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US Foreclosure Trends and Foreclosure Market Statistics – RealtyTrac

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Will Aggressive Foreclosure Measures Push Prices Down Further?

Sean Collins — Tue, 17 Jan 2012 04:49:36 +0000

New Aggressiveness Seen by Banks in Dealing With Delinquent Mortgages
McKissock 2012-2013 USPAP Online Course Now Available in Approx. 40 States and DC
Year End Reports on State of Commercial Real Estate Market Are Beginning to Appear
Reader Comments About the State of the Appraisal Business
"The Rise of New Groupthink"
Former AppraiserLoft Execs Now Used Car Salesmen?
Asleep at the Wheel: Reports Released on the Federal Reserve’s Lack of Awareness of Problems in the Real Estate Market in 2006
Rates & Dates
Ask Angie
Tell us what you think!
Closing Remarks

New Aggressiveness Seen by Banks in Dealing With Mortgages

A number of published reports during the past week have suggested that banks may be moving more swiftly in dealing with seriously delinquent mortgages and that such actions might lead to further price declines in many markets. Writing in the Los Angeles Times on January 12th, E. Scott Reckard reported on the likelihood that California and other states might see an “enormous wave” of foreclosure actions in 2012 which could lead to further price declines. Mr. Reckard cited RealtyTrac’s report that foreclosures were down by approximately one million in 2011 at approximately 1.9 million from 2010’s 2.9 million. Brandon Moore, CEO of RealtyTrac, is quoted in the article as saying that: "There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year."

Mr. Reckard noted that Realty Trac reported the average foreclosure took 352 days last year in California (a “non-judicial” state) versus 806 days in Florida and 1,019 days in New York, states which require judicial review of these matters. Links to the Los Angeles Times report and to RealtyTrac’s December 2011 U.S. foreclosure map are found here: Foreclosures Expected to Rise, Pushing Home Prices Lower

On January 12th, CNNMoney’s Les Christie discussed the report that last year foreclosures fell to their lowest level since 2007 and noted that “While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays…”

Earlier last week, CNBC’s Diana Olick discussed some of the governmental and private measures to deal with foreclosures and a link to this is found here: Realty Check – Bulk Foreclosure Sales Could Cause Bigger Bank Write-Downs

Writing in the New York Times on January 8th, Gretchen Morgenson noted that:
“The authorities have fallen silent lately about a possible settlement over foreclosure abuses at big mortgage servicing companies…That’s probably not a terrible thing. After all, no deal is better than a bad deal. State and federal authorities jumped into these talks without conducting serious investigations into foreclosure shenanigans. Why strike a deal-one that would, say, shield banks from new litigation over toxic loans…without knowing what happened?”

Ronald D. Orol, writing for MarketWatch on January 9th, noted that the Home Affordable Modification Program had passed the 900,000 mark in loan modifications, far short of the Treasury Department’s original goals of from three to four million when the program was launched in 2009. He also noted that a larger program which included Fannie Mae and Freddie Mac was needed and that many advocated the need for substantial principal reduction which was “…likely on the way.” A link to Mr. Orol’s report is found here: Obama Loan Modification Program Moving Slowly

McKissock 2012-2013 USPAP Online Course Now Available in Approx. 40 States and DC

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Year End Reports on State of Commercial Real Estate Market Are Beginning to Appear

NAI Global has just released their “US Commercial Real Estate Market Year in Review” in which they state that the commercial market across the country is “continuing to struggle”. Some of the trends they note are a “flight to quality” in office markets as a result of lower rental rates and the continuing problem in the retail sector with large “big box vacancies”. They describe the industrial market as “bifurcated” with Class A properties in good locations having a strong demand while the demand is very weak for “outmoded Class B and C properties”. NAI Global cites the large increase in investment sales volume in 2011 according to Real Capital Analytics, resulting in cap rates which “continued to compress” in almost every market with “national average cap rates for all property types below 8%”. A link to the NAI Global report is found here: US Commercial Real Estate Market Year in Review

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Reader Comments About the State of the Appraisal Business

Jim Manning, California appraiser and author of “Public Trust Betrayed: The Truth Behind the Real Estate Appraisal Industry” recently wrote to us about a letter he received from California Congresswoman Jackie Speier in which she commended him for his work and offered some of her own thoughts. Here are excerpts from this letter: "I agree with many of your conclusions. For example, you indicate that existing laws created after the savings and loan debacle were not enforced. I agree, and the State of California and federal regulators bear much of the blame for creating this recent real estate bubble and bust.

In addition, you indicated that the creation of third parties to buy appraisal services has driven down fees by 50% after they were already flat for a decade. Clearly, it is difficult to keep a well-informed appraisal force in the field if
wages and working conditions deteriorate so significantly over a brief period of time. The reforms that we did in Congress in recent years resulted in the creation of appraisal management companies. I concur that this has had a bad impact on valuations as less experienced appraisers do more and more of the work…

In response to your book’s implicit message that we haven’t completed the job of cleaning up the financial system, I will think about the role of appraisers and determine if legislation or further inquiry would be helpful. I also strongly advise you to speak to your state legislators. The most immediate impact on appraisers and the real estate industry can be made by regulators enforcing existing laws… There are not enough federal "cops on the beat" for this type of day-to-day problem, except after the financial autopsy of Wachovia or Washington Mutual is ordered by a receiver. A state legislator, however, can hold a hearing and learn if these laws are being enforced, and take relatively quick action to overcome problems…”

Dudley Tyson of Maine Realty Consultants in Cape Porpoise Maine has this to say:
“I have just received the umpteenth request (requirement) for additional information in the appraisal report. It occurs to me that the fee I charge should somehow reflect the number of pages, not including boiler plates, contained within the report. A survey of how many pages in a “typical” URAR 1004 would be interesting. I used to come in at between 18-20 pages. Currently, that number is more like 30…

I feel we have been absorbing the additional cost of producing reports that are growing larger and larger. Perhaps a menu of basic reports and a page of side dishes with additional costs?

…I understand the need for the lender to feel secure in the market value of a property. However, this is a complete summary report, not a narrative. So why should I be paid 1995 fees for a report that is twice the volume of one from 1995?”

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"The Rise of New Groupthink"

This is the title of an article by Susan Cain in Sunday’s New York Times in which she states that “people are more creative when they enjoy privacy and freedom from interruption”. Here is a link to this article for appraisers to use when receiving an insane amount of insane requests for additional documentation in an appraisal report: The Rise of the New Groupthink

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Former AppraiserLoft Execs Now Used Car Salesmen?

We at AppraiserNews.com have no comment on this except to say that we anticipate that our readership may have some thoughts about this.

A link to Ms. Leung’s report is found here: CEO of Shuttered Appraisal Firm Now in Car Biz

Asleep at the Wheel: Reports Released on the Federal Reserve’s Lack of Awareness of Problems in the Real Estate Market in 2006

Writing in the New York Times on January 13th, Binyamin Appelbaum noted that Fed transcripts released the day before showed that officials “…gave little credence to the possibility that the faltering housing market would weigh on the broader economy…”. The transcripts quoted Timothy Geithner (then president of the Federal Reserve Bank of New York) in December 2006 as saying:

“We think the fundamentals of the expansion going forward still look good”

The Times’ report noted that Mr. Geithner suggested that former Fed chairman Alan Greenspan’s “greatness still was not fully appreciated, an opinion now held by a much smaller number of people”. A link to the Times’ report is found here:
Inside the Fed in 2006: A Coming Crisis, and Banter

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Rates & Dates

Mortgage interest rates remained at historically low levels in the most recent weekly reports issued by Freddie Mac and the Mortgage Bankers Association (MBA).

On January 12th, Freddie Mac reported that rates for all products in their survey reached historic lows. 30-year fixed-rate mortgages declined to 3.89% from 3.91% during the prior week and they noted that last year at this time, the rate was at 4.71%.

The MBA in its most recent Weekly Mortgage Applications Survey released January 11th for the week ending January 6th, reported that 30 year rates with conforming loan balances ($417,500 or less) declined to 4.11% from 4.07% during the previous week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.34% from 4.41%. At the same time, the average rates for FHA backed mortgages remained at 3.96%.

In their press release of January 11th, the MBA also reported an increase of 4.5% in mortgage applications during this most recent survey. Refinance applications declined to 80.8% from 81.9% in this most recent survey.

On January 5th, David H. Stevens, former head of the FHA and current President/CEO of the MBA released a statement on the Fed’s Housing Policy White Paper in which he said:

"The Fed’s white paper is a thoughtful document that raises a number of very interesting issues that policymakers ought to consider as they seek to solve the ongoing ills of the housing market. The Fed staff’s comments validate much of what we have been saying, as it relates to the balance between credit availability and consumer protection, as well as the role that Fannie Mae and Freddie Mac could play in stabilizing and revitalizing the mortgage market.

"FHFA is tasked with preserving the assets and minimizing the near-term losses of Fannie Mae and Freddie Mac. However, at the same time, Fannie and Freddie are the dominant players in the mortgage market and we agree with the Fed that, if allowed, could take steps that would benefit the markets by helping homeowners and making affordable credit more available for qualified borrowers. Among those could be initiatives that may increase short term losses, but have long-term benefits for the housing market.

"We continue to urge policymakers to join us in advancing initiatives that will appropriately balance credit availability for qualified borrowers with regulation and protections for consumers that will ensure that the excesses of the past are not allowed to happen again."

