We're Back To The Beginning

[Terrel L. Shields]

That there should be laws against $175 reports

Not so much...but why the pressure for appraisers to provide an appraisal below the cost of an evaluation. ??? Is it because they cannot use an evaluation on property loans over $250,000? To answer an earlier question by @Marion Rhodes banks are lending their "own" money in a way. They are using brokered funds provided by investors. This reduces their margins since it is a higher price they pay regular CDs, etc. but allows a bank to grow. Banks can loan a percent of their assets, so paying a premium to a Wall Street fund to obtain such funds allows them to make in house loans to place on the books. This can create a house of cards like the ANB Financial scandal which was one of the earliest banks to be seized in the Great Recession. ANB was headquartered in Bentonville, AR (but not related to any Walton Family member) and had "banks" in St. George, UT and Jackson Hole ...which was open only by appointment. They lent brokered funds to developers which fueled a massive over-building of lots and spec McMansions.

 

[Meandering]

But what is the point of your analogy? That there should be laws against $175 reports? Or that there are, and those laws simply are not being enforced?

Maybe I am missing your point.

Here you read it, I'm tired of quoting it all these years, and note:

DATES
This interim final rule is
effective December 27, 2010, except that
the removal of § 226.36(b) is effective
April 1, 2011.

https://www.gpo.gov/fdsys/pkg/FR-2010-10-28/pdf/2010-26671.pdf

 

[Meandering]

Not so much...but why the pressure for appraisers to provide an appraisal below the cost of an evaluation. ??? Is it because they cannot use an evaluation on property loans over $250,000? To answer an earlier question by @Marion Rhodes banks are lending their "own" money in a way. They are using brokered funds provided by investors. This reduces their margins since it is a higher price they pay regular CDs, etc. but allows a bank to grow. Banks can loan a percent of their assets, so paying a premium to a Wall Street fund to obtain such funds allows them to make in house loans to place on the books. This can create a house of cards like the ANB Financial scandal which was one of the earliest banks to be seized in the Great Recession. ANB was headquartered in Bentonville, AR (but not related to any Walton Family member) and had "banks" in St. George, UT and Jackson Hole ...which was open only by appointment. They lent brokered funds to developers which fueled a massive over-building of lots and spec McMansions.

And note that none of that should be in UAD, or XML or uploaded to the GSEs.

.

 

[djd09]

Higher-Loan-to-Value Lending Guidance Designed to Spur Community Revitalization
WASHINGTON — The Office of the Comptroller of the Currency (OCC) today issued a bulletin providing guidance to spur community revitalization through prudent higher-loan-to-value mortgage lending in targeted areas.

The bulletin interprets existing regulations and sets out principles for managing risks associated with the origination of certain residential mortgage loans where the loan-to-value ratio at origination exceeds 100 percent.

The OCC recognizes the concern that depressed housing values in certain distressed communities in the United States may inhibit mortgage lending and slow recovery in these communities. Banks can support revitalization efforts by offering mortgage products for owner-occupied residential properties in communities targeted by governmental entities for revitalization.

“Banks and thrifts play a critical role in keeping communities vibrant and helping struggling communities recover,” said Acting Comptroller of the Currency Keith A. Noreika. “Higher-LTV lending programs in communities targeted for revitalization can promote more healthy communities in a manner consistent with safe and sound lending practices.”

https://www.occ.treas.gov/news-issuances/news-releases/2017/nr-occ-2017-93.html

Exactly what the doctor order for inner Cleveland. It is all about supply and demand.

 

[TRESinc]

Higher-Loan-to-Value Lending Guidance Designed to Spur Community Revitalization
WASHINGTON — The Office of the Comptroller of the Currency (OCC) today issued a bulletin providing guidance to spur community revitalization through prudent higher-loan-to-value mortgage lending in targeted areas.

The bulletin interprets existing regulations and sets out principles for managing risks associated with the origination of certain residential mortgage loans where the loan-to-value ratio at origination exceeds 100 percent.

The OCC recognizes the concern that depressed housing values in certain distressed communities in the United States may inhibit mortgage lending and slow recovery in these communities. Banks can support revitalization efforts by offering mortgage products for owner-occupied residential properties in communities targeted by governmental entities for revitalization.

“Banks and thrifts play a critical role in keeping communities vibrant and helping struggling communities recover,” said Acting Comptroller of the Currency Keith A. Noreika. “Higher-LTV lending programs in communities targeted for revitalization can promote more healthy communities in a manner consistent with safe and sound lending practices.”

https://www.occ.treas.gov/news-issuances/news-releases/2017/nr-occ-2017-93.html

Exactly what the doctor order for inner Cleveland. It is all about supply and demand.

so what exactly has happened as a result of the article you posted from over a year ago? you specifically mention "inner" cleveland, so post an example of what has happened as a direct result of the article. you must have some first-hand experience with this since you specifically cited the location, or are you just spouting off again with nothing to back it up?

 

[DonRico]

not really. i knew from experience that the first cup of coffee sol pays for the entire process of making a full pot, so i search out costs on soft drinks at mcdonalds.

