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Archive for December, 2016

Top 10 Appraisal Predictions for 2017

December 13th, 2016

Top 10 Appraisal Predictions for 2017.

Somebody has to go first, so, here we go! Just say that you heard it at first!

1) $417,000 mortgage ceiling increasing.

Oh, sorry, this isn’t a prediction it is scheduled to take effect next month. The Federal Housing Finance Agency (FHFA) announced several weeks ago that the limit on loans qualifying as conforming will rise from $417,000 to $424,100, the first change in ten years.  Some pricier markets (i.e. New York and San Francisco) will see an even greater increase from $625,500 to $636,150.

2) Mortgage interest rates increase significantly.

Didn’t we say this last year? (And the year before?)

Well, we’re saying it again. We think that Kiplinger’s forecast for 30 year rates reaching 4.5% by the end of 2017 makes sense.

3) Mortgage appraisal volume declines substantially.

Along with expected declines in mortgage appraisals due to the anticipated interest rate increase, Freddie Mac’s waiving of the appraisal requirement in some lending situations will negatively impact mortgage appraisal business. Expect a 20 to 25% decline in mortgage appraisal volume in 2017 from these factors.

4) Mortgage appraisal business becomes somewhat less appealing.

Not much has been said about this: many of the appraisals that will no longer be ordered likely would have been “easier” ones with less pushback on appraisers. This is not an insignificant point to appraisers who are overtaxed by a seemingly endless stream of “stips”, requests for additional commentary, additional comparables, etc. Not good for the health of appraisers, they do need an easy one now and then!  Other than the possibility of a declining market and the wrath thrown at appraisers in that situation, no increases in scope of work are projected that would make day to day life more difficult.

5) Increasing use of Automated Valuation Models (AVMs) and Big Data.

As indicated above, AVMs will cut into appraisal volume whether by Freddie Mac (using data largely gathered by appraisers) or by homeowners zestimating. The many problems with AVMs as standalone value indicators become apparent to users quickly, however, and the impact on appraisal volume will be limited in 2017.

6) Dodd Frank amended.

We expect to see a reduced compliance and regulatory environment for lenders by year end with community banks and smaller lenders in particular looking to increase lending. This could be a positive for appraisers. It is a concern, however, that reduced regs and oversight might again lead some lenders into unwise risk taking and a repeat of past mistakes.

7) Appraisal Management Companies (AMCs) under pressure.

Look for AMCs to feel the heat from multiple sources as the spotlight is directed at their role in the lending process and what should be their “customary and reasonable fee”. Appraisers are becoming organized and are laser focused on getting out the message that AMC fees should be separated from appraiser fees in disclosure documents and should be based on “cost plus” models. Many responsible AMCs will do well in 2017 but a significant number of AMCs will not make it through the year.

8) Increase in eminent domain/condemnation appraisals.

Over the next several years, if a consensus emerges to rebuild infrastructure, the volume of appraisals for eminent domain and condemnation will rise somewhat.

9) Decline in appraisals for estate and gift tax purposes.

The possible elimination of the estate tax (or a rise in its ceiling) and changes in the tax code might significantly reduce appraisals for these purposes.

10) Appraisers reign supreme!

As we have said many times: Appraisers have a central and irreplaceable role in facilitating proper risk management in mortgage lending and in assisting property owners and others in making responsible decisions related to real property. We predict that in 2017, this will increasingly be recognized by the users of real estate appraisal services and that licensed and certified appraisers will have a banner year!

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Rates & Dates

Freddie Mac and the Mortgage Brokers Association (MBA) again reported upward movement in mortgage interest rates last week.

In their survey on December 8th, Freddie Mac reported that 30-year fixed-rate mortgages rose to 4.13% from 4.08% the previous week. They also noted that one year ago, the 30-year rate was at 3.95%.

Sean Becketti, the chief economist for Freddie Mac noted that:

“The 10-year Treasury yield dipped this week following the release of the Job Openings and Labor Turnover Survey. The 30-year mortgage rate rose another 5 basis points to 4.13 percent, starting the month 18 basis points higher than this time last year. As rates continue to climb and the year comes to a close, next week’s FOMC meeting will be the talk of the town with the markets 94 percent certain of a quarter-point-rate hike.”

The MBA reported on December 7th (for the week ending December 2nd) that 30-year rates with conforming loan balances ($417,000 or less) increased from 4.23% to 4.27%. This was the highest point since October 2014. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) also moved up, from 4.18% to 4.22%, the highest level since September 2014.  Rates for FHA backed mortgages were unchanged from the previous week at 4.0%, the highest mark since July 2015.

Mortgage applications fell by 0.7% from the previous period.  Refinance applications as a percentage of all applications increased from 55.1% to 56.2%. The FHA share of applications moved from 10.4% to 11.3% and the VA share rose from 11.7% to 12.6%.

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

Ask Angie

Angie would first like to acknowledge the winner of her last contest: California appraiser Naomi Homer.  Naomi was the first to answer correctly that Groucho Marx was the author of all three quotes: the quote “One morning I shot an elephant in my pajamas.  How he got into my pajamas I’ll never know”; “A child of five would understand this.  Send someone to fetch a child of five”; and “Humor is reason gone mad”.

Today’s questions:

1. Who said: “The best way to predict your future is to create it.”

a) Abraham Lincoln
b) Mark Cuban
c) Steve Jobs
d) None of the above

2. Who said: “New Year’s Resolution: To tolerate fools more gladly, provided this does not encourage them to take up more of my time.”

a) Mark Twain
b) James Agate
c) Old appraiser saying on working with AMCs
d) None of the above

3. Who said: “I know a man who gave up smoking, drinking, s*x, and rich food. He was healthy right up to the day he killed himself.”

a) George Carlin
b) Groucho Marx
c) Johnny Carson
d) None of the above

The first to respond with the correct answers wins:

One Free Regular Listing on

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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


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