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

We want to congratulate our most recent winner: Arizona Certified Residential Appraiser John Fournier. John was the first to answer that Mark Twain said “New Year’s Day: Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual”; Benjamin Franklin advised “Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man”; and Jay Leno joked that “New Year’s Eve, where auld acquaintance be forgot. Unless, of course, those tests come back positive.” Today’s questions:

Today’s questions:

1. Who Said: "The best way to appreciate your job is to imagine yourself without one."

a) Oscar Wilde
b) Mitt Romney
c) George Romney
d) Donald Trump
e) None of the above

2. Who said: "Act enthusiastic and you will be enthusiastic"

a) Dale Carnegie
b) Napoleon Hill
c) Tina Fey
d) Tracy Ofri
e) None of the above

3. Who said: "Develop success from failures. Discouragement and failure are two of the surest stepping stones to success."

a) Dale Carnegie
b) Napoleon Hill
c) Aman Makkar
d) Anne Finucane
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 AppraiserHelp.com

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

Tell us what you think!

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

Regards,

Bill Collins, Appraiser Help Inc.

Yale’s Shiller on U.S. Housing, Economy

AppraiserNews and the AppraiserNews Logo and all original content ©AppraiserHelp, Inc. 2009-2012

Real Estate in 2012; Lipstick on a Pig

Sean Collins — Tue, 03 Jan 2012 15:19:14 +0000

Some Recent Real Estate Reports
McKissock 2012-2013 USPAP Online Course Now Available in Approx. 40 States and DC
Is The National Association of Realtors Still Double-Counting Sales?
"I Just Got Here, But I Know Trouble When I See It"
How Much Interconnectedness and Online Time is Too Much: Finding The Right Balance
New Year Reminder For Appraisers
Rates & Dates
Ask Angie
Tell us what you think!
Closing Remarks

Some Recent Real Estate Reports

The S&P/Case-Shiller Home Price Indices showed month to month declines in 19 of the 20 cities covered in the most recent monthly report released on December 27th. The 10 and 20 City Composites showed respective monthly declines of 1.1% and 1.2% month to month along with respective year to year declines of 3.0% and 3.4%. David M. Blitzer, Chairman of the Index Committee at S&P Indices, said that “There was weakness in the monthly statistics…” while noting “…the only good news is some improvement in the annual rates of change in home prices…”.

Mr. Blitzer concluded his commentary by saying that:
“Some of the other housing statistics posted relatively healthy figures for November, but it seems that most of the good news was confined to the multi-family sector. Existing home sales rose in November, but are still at a low annual rate of about 4.0 million. Single family housing starts also rose, but remain close to record lows and are still down about 1.5% versus October 2010.”
A link to the entire Case-Shiller report along with graphic illustrations is found here: The Fourth Quarter Starts with Broad-based Declines in Home Prices According to the S&P/Case-Shiller Home Price Index

Writing for CNNMoney on the day the Case-Shiller report was released, December 27th, Les Christie noted that this was the sixth consecutive month of declines reported by Case-Shiller. He quoted Pat Newport, a housing market analyst for HIS Global Insight as saying that "The numbers are pretty bad and will get even worse over the next two years." Mr. Newport attributed the past and prospective declines to tight lending standards and the glut of foreclosed properties selling at distressed prices.
Bloomberg’s Timothy R. Homan discussed the Case-Shiller findings and their reporter Matt Miller interviewed Robert Shiller that day. Mr. Shiller found some positives amidst the negative data and suggested that the historically low interest rates suggest it “…might be a good time to buy” for those who will be staying put for a number of years and can weather some additional market declines in the next several years. Links to both Bloomberg reports are found here:
U.S. Home Prices Fell More Than Forecast

Housingwire’s Kerri Panchuk reported on December 29th about a new Urban Institute study on foreclosure which quoted Leah Hendey, a research associate for the Urban Institute as saying that “The foreclosure inventory that is building up is going to take an incredibly long time for lenders to clear. At the current pace of foreclosure sales, we are looking at a process that could take decades to complete.”

International Business Times had an interesting report on December 22nd titled “10 Trends in U.S. Housing in 2011 and What to Look for in 2012” and a link to this is found here: 10 Trends in U.S. Housing in 2011 and What to Look for in 2012

McKissock 2012-2013 USPAP Online Course Now Available in Approx. 40 States and DC

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

Is The National Association of Realtors Still Double-Counting Sales?

While the NAR’s press release of December 29th had an upbeat title “Pending Home Sales Rise in November, Highest in Year-and-a-Half” we are still concerned about the accuracy of their data. In the press release reporting a 7.3% increase in pending sales (a figure well publicized in the media) Lawrence Yun, the NAR’s chief economist is quoted as saying that “…contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems…”. In a video interview with Mr. Yun that day, he acknowledges that contract cancellations have been “ratcheting up” in recent months to approximately 30% from about 10% last year and that we may be seeing some “re-entering” in the pending sale numbers.

It is disappointing that the NAR may still be attempting to “put lipstick on a pig”. The net impact of disseminating faulty data and mindless cheerleading hurts not only the NAR and some of their positive projects (i.e. promoting the benefits of homeownership) but leads the public and policymakers into a false optimism whereby positive efforts to assist the real estate market are put aside. A link to the NAR press release and Mr. Yun’s video is found here: Pending Home Sales Rise Again in November, Highest in a Year and a Half

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"I Just Got Here, But I Know Trouble When I See It"

On New Year’s Day, New York Times published an article with the above headline in which six economists gave their thoughts on the many troubles facing us in 2012. Robert Shiller discussed “A Tax Credit to Fix A Housing Mess” in which he endorsed changes to the tax system proposed by Professor Richard Green of USC whereby there would be “…stronger, more targeted encouragement for homeownership by focusing on people who might be giving up the dream of buying any home at all”. Mr. Shiller begins by noting that:

“We used to talk a lot about helping homeowners in trouble. Instead, the bankers were bailed out — and now we hardly talk at all about aiding ordinary Americans. Yet the problems facing homeowners today are even bigger than they were in the dark days of the financial crisis”. He goes on to briefly discuss how this change in the tax code might work and concludes by saying:

“Homeownership fosters citizenship, builds stronger families and communities, encourages active participation in the economy and, ultimately, bolsters economic confidence. Professor Green’s proposal is an example of a change that wouldn’t smack of a bailout, but would help vulnerable people who are losing hope in the American Dream”.

A link to this report is found here: From 6 Economists, 6 ways to Face 2012

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How Much Interconnectedness and Online Time is Too Much: Finding The Right Balance

In an article in Sunday’s New York Times titled “The Joy of Quiet”, Pico Iyer notes the extent that people go to take a break from the incessant chatter and noise we face, in one instance describing a retreat with no internet or TV at a cost of $2,285 for one night. The author notes that:

“Has it really come to this? In barely one generation we’ve moved from exulting in the time-saving devices that have so expanded our lives to trying to get away from them — often in order to make more time. The more ways we have to connect, the more many of us seem desperate to unplug”.

Mr. Iyer notes that the average American now spends at least eight and a half hours per day in front of a screen with the number of hours spent online by adults doubling between 2005 and 2009. The author cites research which reports that the average office worker “…enjoys no more than three minutes at a time at his or her desk without interruption”. He notes that “…we’re rushing to meet so many deadlines that we hardly register that what we need most are lifelines” and states that “All the data in the world cannot teach us how to sift through data…”

My suggestion to appraisers the next time they are asked to provide additional data for no good reason by a client or AMC is to simply provide them the above comment.

A link to the Times’ article is found here: The Joy of Quiet

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New Year Reminder For Appraisers

So, what are you waiting for? How many times do we have to tell you to allocate some time each day to building your private appraisal practice?

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

Rates & Dates

Mortgage interest rates remained low in the most recent weekly reports issued by Freddie Mac and the Mortgage Bankers Association (MBA).

On December 29th, Freddie Mac reported that rates for 30-year fixed-rate mortgages rose to 3.95% from 3.91% during the prior week. They noted in their report that last year at this time, the 30-year rate was at 4.86%.

The MBA in its most recent Weekly Mortgage Applications Survey released December 21st for the week ending December 16th, reported that 30 year rates with conforming loan balances ($417,500 or less) declined to 4.08% from 4.12% during the previous week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.44 percent from 4.47 percent. At the same time, the average rates for FHA backed mortgages declined to 3.93% from the prior week’s 3.94%. In all three instances, the MBA noted that the rates were now at the lowest point of the year.

In their press release of December 21st, the MBA also reported a decrease of 2.6% in mortgage applications during this most recent. Refinance applications rose to 80.7% of all applications in this most recent survey, the highest percentage reached this year. In the report, Michael Fratantoni (MBA’s Vice President of Research and Economics) noted that:
“Remarkably low rates are not enough, as many homeowners continue to hold back due to lack of equity in their properties, [credit problems] and a weak job market.”

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

We want to congratulate our most recent winner: Nevada Certified Residential Appraiser Michael L. Brunson who is with Brunson-Jiu LLC in Las Vegas, Nevada.Brunson-Jiu LLC provides a variety of valuation services including USPAP compliance reviews, real estate damage analytics and litigation consulting (some of which he performs on a nationwide basis). Mr. Brunson was the first to answer that Louis Brandeis said “Most of the things worth doing in the world were said to be impossible before they were done”, Vaclev Havel noted that “All important events in the world—whether admirable or monstrous—are always spearheaded in the realm of words” and Henry Youngman joked that “I once wanted to become an atheist, but I gave up – they have no holidays.” Today’s questions:

Today’s questions:

1. Who Said: "New Year’s Day: Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual."

a) Oscar Wilde
b) Benjamin Franklin
c) Mark Twain
d) Lindsay Lohan
e) None of the above

2. Who said: "Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man."

a) William Booth
b) Benjamin Franklin
c) Mark Twain
d) Michelle Bachman
e) None of the above

3. Who said: "New Year’s Eve, where auld acquaintance be forgot. Unless, of course, those tests come back positive."

a) Jay Leno
b) Jon Stewart
c) Sarah Palin
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 AppraiserHelp.com

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

Tell us what you think!

