCs which appear to have given more consideration in the appraiser selection process than in the subject instance.

Much has been written about the now defunct AMC Evaluation Solutions and its largest client, Chase, which owed appraisers millions at the time of its collapse and subsequent bankruptcy.  Evaluation Solutions utilized an appraiser selection process which also did not make the appraiser’s qualifications first and foremost.

A fee of $265 for the Sagaponack appraisal is far below “customary and reasonable”.  The California AMC notes in their appraisal request that:

“Customary and Reasonable (C&R) Fees
Section 129E of the Truth in Lending Act (TILA); 
Unless an assignment has been designated as a Purchase or Refinance assignment above, it is not a "covered transaction" and therefore does not require that a customary and reasonable fee be paid pursuant to TILA requirements.   

(Unnamed) AMC’s Policy; 
(Unnamed) AMC’s standard policy is to pay a fee that we deem to be customary and reasonable regardless of whether the assignment technically qualifies as a ‘covered transaction’ under TILA. The appraisal fee has been calculated in a manner intended to establish a customary and reasonable fee for this assignment.  Please note, however, that certain assignments may be found to be complex or to require an increased scope of work due to unique property- or assignment-specific characteristics.”

The offered appraisal fee is far below what is customary and reasonable and the California AMC has the capability of recognizing this easily; it is an insult to suggest that the fee “has been calculated in a manner intended to establish a customary and reasonable fee for this assignment”.  The suggestion that certain assignments may be more involved and that the fee could be enhanced falls on deaf ears: I have never received an appraisal assignment from this AMC when requesting a higher fee than initially offered.

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Why Aren’t 60 Minutes, AG Schneiderman, Bank Regulators or the CFPB (Consumer Financial Protection Bureau) Looking At This?

It is our fervent hope that one or more of the above seriously investigate the appraiser selection process by various AMCs representing Chase.  I am anxious to hear how Jamie Dimon responds to questions as to “what did Chase know and when did they know it?”

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Regarding the CFPB

It is reported that the CFPB will be revisiting the issue of “customary and reasonable fees” by the end of this year.  It is our hope that their investigation will be complete and result in an improved situation than we currently have.

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Recent Real Estate Reports

In their Home Price Index released last Tuesday, CoreLogic reported that prices rose nationally by 12.4% in August on a year over year basis compared with August of 2012.  On a month to month basis, prices rose 0.9% from July.  Both studies include distressed sales.  Excluding distressed sales, prices rose 11.2% year to year and 1.0% month to month.  Other findings:

“Including distressed sales, the five states with the highest home price appreciation were:  Nevada (+25.9 percent), California (+23.1 percent), Arizona (+16.4 percent), Wyoming (+15 percent) and Georgia (+14.8 percent).

Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to August 2013) was -17.1 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -12.6 percent.”

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Rates & Dates

Freddie Mac, the Mortgage Brokers Association (MBA) and HSH Market Trends all reported falling mortgage interest rates in their most recent surveys. 

On October 3rd, Freddie Mac reported that 30-year fixed-rate mortgages declined to 4.22% from the previous week’s rate of 4.32%, the third consecutive week in which rates fell. They also noted that last year at this time the 30-year rate was at 3.36%. 

The MBA in its most recent Weekly Mortgage Applications Survey released October 2nd for the week ending September 27th, reported that 30-year rates with conforming loan balances ($417,500 or less) dropped to 4.49% from 4.62% during the previous week.   The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) fell to 4.53% from last week’s 4.66%.  Rates for FHA backed mortgages declined to 4.21% from 4.32% the previous week. 

In their press release of October 2nd, the MBA reported a decline 0.4% in mortgage applications with refinance applications rising to 63% of all applications from 61% the previous week. 

Previously on September 30th, the MBA released their “Commercial/Multifamily Quarterly Data Book” for the second quarter of 2013 which showed an increase in applications of 7% from the second quarter last year along with a 36% increase from the first quarter of this year. It also reported a decline in delinquency rates for commercial and multifamily mortgage loans.

On October 4th, HSH Market Trends reported that 30-year mortgage rates fell to 4.43% from 4.52% the previous week.  Rates for FHA-backed mortgages also declined by 9 basis points from the previous week to 4.04%.  In their news release, HSH noted that:

“Despite the complete shutdown of the wholly government-backed USDA program, the immediate impact on mortgage borrowers is still only slight.  However, as time passes, the mucilage in the gears of the mortgage machine will begin to gel, and delays in closing loans and backlog of deals will become the order of the day.  We still have some time before that becomes reality, so for now, let’s hope for a quick end to the impasse in Washington.”

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

Additional information from HSH can be found by going to: HSH.Com

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Ask Angie

We would first like to congratulate our most recent winner: North Carolina appraiser Larry Shipp of Shipp & Associates.  Shipp & Associates covers the north central North Carolina counties of Wake, Durham, Johnston, Harnett, Granville, Orange and Chatham (including Raleigh, Durham and the Chapel Hill metro area).  Larry was the first to answer correctly that Wyatt Earp was the author of the quote “Fast is fine, but accuracy is everything”; Lau-tzu authored the quote “To lead the people, walk behind them”; and that the quote " Let us learn to appreciate there are times when the trees will be bare, and look forward to the time when we may pick the fruit” is attributed to Anton Chekhov.

Today’s questions:

1. Who said: “The charm of history and its enigmatic lesson consist in the fact that, from age to age, nothing changes and yet everything is completely different.”

a) Nouriel Roubini
b) Stephen Mihm
c) Aldous Huxley
d) Newt Gingrich
e) None of the above

2. Who said: "Those who have cultivated the habit of persistence seem to enjoy insurance against failure"

a) Winston Churchil
b) Dale Carnegie
c) Napoleon Hill
d) JC Penney
e) None of the above

3. Who said: "Happiness is nothing more than good health and a bad memory."

a) Mark Twain
b) Mark Cuban
c) Albert Schweitzer
d) Mark Zuckerberg
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 to Members of and FREE!)

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Tell us what you think!

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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