• $0.12 for soda
• $0.07 for the cup
• $0.01 for the lid
• $0.015 for the straw
  

I'm sorry I didn't make my point clearer. The Thrust here is not the cost of soda......it's the automation of tasks.

I'll try again, this time with single syllable words --
Bots will soon fill some jobs that were once thought to be safe. If you don't think that Home Values can be spit out by AI.......you are not seeing the future of the Residential Appraisal Profession.

 

[Overimprovement]

Bots will soon fill some jobs that were once thought to be safe. If you don't think that Home Values can be spit out by AI.......you are not seeing the future of the Residential Appraisal Profession.

It may be instructive for this industry to examine two very related industries, surveying and title work.

I was a lender for some years, and it was always curious to me why these two items were required on each RE transfer (title work anyway, surveys tend to be only with some lenders). A survey should be a one and done thing, right? Unless the earth moves in an earthquake or erosion or something.

Title work is even more interesting. That was always a requirement, and not just since the last transfer either, but at least 60 years, sometimes more. With the proliferation of online data in most counties, why are title 'searches' still required and and why is it so expensive to get title insurance?

Shouldn't it take a simply online inquiry to determine if there are any liens, easements, etc on a piece of property? But yet we still have a system where a full title search is needed for almost every transaction. IF the same attorney/title company is used as the loan a lender currently has on the books, they may be comfortable just getting an update since THAT transfer, but the fee is not much less.
I have never heard that there is least bit of angst among lenders, Fannie, buyers or anyone about title insurance. No plans in the works that I know of to get rid of it or replace with some online thing. Why not???

Most of this is a rhetorical thing, but if someone on here smarter than me can figure out how the attorneys/title companies are staying out of this real estate automation discussion, perhaps we can yet save our industry, because I think most on here believe a human will always be a better judge of value than a computer, because it is humans who buy real estate, not computers.

 

[J Grant]

We are not "back to the beginning", this is a more complex time with new challenges than in prior appraisal decades.

The only way "back to beginning" analogy is some AMC fees are as low as back in the early 90's.

There are several issues facing appraisers now : 1) ongoing tactics leading to downward fee pressure for AMC model work 2) ) Fannie and Freddie elimination (est 5-10%) , of appraisals with waivers 3) Data / software /future AI alternative valuation products 4) push by lenders and AMC's for bifurcated aka hybrids to replace a portion of "traditional" appraisals .

None of the above bode well for volume or fees so yes, anyone struggling now or lacking private clients ( and even private clients are vulnerable to change ) might want to consider this part time income rather than full time income and prepare accordingly, whatever hat means for them, even if for the next couple of years the changes are not felt. If the changes are not that drastic then do a happy dance but imo better to prepare for anyone who is, or feels vulnerable.

One semi bright spot is the loans such as HELOC that used to need just an AVM's or BPO' are required to be upgraded to min evaluation with ext inspection, a number now ordered from appraisers as "desktops", the pay low $60-$75 each but a work source that was not there before.

 

[TRESinc]

There are several issues facing appraisers now : 1) the ongoing tactics leading to downward fee pressure for AMC or lender division AMC model work 2) ) Fannie and Freddie elimination ,estimated for now 5-10%, of appraisals with waivers 3) Data and software /future AI alternative valuation products 4) push by lenders/AMC's for bifurcated aka hybrids to replace a portion of "traditional" appraisals .None of these bode well for an volume of work nor for fees charged. The field was dealt a further blow with dropping of college e degree and while they had their hand in the cookie jar of let in more trainees, they dropped AA degree and reduced training requirements.

sounds like great reasons to start appraising outside of the realm of residential lending instead of sitting around waiting for lenders and AMCs to automatically send work to appraisers...

 

[Evincere]

It may be instructive for this industry to examine two very related industries, surveying and title work.

I was a lender for some years, and it was always curious to me why these two items were required on each RE transfer (title work anyway, surveys tend to be only with some lenders). A survey should be a one and done thing, right? Unless the earth moves in an earthquake or erosion or something.

Title work is even more interesting. That was always a requirement, and not just since the last transfer either, but at least 60 years, sometimes more. With the proliferation of online data in most counties, why are title 'searches' still required and and why is it so expensive to get title insurance?

Shouldn't it take a simply online inquiry to determine if there are any liens, easements, etc on a piece of property? But yet we still have a system where a full title search is needed for almost every transaction. IF the same attorney/title company is used as the loan a lender currently has on the books, they may be comfortable just getting an update since THAT transfer, but the fee is not much less.
I have never heard that there is least bit of angst among lenders, Fannie, buyers or anyone about title insurance. No plans in the works that I know of to get rid of it or replace with some online thing. Why not???

Most of this is a rhetorical thing, but if someone on here smarter than me can figure out how the attorneys/title companies are staying out of this real estate automation discussion, perhaps we can yet save our industry, because I think most on here believe a human will always be a better judge of value than a computer, because it is humans who buy real estate, not computers.

I agree. Difference? lobbyists for the insurance industries would strike out and be all over (and fast to quelch) any issues that could be construed to be against or affect the public’s interests. Thus far their (value added) roles and services protecting the public’s financial and legal interests haven’t been challenged or questioned.