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

Regards,

Bill Collins, Appraiser Help Inc.

Foreclosures Fall, But Outlook Isn’t Bright

AppraiserNews and the AppraiserNews Logo and all original content ©AppraiserHelp, Inc. 2009-2011

NAR Admits Significant Error in Sales Calculations for 5 Years

Sean Collins — Tue, 20 Dec 2011 05:14:17 +0000

National Association of Realtors Admits to Double Counting Some Home Sales Resulting in Overstated Sales Figures for Five Years
McKissock 2012-2013 USPAP Online Course Now Available in Approx. 40 States and DC
Some Recent Real Estate Reports
What Our Readers Have to Say About The Difficult State of the Appraisal Profession
End of Year Reminder For Appraisers
"Perils of Indemnity"
Rates & Dates
Ask Angie
Tell us what you think!
Closing Remarks

National Association of Realtors Admits to Double Counting Some Home Sales Resulting in Overstated Sales Figures for Five Years

In a statement to Reuters last week, NAR spokesman Walter Malony reportedly stated that: “All the sales and inventory data that has been reported since January 2007 is being downwardly revised. Sales were weaker than people thought”.

On December 14th, the NAR posted a video and “Q and A on Re-Benchmarking of Home Sales” in which they discussed the matter. The video and Q and A discussed the problem of “data drift” and how “…there could be double or triple counting of a single home sale transaction” due to a single property being listed and sold on several Multiple Listing Systems. The NAR addressed some of the ways in which they would change their methods of collecting and processing information. They also seemed to be saying that the errors were not that important because the “trend lines” were the same as before and that “Like weather, the only thing that truly matters for consumers are outlooks on data from their local market area.”

After what appears to be an attempt to downplay the significance of the errors, the Q and A noted that: “The national data is important for policymakers to measure the broad strength and weakness of the housing market as they impact the national economy.”

The over-statement of sales by the NAR was substantial and appears to have continued for approximately five years, supposedly ending in October of this year. AppraiserNews.com is of the opinion that this is no time for the NAR to try to gloss over the extent of the problem, their credibility is truly at stake. If their data is to remain “important for policymakers” they will have to seriously address their deficiencies and make their chief economist, Lawrence Yun, choose whether he really is an economist and not a cheerleader whose commentary is not credible. In their video of December 14th, Mr. Yun starts to drift away into lala land with comments about “hopefully banks will start lending” and remarks about increased sales in 2012 along with a modest increase in values. The Q and A states:
“NAR takes its role as a leading source for housing information very seriously, and toward that end, NAR research will announce results of a year-long re-benchmarking process for existing-home sales on Wednesday, December 21.”

We shall see. A link to the NAR video and Q and A is found here: National Association of Realtors, Existing Home Sales Methodology, Benchmarking FAQ

McKissock 2012-2013 USPAP Online Course Now Available in Approx. 40 States and DC

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

Some Recent Real Estate Reports

On December 15th, CNNMoney’s Les Christie discussed RealtyTrac’s latest report and why a new wave of foreclosures may be about to bring in the new year. Links to Mr. Christie’s article and the RealtyTrac report are found here: Scheduled Foreclosure Auctions At 9-Month High as New Foreclosure Wave Builds

On December 16th, the SEC charged six former executives of Fannie Mae and Freddie Mac with securities fraud related to misrepresentations of their holdings of subprime or high risk mortgage loans. Links to the SEC press release and a report by CNNMoney’s Aaron Smith are found here: SEC Charges Former Fannie Mae and Freddie Mac Executives With Securities Fraud

SEC Charges Former Execs of Fannie, Freddie

While Fannie and Freddie ex-execs were getting kicked around, Mark Zandi in the Washington Post on December 15th had some nice words for the FHA including the following:
“It has become fashionable to rail against government intervention in the economy, and the FHA is a favorite example by those trying to show the government’s overreach. In reality, the FHA shows how government action during the Great Recession forestalled a much worse economic fate. If FHA lending had not expanded after private mortgage lending collapsed, the housing market would have cratered, taking the economy with it.” A link to the complete article is found here: FHA Role May Be Bloated, But We’d Be Much Worse Off Without It

On December 9th, Rusty Weston of Yahoo! Real Estate discussed their recent survey which found continued support for the American dream of homeownership, along with a newly “Green” component and a link to this report is found here: Yahoo! Study: American Dream Homes Turn Green

On December 15th, CNBC’s Diana Olick discussed the projected growth in “green” construction and retrofitting in commercial real estate, along with the increased value associated with such work. A link to Ms. Olick’s video is found here: Green Buildings Pay

According to HousingWire’s Kerri Panchuk, Standard & Poor’s Rating Services reported yesterday that the delinquency rate for collateral backing industrial commercial mortgage-backed securities had reached 12.05%, a 22 year high. The article did note that the report indicated that the industrial segment was the only property type which was currently at a historic high.

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What Our Readers Have to Say About The Difficult State of the Appraisal Profession

Jon Cappaert, who performs appraisals in both Wisconsin and Michigan writes that:
“I am 34 years old, and have been appraising since 2005. I am a Certified Residential Appraiser. I don’t mind the 1004MC or the new UAD, I can’t handle all the the client specific requirements that the AMC’s have and they all have different requirements. I don’t have time to read each of the AMC’s flyers every other day telling me what needs to be on the report. All they want to do is to try and make their appraisals look better than the rest. The only thing I can do is charge more for the extra work. I think other appraisers in my area are feeling the same way, because I am still getting more than enough work. Bottom line is that they need to pay for our extra work.”

Buffalo, New York appraiser Jerry Pirritano writes: “How does anyone expect a professional opinion of value instantly. Broadcasting assignments at reduced fees with unrealistic turn times yet requiring quality work doesn’t equate. How long does an attorney take, or realtors, title, surveyors…”

A New Jersey appraiser (who prefers to remain anonymous) writes: “As for the number of appraisers renewing their licenses, don’t be mislead if it appears that a large number are renewing. My son and I (both certified with > 20 years experience) are renewing this month but our appraisal work is effectively nonexistent. We’ve attempted to demand our C&R fees but this eliminated over 90% of our work. We’re moving on to new endeavors and plan to be part time appraisers only. I suppose this is our meager contribution to the industry… adding a few more assignments for those appraisers deciding to (or being force to) work for the C&R fees dictated by the AMCs.”

Atlanta, Georgia appraiser Clay Posey writes: “You can add my name to the appraiser retired list. I have been appraising in the Atlanta area since 1977. I just turned in my business license, my MLS account, my MLS lockbox key, all my data services, and put my tape measure out to pasture. I have had it. I did keep my license active because it takes so much to get one, just in case.

This profession was enjoyable until about 2009, when all these new regulations started up. I don’t need AMC’s or anything connected with them, and I hope all of you remaining appraisers can survive working with them. I calculated that my on my last appraisal, I earned around $90 a day, before expenses. After expenses, about $80. I turned 65 and am now turning over my work to you younger guys. Good luck to all of you.”

Colorado appraiser Ray Starks writes: “This has forced me out of the appraisal business after 16 years. So far we have identified over $100,000 in fees owed to Colorado Appraisers for work done thru the Loft between August and September. (Name withheld) Credit Union contracted with them in August even though they were told that the Loft had a poor reputation. They owe me $9000. We intend to go after the Lender/Client/end user! I have filed complaints with the California and Colorado Attorney Generals, the California and Colorado Department of Regulatory Agencies, and The BBB. So far the BBB and DORA have asked the credit union to respond… If we can band together and hold the lender ultimately liable it would set national precedence.”

Virginia appraiser Jeff Phillips writes: “I keep reading the industry news and all the nonsense that is out of control. At least out of the appraiser’s control. What I don’t see are solutions to this nonsense. I am considered a "young buck" in this profession. I have been appraising for 10 years and I am 37 years old. I have yet to see a solid or size-able voice for the appraisers. Why are we not or unable to take control of our industry? To me, this is the issue I do not understand. Why are we not united? The real estate agents are. They do not seem to have had their fees or industry devastated like ours. I admit I am not aware of their changes, however, I have not heard any of them complaining. Please advise or offer advice as to your opinion or the readers opinion of why this is. I appreciate your time. Keep up the good work.”

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End of Year Reminder For Appraisers

So, what are you waiting for? How many times do we have to tell you to allocate some time each day to building your private appraisal practice?

Limited Time Only: Pay Last Year’s Price for This Year’s AMC Directory! Over 150 AMCs listed with fully updated contact information for only $39.99

"Perils of Indemnity"

The above is the title of an article written by Charles R. Franklin of Belongia, Shapiro & Franklin, LLP which was provided to AppraiserNews.com by John Torvi of Herbert H. Landy Insurance Agency. The article further discusses some of the concerns which we discussed in the last newsletter regarding the indemnity clauses which appraisers are frequently being asked to sign. Mr. Franklin concludes his comments by saying that:

“The moral: know who you are dealing with. Do some due diligence. While there soon will be nor requirement to sign contracts with indemnity clauses, if you choose to do so, BEWARE! Make sure the clause is clear and that it actually reflects your intentions, and because of unintended consequences and possible unforeseen events, make sure you are appropriately and adequately protected.”

Please feel free to contact AppraiserNews.com if you would like to receive a reprint of this article in full

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Rates & Dates

Mortgage interest rates declined significantly in the most recent weekly reports issued by Freddie Mac and the Mortgage Bankers Association (MBA).

On December 15th, Freddie Mac reported that rates for 30-year fixed-rate mortgages dropped to 3.94% (matching a historic low) from 3.99% during the prior week. Frank Nothaft, vice president and chief economist for Freddie Mac. Mr. Nothaft reported that “Over the first nine months of 2011, households lost almost $400 billion in property values which contributed to a $1.4 trillion reduction in overall net worth. In addition, serious delinquency rates (90 or more days delinquent plus foreclosures) on mortgages increased slightly between June 30 and September 30th”.

The MBA in its most recent Weekly Mortgage Applications Survey for the week ending December 9th, reported that 30 year rates with conforming loan balances ($417,500 or less) declined to 4.12% from 4.18% during the previous week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.47 percent from 4.52 percent. At the same time, the average rates for FHA backed mortgages declined to 3.94% from the prior week’s 3.98%. In all three instances, the MBA noted that the rates were now at the lowest point of the year.

In their press release of December 14th, the MBA also reported an increase of 4.1% in mortgage applications during this most recent week with refinance activity up 9.3% and purchase mortgage applications down 11.8%. Refinance applications rose to 79.7% of all applications in this most recent survey.

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

We want to congratulate our most recent winner: New York State Certified Residential Appraiser Dhanraj Singh who is with Reliable Appraisal Service. Mr. Singh was the first to answer that Albert Einstein said “Any intelligent fool can make things bigger and more complex… It takes a touch of genius – and a lot of courage to move in the opposite direction”, Thomas Jefferson said “Do you want to know who you are? Don’t ask. Act! Action will delineate and define you” and Groucho Marx joked that “A child of five would understand this. Send someone to fetch a child of five.” Today’s questions:

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 AppraiserHelp.com

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

Tell us what you think!

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

Regards,

Bill Collins, Appraiser Help Inc.

Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

AppraiserNews and the AppraiserNews Logo and all original content ©AppraiserHelp, Inc. 2009-2011

Appraiser Burn-Out? Or AMC Burn-Out?

Sean Collins — Tue, 06 Dec 2011 10:55:34 +0000

Appraiser Burn Out? Or is it AMC Burn Out?
Some Recent Real Estate Reports
What Our Readers Have to Say About Our Recent Newsletter and AppraiserLoft
"What Do I Do?" Complaints and Claims Against Real Estate Appraisers
McKissock 7 Hour 2012-2013 USPAP Online Course Now Available in Approx. 40 States and DC
Rates & Dates
Ask Angie
Tell us what you think!
Closing Remarks

Appraiser Burn Out? Or is it AMC Burn Out?

Busy, busy, busy…accepting orders…making appointments…following all the mandated procedures…answering idiotic requests…over…and over…and over…

While many residential appraisers have adapted to the HVCC, the AMCs, the UAD, etc., many seem to be saying “No Mas” to their chosen profession. It has been well documented that appraisers are not a “young demographic” but something seems to be changing with many choosing early retirement or attempting to change the character of their appraisal practices.

Every week we at AppraiserNews.com and AppraiserHelp.com receive notices from appraisers that they have retired, closed down their practices or are just shutting down for awhile. Appraisers whom I have known for decades are disgruntled, even those who have transitioned satisfactorily into this brave new world where we are “managed” by those half our ages and who have little or no appraisal experience.

Dealing with AMCs still seems to be the biggest gripe of residential appraisers but the problems seem to be compounded by new requirements which add minutes/hours to each assignment, extending the workday later into the evening and on to weekends. Commercial appraisers also do not seem particularly pleased with the appraisal profession either as the overall stress level of market participants is elevated in this depressed environment making them hope (worry?) that their client (local bank?) will be solvent when it is time to pay the appraisal fee.

The happiest appraisers we have found are either located in remote locations (don’t worry, we won’t say where) with little competition or are building healthy appraisal practices in the non-lending universe. Divorce, estate, tax grievances, portfolio analysis, anything in the world of private appraisal practice seems to be correlated with appraiser happiness.

So, what are you waiting for? How many times do we have to tell you to allocate some time each day to building your private appraisal practice?

By the way, here is a link to the results of AppraisalPort’s recent poll which asked the question “We have been losing many appraisers lately – do you plan to renew your appraisal license at the next expiration date?”
Appraisal Port Poll Results

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Some Recent Real Estate Reports

On December 1st Calculated Risk posted the most recent results of LPS (Lender Processing Services, Inc.) Mortgage Monitor Report which showed that while mortgage delinquencies were down from their peak, foreclosure inventories were at an all time high at 4.29% of all active mortgages. LPS reported that 7.93% of mortgages were delinquent in October, down from 8.09% in September. A link to the Calculated Risk report is found here: Calculated Risk: LPS: Mortgages in Foreclosure Process at an All-Time High

The Case-Shiller Index released on November 29th showed declines of 3.8% from the previous month and 3.6% from the same month last year, both declines greater than anticipated. Bloomberg’s Alex Kowalski discussed this that day and a link to his report is found here: Home Prices in 20 U.S. Cities Fall More Than Forecast, Case-Shiller Says – Bloomberg

CoreLogic reported that same day that at the end of the third quarter, approximately 22.1% of all homes (10.7 million) with mortgages were “underwater”, down slightly from the second quarter (22.5% and 10.9 million properties). They also reported that an additional 2.4 million borrowers had less than 5% equity (referred to as near-negative equity) which together accounted for 27.1% of all homeowners with mortgages nationwide. A link to this report is found here: CoreLogic Third Quarter 2011 Negative Equity Data Shows Slight Decline But Remains Elevated

Mokoto Rich writing in the New York Times that day discussed the expansion of HARP (Home Affordable Refinance Program) to more “underwater” homeowners and a link to this report is found here: U.S. Mortgage Relief Program Widens Its Scope

Also on November 29th, CNBC’s Diana Olick noted that homeownership rates were sinking to new lows which could push rates down to their lowest point since the Census Bureau started tracking this in 1962. A link to Ms. Olick’s report is found here: US Real Estate: As Home Prices Sink, Home Ownership Heads to New Lows – US Business News Blogs – CNBC

The NAR (National Association of Realtors) Pending Home Sale Index rose 10.3% in October, more than anticipated. While the chief economist of the NAR, Lawrence Yun, was his usual optimistic self in the NAR’s press release of November 30th, he did note that: “Although contract signings are up, not all contracts lead to closings.” A link to this press release including a video with Mr. Yun (in which he blames “appraisal issues” as a reason for contract cancellations) is found here: Pending Home Sales Jump in October

Limited Time Only: Pay Last Year’s Price for This Year’s AMC Directory! Over 150 AMCs listed with fully updated contact information for only $39.99

What Our Readers Have to Say About Our Recent Newsletter and AppraiserLoft

California appraiser Bob Eklund writes: “I am of the opinion that the head guy at "THE LOFT" boated off with all the money for his "Madoff" style lifestyle and should face criminal charges. The guy lives here in San Diego, started up this company and seems to have run a gigantic Ponzi scheme.

You know how it works: Start a company, lease an impressive office, hire a bunch of clones and you’ve got instant respectability!

Have you heard anything about this gentleman facing charges yet? He definitely should be facing the music and I believe he will in the end. You heard it here first.”

Another (unnamed) California appraiser reports: “I was doing appraisals for AppraiserLoft for almost 2 years. It was a struggle to get paid from the very beginning, in my case (2008). By the end of 2009, I caught on. Their website said appraisers did not have to send invoices or keep track of fees owed because they do all that and send checks out every 15 days. Not true, and any appraiser who does not send or include invoices can be blamed for non-payment. I reported "The Loft", to the Calif. Appraiser board, (OREA), that licenses AMC’s and I was even more appalled at their response. Their typical canned responses include, "We have no advisory opinion." or, "We do not get involved with matters of payment." When an appraiser is MANDATED to go through an AMC…ALL AMC’s should be mandated to pay the appraiser!… Appraisers are treated like the least important part of a real estate transaction, when in fact, we are the most important by collateralizing all the RE loans. It’s this twisted fate of our profession that has led to its down fall. I do not know who would want to go into this profession if not already in it (due to the large sums of money and time spent getting educated, continued education, and all the equipment and info that costs money every month just to be able to perform an appraisal.) We can’t get the work on our own, were at the Mercy of AMC’s, and no one cares if the AMC pays us or not, or how much! This would not be stood for in any other industry!”

New York appraiser John summed it all up by saying that: “You can add my 3,000 to the "loft" number.”

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"What Do I Do?" Complaints and Claims Against Real Estate Appraisers

The above is the title of an article provided to AppraiserNews.com by John Torvi of the Herbert H. Landy Insurance Agency. While this was written in June of 2010, the “target that seems to be on the back of real estate appraisers” has not moved and as we reach year’s end, it is a good time for appraisers to evaluate their business practices and client agreements, particularly those which certain AMCs are asking them to sign off on.

Here is one example from an unnamed AMC: “Vendor agrees to indemnify and hold (unnamed AMC) harmless from any claims, costs, losses, damages, judgments and expenses, including but not limited to reasonable attorney’s fees and expenses, relating to or arising out of any breach of this Agreement and from any and all claims for injury or loss…”

There are times when appraisers just have to say no, they will not accept obligations which require them to sign away rights and take on obligations which could extend years into the future and threaten their financial well being. We at AppraiserNews.com have spoken to a number of appraisers who have had to deal with various threats and claims and have heard the real fear in the voices of those so charged. It makes good sense at this time for appraisers to review all such agreements with their attorney or errors and omissions provider; please feel free to contact AppraiserNews.com or Mr. Torvi at Herbert H. Landy Insurance Agency for additional information (such as the aforementioned article).

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Rates & Dates

Mortgage interest rates were largely unchanged in the most recent weekly reports issued by Freddie Mac and the Mortgage Bankers Association (MBA).
Freddie Mac reported that rates for 30-year fixed-rate mortgages remained at or below 4.00% for five consecutive weeks with this week’s rate at 4.00%, up from 3.98% the prior week.

The MBA in its most recent Weekly Mortgage Applications Survey for the week ending November 25th, reported that 30 year rates with conforming loan balances ($417,500 or less) declined to 4.23% from 4.21% during the previous week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.55 percent from 4.59 percent.

In their press release of November 17th, the MBA also reported a decline of 11.7% in mortgage applications during this most recent week with refinance activity down 15.3% and accounting for 73.9% of all applications.

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

We would like to congratulate our most recent winner, Charlie Kizer, a Certified Residential Appraiser with Kizer Appraisals in Riverside, California. Charlie was the first to answer that Cicero said “A thankful heart is not only the greatest virtue, but the parent of all the other virtues”, Meister Eckhart noted that “If the only prayer you said in your whole life was, "thank you," that would suffice” and Jon Stewart joked that that “I celebrated Thanksgiving in an old-fashioned way. I invited everyone in my neighborhood to my house, we had an enormous feast, and then I killed them and took their land.”

Today’s questions:

1. Who Said: "Any intelligent fool can make things bigger and more complex… It takes a touch of genius – and a lot of courage to move in the opposite direction."

a) Michael Williams
b) Edward DeMarco
c) Albert Einstein
d) Isaac Newton
e) None of the above

2. Who said: "Do you want to know who you are? Don’t ask. Act! Action will delineate and define you."

a) William Jones
b) Clark Kent
c) Thomas Jefferson
d) Annie Oakley
e) None of the above

3. Who said: "A Child of five would understand this. Send someone to fetch a child of five."

a) Wolfgang Mozart
b) Jake Harper
c) Groucho Marx
d) Douglas H. Shulman
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 AppraiserHelp.com

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

Tell us what you think!

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

Regards,

Bill Collins, Appraiser Help Inc.

Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

AppraiserNews and the AppraiserNews Logo and all original content ©AppraiserHelp, Inc. 2009-2011

Appraiser Loft, Strategic Defaults & Other Turkeys

Sean Collins — Tue, 22 Nov 2011 06:52:14 +0000

What Do The "Experts" Report?
What Our Readers Have to Say About Our Recent Newsletters and the Appraisal Profession
Congratulations to Award-Winning Appraiser and Author, James Manning!
Going Viral: Please Don’t Tell Anyone How Sick the Housing Market is, or…
Rates & Dates
Ask Angie
Tell us what you think!
Closing Remarks

What Do The "Experts" Report?

On November 18th in a presentation at the Central Bank of Chile, John C. Williams, President and CEO Federal Reserve Bank of San Francisco, discussed the importance of housing to any economic recovery in the U.S. He noted that the housing crash directly reduced household wealth by $6.5 trillion along with indirect reductions in household worth due to declines in stock value related to the financial crisis. Mr. Williams went on to say:
“But the wealth effect is only the beginning of the story. The decline in housing wealth also wiped out the home equity of millions of mortgage borrowers. Indeed, it’s estimated that nearly 30 percent of mortgages—about 16½ million in total—are currently “underwater,” meaning that borrowers owe more than their homes are worth. Millions more are “above water,” but have less than the 20 percent equity typically needed to refinance. This evaporation of home equity has had severe repercussions for the economy. Widespread negative equity has contributed to a dramatic rise in mortgage delinquencies and foreclosures.”

Mr. Williams discussed the tightened credit for residential, commercial and industrial loans and the fact that many small business owners were in a similar position of negative equity and in no position to borrow or even refinance existing loans. He went on to discuss the lack of private residential loan securitization along with characterizing securitization of commercial real estate as “dormant” due to risk related concerns. Mr. Williams called for fiscal policy actions that would work along with monetary policy in a way which would “stimulate the economy” such as the “…recently announced U.S. government initiative to make it easier for underwater homeowners to take advantage of very low rates and refinance their mortgages. This will trim monthly payments for some households and could reduce foreclosure rates.”

A link to Mr. Williams graphically illustrated presentation is found here: Federal Reserve Bank of San Francisco; President’s Speech: The Economic Outlook and Monetary Policy

In a graphic illustration of the state of the housing market, Paul Toscano of CNBC.com recently posted a slideshow of “The 10 Emptiest U.S. Cities” based on Census Department data (#1-Tucson, Arizona) and a link to this is found here: The 10 Emptiest US Cities – CNBC

On November 16th, Bankrate.com posted a “glass half full” slideshow of “Home Values: 5 Best Markets” based on data from the National Association of Realtors (#1: Grand Rapids, Michigan) and a link to this is found here: Home Values: 5 Best Markets – Bankrate.com

O.K., we can’t resist posting one more slideshow, this one titled “Homes on Top of the World” from CNBC and Realtor.com: Homes on Top of the World – CNBC

On November 16th, CNBC’s Diana Olick reported how the housing crash has “trapped” millions of Americans with just 4.7% of Americans moving in the past year, according to Census data. Also that day, Bloomberg’s John Gittelsohn discussed how this lack of mobility in conjunction with more Americans living with extended families was reflected in homebuilders targeting “multigenerational” families with second master bedrooms, kitchenettes and separate entrances. Mr. Gittelsohn noted Census Bureau data which reported that in 2010 there were 5.1 million households comprised of three generations, up from 3.9 million one decade earlier. He also cited an October report by the Pew Research Center which showed that approximately 51 million Americans (16.7% of the population) lived in homes with at least two generations, up from 42 million in 2000. A link to the Bloomberg report is found here: Homebuilders Target In-Laws, Dogs as Extended Families Grow

In an interview with Bloomberg’s Tom Keene on November 14th, Scott Simon, the head of PIMCO’s (Pacific Investment Management Co.) mortgage division stated that home prices may drop another 6% to 8% before reaching a bottom. PIMCO reportedly runs the world’s largest bond fund. In the interview, Mr. Simon discussed the “dire situation” presented by even greater drops in home value which could leave approximately ½ of Americans with mortgages underwater, up from approximately 1/3 now.

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What Our Readers Have to Say About Our Recent Newsletters and the Appraisal Profession

Here are some of recent emails that we have received:

Florida real estate appraiser Joe Johnson writes: “Now we have managers of large banking institutions who made millions betting shorts against the bad paper they were selling telling us that mortgage forgiveness is the only way to right the housing industry. Long and short is none of these institutions can afford the write down, so it will be left to the tax payers. These are the very people that wrote the worst paper and stand to lose the most , writing the rules.

The only cure for the housing industry is the restoration of the middle class. Read history, go back as far as the late seventeen hundreds and see that with no middle class society in general is in for a rough ride.

As appraisers we have a great responsibility and liability for millions of dollars in loans, yet we are at the bottom of the pay scale in all of these transactions.

Something wrong with this deal.”

California appraiser Clay Martinek writes: “You guys are honest and awesome. You tell the truth!!! I think the appraising profession is becoming not a profession. We are now paper pushers without faces and reputations. I think that it is part of a larger plot that gave all the power to the lenders. Look around it is happening in every industry.”

Another California appraiser, Robert Eklund, writes: “Regarding Joe Nocera’s Nov. 4 statement about ‘principal reduction being our only hope out of the housing crisis’, I would like to say that we likely have no hope of ending the ‘crisis’, for what person or company or corporation is going to willingly absolve the debt of hundreds or thousands of its borrowers? Maybe Jesus, but…….And can one imagine legislators somewhow passing a bill in this regard? Just think about that!”

Colorado real estate appraiser Kim Herzfeldt writes: “The world of appraisal has been moved by Appraiserloft’s theft of appraisal fees.

It is the belief of many that, in the end, the lender who hired the loft can be held responsible for the fees.

Illinois Department of Financial and Professional Regulations states the" AMC is an agent of the lender and that the lender is responsible for the action or lack of action of the agent and is liable to the appraiser for payment should the assigned agent default". When I have the full quote with posting info I’ll send it.

I am a past Chairman of the Colorado Board of Appraisers. I have been hurt by the Loft and my long time client for over $10,000. We have also identified a partial list of appraisers owed over $70,000 in fees owned though this one lender with the total expected to be close to the $250,000 range. The story is a good one as the lender was notified the loft was a bad player throughout the 70 or so days they used the lofts service. Can you say possible class action or consumer fraud issue at the AG’s office?

…As a profession we need to rally around this issue as we can clearly define what lenders must do and give appraisers a chance to practice with a more limited exposure to bad players. We have no power as individual appraisers but as a group we can influence governing agencies, regulations and controls. If the lender is held responsible much of this issue goes away.

Please research this issue as the web posts are viral and the public is being hurt. We need to contact our state and federal elected officials as well at the state boards that govern finance and appraisal.. Make the calls… the light of day makes the roaches run for cover.”

Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

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Congratulations to Award-Winning Appraiser and Author, James Manning!

On November 1st, USABookNews.com announced that California appraiser James Manning was the award winner in the “Business: Real Estate” category for his book Public Trust Betrayed: The Truth Behind the Real Estate Appraisal Industry.

Further information can be found by going to USA Book News – Covering Whats Hot, New and Noteworthy in the World of Books!

Limited Time Only: Pay Last Year’s Price for This Year’s AMC Directory! Over 150 AMCs listed with fully updated contact information for only $39.99

Going Viral: Please Don’t Tell Anyone How Sick the Housing Market is, or…

On November 16th, the MBA put out a press release titled “Award Winning Study Examines Impact of Social Networks on Homeowners Decision to Strategically Default”. It discussed a study by Michael J. Seiler, Andrew Collins and Nina H. Fefferman which was sponsored by the MBA. Amongst the findings of the study:

“Strategic default is a result of a borrower’s unwillingness to pay, even if able. It can be very difficult to determine whether a borrower is unable or unwilling to pay.”

“Ideas are transmitted through the population in ways similar to those in which diseases are transmitted. Thus, they can be modeled in a similar manner. Certain corrective factors may lead some borrowers to be resistant to the temptation to strategically default, including the ability of lenders to pursue deficiency judgments, provisions of the tax code and bankruptcy laws.”

“The model shows that real estate experts can influence market dynamics, but not in all cases. Markets are strong or weak due to fundamentals, however, markets in between can be pulled down or lifted up depending upon individual and expert behavior.”

The MBA sponsored study distinguished between economic or hardship defaults and strategic defaults and noted how ideas about strategic defaults are transmitted through social networks and that the end result is lower home prices “an epidemic of strategic defaults” and “the collapse of a housing market.”

Mr. Seiler is quoted as saying that: "Housing pundits share their expert opinion with a large audience on a frequent basis through the media. These social networks create the potential for much faster disease spread/cure than in the past. They can greatly impact mortgage markets…”

"Whether by choice or necessity, as foreclosures increase, they have an increasingly negative impact on the price of the healthy homes around them. One default does little to negatively impact the price of surrounding homes. However, as more and more mortgages in the neighborhood go into default, the negative impact is felt at an increasing rate. Much the same way as a disease spreads throughout a population, so, too, do decisions to ’strategically’ default."

Michael Fratantoni, the MBA’s Vice President of Research and Economics highlighted the consequences of strategic defaults on housing markets and said that “…opinion and information (or disinformation) can move markets. More specifically, that policymakers and Mavens have the ability to stabilize or de-stabilize markets."

The tone of the MBA press release is unsettling. The housing crisis is real and has the potential to become much worse due to lack of acknowledging the magnitude of the situation and lack of positive actions which address the problems. Comparing the free and easy movement of ideas in our democracy with the spread of diseases carries with it the implication that some ideas should be suppressed, a notion that is anathema to what our country stands for.

Why are we not recognizing the disastrous path we are on and taking corrective actions to change this?

A link to the MBA press release, including their link to the study, is found here: Award Winning Study Examines Impact of Social Networks on Homeowners Decision to Strategically Default

Rates & Dates

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

Freddie Mac reported that rates for 30-year fixed-rate mortgages rose from 3.99% to 4.00% for the week ending November 17th.

The MBA in its most recent Weekly Mortgage Applications Survey for the week ending November 11th, reported that 30 year rates with conforming loan balances ($417,500 or less) increased to 4.23% from 4.22% during the previous week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.56 percent from 4.57 percent.

In their press release of November 17th, the MBA also reported a 10% decline in mortgage applications during this most recent week with refinance activity accounting for 77.3% of applications.

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

We would like to congratulate our two most recent winners, Don Hendrickson, a Certified Residential Appraiser with Hendrickson Appraisals in Mesa Arizona, and Robin Newton, a Certified Residential Appraiser with Appraisal Residential Services in Vero Beach, Florida. Don and Robin were the first to answer correctly that Andy Rooney was the person who said all of the following: "Anyone who watches golf on television would enjoy watching the grass grow on the greens," "Taxes are important. President Bush’s tax proposals leave no rich person behind. Voters approve of President Bush helping the kind of people they wish they were one of," and "I didn’t get old on purpose, it just happened. If you’re lucky, it could happen to you."

Today’s questions:

1. Who Said: "A thankful heart is not only the greatest virtue, but the parent of all other virtues."

a) Cicero
b) Plato
c) Aristotle
d) Socrates
e) None of the above

2. Who said: "If the only prayer you said in your whole life was, ‘thank you,’ that would suffice."

a) Heidegger
b) Meister Eckhart
c) St. Augustine
d) Pope John XXII
e) None of the above

3. Who said: "I celebrated Thanksgiving in an old-fashioned way. I invited everyone in my neighborhood to my house, we had an enormous feast, and then I killed them and took their land."

a) George Carlin
b) Johnny Carson
c) Jon Stewart
d) Rick Perry
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 AppraiserHelp.com

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

Tell us what you think!

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

Regards,

Bill Collins, Appraiser Help Inc.

Government Plays Valuable Role in Homeownership, Say Realtors

AppraiserNews and the AppraiserNews Logo and all original content ©AppraiserHelp, Inc. 2009-2011

Special Edition: Mr. Yun, You’re Fired!

Sean Collins — Tue, 15 Nov 2011 04:55:59 +0000

Economist or Cheerleader? The NAR’s Chief Economist Hurts the Organization with his Lack of Credibility, Undercutting Good Initiatives of the NAR

This past week, the National Association of Realtors (NAR) held their 2011 Realtors Conference & Expo. During the conference and the period leading up to it, the NAR distinguished themselves with thoughtful commentary related to the housing crisis and actions which need to be taken, along with actions to be avoided.

On October 13th, Moe Veissi (the 2011 President-Elect of the NAR) testified before the House of Representatives Committee on Financial Services and intelligently defended the “American Dream-homeownership” along with the federal government’s “…vital role in the success of our nation’s housing system”.

AppraiserNews.com has discussed the failings of both Fannie Mae and Freddie Mac (the GSE’s) and their role in the housing crisis along with pointing to the well documented research of the GSE’s by Gretchen Morgenson (“Reckless Endangerment”) and others. At the same time, we have repeatedly warned against reckless proposals which would remove government support for housing and exacerbate the continuing crisis. In his testimony, Mr. Veissi addressed this:
“Those who advocate for legislation that effectively constrains, shuts-down the secondary mortgage market functions traditionally served by Fannie Mae and Freddie Mac, removes government participation from the conventional mortgage market, and/or relies only on private capital to operate the secondary mortgage market need only examine the current miniscule activity in the jumbo and manufactured housing mortgage markets in order to understand the implications of private capital as the sole participant in the secondary mortgage market. In both of these markets, mortgage capital became nearly non-existent, which prohibited creditworthy borrowers from access to the funds required to purchase a home”.

The NAR issued a press release on that same day which discussed Mr. Veissi’s testimony along with their support for a bipartisan resolution (H.R. 2413) which Mr. Veissi said “…gives the federal government a continued role to ensure a consistent flow of mortgage credit in all markets and all economic conditions”. Links to Mr. Veissi’s testimony and the NAR press reease are found here: Testimony of Moe Veissi, 2011 President-Elect, NAR

On the eve of the NAR conference they put out a press release titled “Realtors Ready to ‘Seize the Day’ for America’s Home Owners” in which current President Ron Phipps said:
““For the first time in generations, the American dream of homeownership is being threatened. We need to keep housing first on the nation’s public policy agenda, because housing and home ownership issues affect all Americans.”

Links to this press release and the NAR’s “Five-Point Housing Plan” are found here: Realtors Ready to ‘Seize the Day’ for America’s Home Owners

2011 Five-Point Housing Solutions Plan

At the same time that the NAR was warning of the seriousness of the housing crisis, however, the message was muddled by the nonsensical statements made by Lawrence Yun, the NAR’s chief economist. Particularly alarming were his statements from a November 11th press release in which he said:
“Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently. Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”

“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year. Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities.”

“Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012”

“Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve. If we could maintain sound and reasonable mortgage underwriting standards, the market would be able to avoid a future big boom and bust cycle, but mortgage standards remain overly stringent.”

A link to this press release is found here:
Gradual Recovery for Housing and the Economy Expected in 2012

After Mr. Yun’s optimistic forecast, much of the print and online media broadcast the good news that the housing market was on the way back. The message: All of the concerns highlighted by the NAR and others could now be forgotten and we just had to wait several months until next year.

Many have not forgotten the gross overstatements of sales made by the NAR over a period of several years, along with their acknowledgment and promise to provide corrected figures. Well, we are still awaiting these corrections and many outside of the appraiser and real estate community distrust the NAR because of this. One example was the following letter to the editor in yesterday’s Newsday:
“That’s strange, the forecast 2 years ago said house prices would rise last year! Where can I get that forecaster’s job?”

While Appraiser News has had other issues with the NAR such as their promotion of BPO’s (broker price opinions) and the blame given to appraisers for appraised values coming in less than contract prices, it is disappointing that much of the good work that the NAR has recently done promoting and preserving homeownership is being undercut by the recklessness of Mr. Yun.

Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

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Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

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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: bill@appraiserhelp.com with your thoughts!

Regards,

Bill Collins, Appraiser Help Inc.

Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

Housing Death Spiral?

Sean Collins — Tue, 08 Nov 2011 00:59:33 +0000

Appraiser News Headline from One Year Ago: "Double Dip in Housing: Has it Clearly Arrived?"
Headline News This Past Week
Wall Street Yes, Main Street No?
Real Solutions Anyone? Many Say Mortgage Principal Reduction is Essential to Solving Problems, Others Say Nothing
Status of the Appraisal Profession
Rates & Dates
Ask Angie
Tell us what you think!
Closing Remarks

Appraiser News Headline from One Year Ago: "Double Dip in Housing: Has it Clearly Arrived?"

We thought it might be interesting to go back into the AppraiserNews.com archives and take a look at the issue from October 26th, 2010 (which anybody can do by going to www.AppraiserNews.com) and see how things have changed since then.

Not surprisingly, as you can see by the headline, not much has changed except for the use of the phrase “Triple Dip” in many of the housing reports now. We noted that Lawrence Yun, the Chief Economist for the National Association of Realtors (NAR) had proclaimed one day earlier that:

“A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions”.

In that issue, we also noted the optimistic comments made by HUD Secretary Shaun Donovan about the housing market showing significant signs of improvement. AppraiserNews.com viewed the situation differently, however, as our sections for that issue were titled: “The Foreclosure Crisis: Beginning of Another Meltdown?” and “Time to Stop Pretending and Acknowledge the Crisis”.

The following issue of AppraiserNews.com on November 8th, 2010 included a section titled “The Foreclosure Crisis is Not Going Away Soon” and included this reader comment from Wisconsin appraiser Doug Quenzer:

“In 2008 Yun was spouting that the housing market had bottomed and we would start to see prices stabilize. I wrote a letter to the REALTOR magazine and told them he was crazy. Look what has happened since! Now he continues to say that the market is starting to turn around because of September sales…How can the housing market possibly recover when the supply exceeds the demand? This is economics 101, and Yun is a prime example of someone that is living in lala land…Most people that are honest will say that over all the housing market will take about two to three more years to see real recovery. And that needs to be qualified with a caveat which is economic recovery.”

In that November 8th, 2010 issue of AppraiserNews.com we discussed the thoughts of the prominent economist Nouriel Roubini and noted “…the falsely optimistic tendencies of many interested (and disinterested) parties towards the economic, housing and foreclosure crises that we are facing.”

The elephant is still in the room and those who could take positive actions to assist the housing market are either ignoring the situation or proposing actions which would make the situation worse. Where will we be one year from now? It is our opinion that this slow deterioration of the housing market might begin to accelerate into something worse this winter and then…

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Headline News This Past Week

On November 3rd, Clear Capital’s Home Data Index for October was down 2.8% nationally, the 13th straight month of falling prices. Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital, somberly noted that: “Short term gains have been nearly eliminated while longer term performance measures point to mostly negative territory through the turn of the year. With current tepid demand expected to weaken even more, consumer confidence at record lows, and as the distressed inventory continues to flow into the market, we can expect another long winter as the housing market will truly be put to the test against these downward forces.”

A link to the Clear Capital press release is found here: Clear Capital Newsroom: Market Report

Yesterday, CoreLogic’s Home Price Index showed declines of -1.1% from the prior month and -4.1% from the prior year. Mark Fleming, chief economist for CoreLogic stated that:
“Even with low interest rates, demand for houses remains muted. Home sales are down in September and the inventory of homes for sale remains elevated. Home prices are adjusting to correct for the supply-demand imbalance and we expect declines to continue through the winter. Distressed sales remain a significant share of homes that do sell and are driving home prices overall.”

A link to yesterday’s CoreLogic press release is found here: CoreLogic September Home Price Index Shows Second Consecutive Month-Over-Month and Year-Over-Year Decline

Fitch Ratings also released a report yesterday which noted a significant increase in foreclosure start rates on delinquent mortgages and how this increased inventory of distressed properties on the market would further depress prices. A link to the Fitch report is found here: Fitch Ratings: Foreclosure Starts Rising; U.S. Home Prices Will Feel the Effects

Another report released yesterday, this one by Trepp LLC, discussed how soured commercial real estate loans were the root cause of the 11 banks that failed in the U.S. during October. Kerry Panchuk of HousingWire.com reported yesterday that Trepp said non-performing commercial real estate loans made up approximately 2/3 of the total non-performing loans of these failed institutions. This report by Trepp was not unlike September’s report and others earlier this year where they linked bank failures primarily with bad commercial real estate loans.

Writing in Huff Post Business on Sunday, Robert Kuttner discussed his dislike for the term “The Great Recession” because it is “…not an ordinary recession, not even a great one. It is a period of protracted deflation, where weak demand, declining incomes, and falling asset prices keep dragging the economy downward into a self-deepening sinkhole.” In regard to housing, he contrasts current efforts with those made during the Great Depression: “The Roosevelt administration dealt forthrightly with the housing crisis of that era, creating a Home Owners Loan Corporation that made direct loans to one homeowner in five, to keep people from losing their homes. In the current crisis, some 10 million homeowners are still on track to default, and the Obama administration keeps producing half-measures too feeble to solve the problem.”
A link to Mr. Kuttner’s report is found here: The Great Deflation

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Wall Street Yes, Main Street No?

Interesting comment by Neil Barofsky, former head of the Troubled Assets Relief Program (TARP): “There’s a very popular conception out there that the bailout was done with a tremendous amount of firepower and focus on saving the largest Wall Street institutions but with very little regard for Main Street. $700 billion fund used to bail out banks. That’s actually a very accurate description of what happened.” Writing in the Washington Post yesterday, Zachary Goldfarb described how Wall Street has come back strong even as Main Street has struggled under Presidents Bush and Obama and a link to this article is found here: Wall Street Surges Under Obama

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Real Solutions Anyone? Many Say Mortgage Principal Reduction is Essential to Solving Problems, Others Say Nothing

On November 4th, the New York Times’ Joe Nocera discussed the increasing evidence that loan principal reduction is central to any solution of the housing mess. He discusses the “shocking calculations” described by Laurie Goodman, a senior managing director at Amherst Securities and an authority on mortgage-backed securities. Here are some of those calculations and data that Ms. Goodman is concerned with:

Firstly: 10 million of the 55 million mortgages in America are “reasonably likely to default” largely due to the fact that the homes are worth so much less than the existing mortgages.

Secondly: The housing supply will “drastically outstrip demand” over the next half decade and beyond with the possibility that the glut of homes could reach 6.2 million in the next six years. This basic supply/demand imbalance (remember Economics 101, a refresher course in which many aspiring presidential hopefuls desperately need to take) would recreate the “housing death spiral” with lower prices leading to more underwater borrowers leading to more defaults leading to further price declines, and on and on.

Mr. Nocera concludes his article by saying that: “It is about cold, hard economics. Three years after the bursting of the subprime bubble, principal reduction isn’t just a nice-sounding way to help homeowners. It is our only hope of finally ending the housing crisis.”

A link to the Times’ article is found here:
To Fix Housing, See the Data

On November 4th, Bloomberg’s Jody Shenn and Kelly Bit discussed this issue of principal reduction and a link to their report is found here: Greg Lippmann Calls for Mortgage Forgiveness After Winning Subprime Wagers

CNBC’s Diana Olick, in a short video, discussed the manner in which the Republican presidential aspirants were dodging the issue of the housing crisis and a link to this is found here: GOP Candidates Position on Housing

Status of the Appraisal Profession

We receive many comments from appraisers describing the difficult and stressful working conditions they face dealing with appraisal management companies, distressed/bankrupt homeowners, delayed payments by clients, etc. One email we received from a Washington appraiser kind of summed it all up:
“I dun runnoft”

Rates & Dates

Mortgage interest rates mostly moved downward in the most recent weekly reports issued by Freddie Mac and the Mortgage Bankers Association (MBA).

Freddie Mac reported that rates for 30-year fixed-rate mortgages declined to 4.0% for the week ending November 3rd, the second lowest in history, a drop from 4.10% during the previous week. Frank Nothaft, vice president and chief economist for Freddie Mac noted that "Market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates”.

The MBA in its most recent Weekly Mortgage Applications Survey for the week ending October 28th reported that 30 year rates with conforming loan balances ($417,500 or less) decreased to 4.31% from 4.33% during the previous week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.69 percent from 4.68 percent.

In their press release of November 2nd, the MBA also reported a 0.2% increase in mortgage applications during this most recent week with refinance activity accounting for 77.1% of applications.

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

We would like to contratulate our two repeat winners, both from New England: Nanci Stone-Hayes, a Certified General Appraiser with Yankee Appraisals in North Conway, New Hampshire and Larry Kelly, a Certified Residential Appraiser with Larry Kelly Appraisal Service in Fairfield, Connecticut. Nanci covers portions of northeastern New Hampshire and southwestern Maine while Larry covers Fairfield County in Southwestern Connecticut.

Here are the answers to last week’s contest: Lane Kirkland was the author of the quote “If hard work were such a wonderful thing, surely the rich would have kept it all to themselves”; Benjamin Disraeli said “How much easier it is to be critical than to be correct”; and the Beatles sang “Number 9, number 9, number 9…”

It appears as though not everyone likes Angie, alas. We received this comment from a Maryland appraiser: “Why would you not ask appraisal —underwriting questions so everyone could learn perhaps something new instead of "TRIVIA"? I breeze right part this portion of your newsletter, because I need to keep up with issues and reporting and NOT trivia…DAH…..you have a great capacity to teach as each edition goes to press….why waste space? Just my 2 cents after 34 years in the business.”

Angie says that she will toughen up the questions when the appraisal business becomes a bit easier (if this ever happens), right now everybody is under too much stress.

Today’s questions:

1. Who Said: "Anyone who watches golf on television would enjoy watching the grass grow on the greens."

a) Andy Rooney
b) Arnold Palmer
c) Michael Weakland
d) Jerry Seinfeld
e) None of the above

2. Who said: "Taxes are important. President Bush’s tax proposals leave no rich person behind. Voters approve of President Bush helping the kind of people they wish they were one of."

a) Warren Buffet
b) Andy Rooney
c) Nancy Pelosi
d) Sarah Palin
e) None of the above

3. Who said: "I didn’t get old on purpose, it just happened. If you’re lucky, it could happen to you."

a) Zsa Zsa Gabor
b) Phyllis Diller
c) Andy Rooney
d) Jeanne Calment
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 AppraiserHelp.com

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

Tell us what you think!

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

Regards,

Bill Collins, Appraiser Help Inc.

Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

Appraisals Excluded from Obama Refi Program?

Sean Collins — Tue, 25 Oct 2011 01:43:43 +0000

Obama Administration Announces New Refi Plan to Help Underwater Homeowners, Not Underwater Appraisers
Headline News This Past Week
Any Good News Amidst The Gloom?
Appraising AppraiserLoft’s Debt to Appraisers: $3 Million?
Quick Quiz: Which Will Come First?
Rates & Dates
Ask Angie
Tell us what you think!
Closing Remarks

Obama Administration Announces New Refi Plan to Help Underwater Homeowners, Not Underwater Appraisers

The Obama Administration yesterday released some details regarding an expansion of the Home Affordable Refinance Program, a three year old program which originally targeted five million borrowers but has to date helped less than 900,000. The program currently allows borrowers to take new loans up to 125% of their home value but the proposed changes would remove any loan to value limits (i.e. the loan can be double the market value of the house) providing the borrowers had made at least six consecutive monthly payments.

Bloomberg’s Lorraine Woellert reported yesterday that early projections were that the changes would result in help to anywhere from 600,000 to 1,000,000 homeowners. Initial reports indicated that appraisers might benefit little from the program, however, with Binyamin Appelbaum of the New York Times writing yesterday that the plan dispenses “…with the need for an appraisal in many cases.” A link to yesterday’s Times report is found here: Administration Proposes Changes to Mortgage Refinancing Program

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Headline News This Past Week

“Gloom Grips Consumers; It May Be Home Prices”
Another article by Binyamin Appelbaum on October 19th discussed how the U.S. has “…a confidence problem: a nation long defined by irrational exuberance has turned gloomy about tomorrow”. The Times article discusses several studies and notes that only recently have economists really studied how the decline in housing prices affects consumer spending and attitudes. Mr. Appelbaum notes that the “wealth effect” is greater for changes in home equity than with other investments such as stocks because people expect that changes in home prices are less likely to be reversed quickly. The article cites a recent paper by Wellesley College economics professor Karl E. Case in which he projected that the decline in home prices in the four years after peaking in 2005 resulted in a loss of $240 billion in consumer spending in 2010, a figure which doesn’t even include other impacts of the housing crash such as the extremely low level of new home building.

“Consumers Most Negative Since Recession”
Shobhana Chandra of Bloomberg reported on October 20th that the Bloomberg Consumer Comfort Index in October had slumped to its lowest level since February 2009. Ms. Chandra noted that the Thompson Reuters/University of Michigan preliminary index of consumer sentiment also fell in October “…as Americans’ outlooks for the economy and their finances slumped to the lowest level since 1980.”

Also on October 20th, the National Association of Realtors (NAR) existing home sales report showed a 3.0% decline in September from the previous month along with an 18% contract cancellation rate, identical with August but twice the rate of last September. The NAR press release noted that: “Contract failures are cancellations caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.” The NAR also reported that the national median sale price was down 3.5% from last September. A link to the entire press release is found here:
Existing-Home Sales Off in September but Higher Than a Year Ago

One day earlier, CoreLogic released a report entitled “U.S. Housing and Mortgage Trends”. CoreLogic’s report showed a substantial decline in homeownership rates for those of “prime home-buying age”. CoreLogic also cited Census Bureau data which showed significant declines in median income and a continuing increase in the percentage share of income allocated to housing by consumers. The report also noted that “…investor activity in foreclosure auctions has receded over the last few years and transitioned to the purchase of REO properties for sale by banks.” A link to CoreLogic’s report is found here: U.S. Housing and Mortgage Trends

Jennifer Johnson, writing in the Phoenix Business Journal yesterday, reported that PMI Group Inc. was seized by the Arizona Department of Insurance late last week. Ms. Johnson noted that Bloomberg reports that this most recent casualty of the housing bust was the nation’s third largest mortgage insurer.

On October 17th, noted economist Nouriel Roubini discussed the connections between rising income inequality and the frequency and severity of economic and financial crises. He concludes that: “…any economic model that doesn’t properly address inequality by providing public goods and economic opportunity to all will eventually face a crisis of legitimacy. Many academic research studies, including a recent IMF study, show that widening inequality leads to lower economic growth. So, even aside from the issue of “fairness,” inequality is also bad on traditional economic “efficiency” criteria”. A link to Mr. Roubini’s analysis in EconoMonitor is found here: Full Analysis: The Instability of Inequality

Yesterday, CNNMoney’s Annalyn Censky reported on the call by New York Fed President William Dudley for “urgent action” to prop up the housing market and a link to this article is found here: Fed’s Dudley calls for housing aid

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Any Good News Amidst The Gloom?

On October 19th, the Commerce Department reported a large jump (15%) in housing starts in September which was mostly due to a surge in construction of multi-family housing and apartments. At the same time, however, the Commerce Department reported that building permits dropped by 5% to a five month low. Bloomberg’s Bob Willis and Alex Kowalski discussed the Commerce Department report when it came out and a link to the report is found here: Sept. Housing Starts Up More Than Forecast

On Friday, CNNMoney’s Les Christie released a report entitled “Foreign Buyers Scooping Up U.S. Homes”. In this report, Mr. Christie noted that “Foreigners spent $82 billion buying up U.S. homes in the 12 months ended in March, up 24% from a year earlier, according to the National Association of Realtors (NAR). That represents 8% of total U.S. sales.” He cited a study by Metrostudy, a housing analytics firm, which reported strong sales of condominium properties in South Florida with Canadians and South American buyers making up the majority of the sales. Mr. Christie reported on the recently proposed Senate bill, con-sponsored by Democratic Senator Charles Schumer of New York and Republican Senator Mike Lee of Utah which would grant visas to investors who spend at least $500,000 on residential real estate in the U.S. New York appraiser Jonathan Miller is noted in the article as reporting that the New York market is now attracting more Asian and Latin American buyers than in the past.

On October 15th, Toluse Olorunnipa tempered the enthusiasm for a quick recovery in South Florida and nationally by reminding us about the elephant in the room (the “shadow inventory”). A link to this Miami Herald article entitled “Shadow Inventory of Homes Could Topple Real Estate Recovery” is found here: Shadow Inventory of Homes Could Topple Real Estate Recovery

CNBC’s Diana Olick reported on the “Most Promising Housing Proposals” in a video on October 21st including an expected initiative this week by the Obama Administration to refinance mortgages of underwater homeowners. A link to this video is found here: Most Promising Housing Proposals

Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

Appraising AppraiserLoft’s Debt to Appraisers: $3 Million?

On October 20th, HousingWire’s Jacob Gaffney reported that AppraiserLoft’s outstanding obligation to appraisers for appraisals performed and invoiced was approximately $3million, according to two individuals reportedly familiar with the situation. Mr. Gaffney also reported that SettlementOne, a real estate settlement firm, was in talks with AppraiserLoft to acquire certain assets of the firm, but not its liabilities. A link to the Housing Wire report is found here: AppraiserLoft Closure Leaves $3M in Unpaid Appraisal Invoices

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Quick Quiz: Which Will Come First?

a) Appraisers will Occupy AppraiserLoft
b) Appraisers will receive payment in full for their AppraiserLoft invoices
c) Real action will be taken by those in power to prevent a further precipitous decline in the real estate market
d) None of the above

Rates & Dates

Some market volatility was evident in the most recent weekly reports issued by Freddie Mac and the Mortgage Bankers Association (MBA).

Freddie Mac reported that rates for 30-year fixed-rate mortgages declined to 4.11% for the week ending October 20th in comparison with 4.12% for the week ending October 13th. Frank Nothaft, vice president and chief economist for Freddie Mac noted that:
“Mortgage rates remained relatively unchanged this week amid mixed economic data reports. Retail sales were up 1.1 percent in September, almost four times the pace set in August, but consumer sentiment was down in October, according to the Thomson Reuters/University of Michigan index. Finally, in its October 9th regional economic review, the Federal Reserve reported that overall economic activity continued to expand in September, but contacts noted weaker or less certain outlooks for business conditions.

"The home construction industry had some good news for a change. The National Association of Home Builders/Wells Fargo Housing Market Index jumped four points in October, the largest one-month gain since April 2010. Housing starts sprang up 15 percent in September, largely driven by a spike in multifamily starts to a level last seen in 2008. Building permits on 5-or-more unit buildings fell by 13 percent, however, suggesting that the multifamily building pickup may be temporary.”

The MBA in its most recent Weekly Mortgage Applications Survey for the week ending October 14th reported that 30 year rates increased to 4.33% from 4.25% during the previous week.

In their press release of October 19th, the MBA also reported a 14.9% drop in mortgage applications during this most recent week with refinance activity accounting for 77.6% of applications.

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

We would like to contratulate our two most recent winners: Nanci Stone-Hayes, a Certified General Appraiser with Yankee Appraisals in North Conway, New Hampshire and Ginny Furr, a Certified Residential Appraiser with Ginny Furr Appraisal Service in Trinity Center, California. Nanci covers portions of northeastern New Hampshire and southwestern Maine while Ginny covers several counties in northern California.

Today’s questions:

1. Who Said: "If hard work were such a wonderful thing, surely the rich would have kept it all to themselves."

a) Lane Kirkland
b) Groucho Marx
c) Karl Marx
d) Lindsay Lohan
e) None of the above

2. Who said: "How much easier it is to be critical than to be correct"

a) Sarah Palin
b) Benjamin Disraeli
c) Milton Friedman
d) Dick Cheney
e) None of the above

3. Who said: "Number 9, number 9, number 9…"

a) Herman Cain
b) Sarah Palin
c) The Beatles
d) The Rolling Stones
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 AppraiserHelp.com

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

One Free Trade Show Pass to Valuation Expo 2011 in Las Vegas

Tell us what you think!

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

Regards,

Bill Collins, Appraiser Help Inc.

Valuation Expo 2011

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