Last week the Obama Administration unveiled its plan to help homeowners refinance to take advantage of historically-low interest rates. We are going to focus on the valuation side of the plan. If you want the rest of the details you can go here and here.
The program includes refinance options for GSE (government sponsored enterprises, Fannie Mae and Freddie Mac) and Federal Housing Administration (FHA) borrowers. Both programs forgo the appraisal requirements in the refinance process. According to the White House Fact Sheet, “the GSEs would be directed to use mark-to-market accounting or other alternatives to manual appraisals for any loans for which the loan-to-value cannot be determined with the GSE’s Automated Valuation Model. This will eliminate a significant barrier that will reduce cost and time for borrowers and lenders alike.”
In line with the administration’s announcement last week, the US Department of Agriculture’s (USDA) Rural Development rolled out its refinance pilot for borrowers already using the Rural Development 502 program. It allows borrowers in the hardest hit rural areas who are underwater to refinance and take advantage of today’s rates. The lender does not have to submit new credit reports, appraisals, minimum property determinations or property inspections. The pilot is available in 19 states.
Yesterday, the US Government Accountability Office (GAO) released their report on real estate appraisals “Appraisal Subcommittee Needs to Improve Monitoring Procedures” as required per Dodd-Frank. GAO was tasked with 1) determining how the Appraisal Subcommittee (ASC) is carrying out its Title XI responsibilities, 2) ASC’s plans to implement Dodd-Frank provisions, and 3) regulatory dollar thresholds for determining when an appraisal is required.
GAO reports that one of the challenges faced by ASC is in the area of resources and planning. GAO cites the creation of a national hotline as one example of a Dodd-Frank requirement that could strain the ASC’s resources. ASC has noted that the number of appraisers is trending downward, which will inevitably impact the agency’s $2.8 million budget. The report also discusses the $250,000 regulatory threshold. While some debate the need to change the threshold, GAO states that it has little impact on the proportion of mortgages with appraisals because the Federal Housing Administration and the government sponsored enterprises (GSE) make up most of the market and require appraisals regardless of price. However, this could change with a more privatized market.
Happy New Year everybody!
The Federal Housing Administration (FHA) is offering appraisal training later this month and early next month. The January training is a Webinar so you can participate from anywhere. The February training is in Denver, CO so if you’re an appraiser heading for ski country this training is for you. Here are the particulars (provided by FHA):
January 17, 2012 – Webinar. Property Requirements for the FHA Appraisal. Have you ever thought, “Am I in compliance with HUD requirements if I do not inspect the subject’s attic?” This FREE webinar training is geared towards the FHA Single Family Roster Appraiser and will cover property inspection requirements to include neighborhood influences, site analysis, and improvements. Appraisers new to the FHA Roster, as well as seasoned professionals wishing to refresh their knowledge, will benefit from this in-depth look at property inspection requirements and HUD/FHA expectations. Register at here (this link can also be used to view the archived Webinar after January 17th). If you have questions you can E-mail the Denver HOC at firstname.lastname@example.org.
February 16, 2012 – Denver, CO. This FREE one-day “Live” class discusses FHA appraisal requirements including: FHA Appraisal Protocol, updates to FHA appraisal policy, and property eligibility. This course provides a refresher to seasoned FHA appraisers, and provides valuable information to appraisers new to the FHA roster. Industry participants including Underwriters and Loan Processors may also benefit. Attendees will receive 7-hours of continuing education acceptable for the State of Colorado appraisal licensing requirements. Class size is limited, first-come, first served. On the day of the class, check-in begins at 8:00 a.m. Class begins promptly at 8:30 a.m. Registration required no fee. More info available here.
Government sponsored enterprises (GSE), Fannie Mae and Freddie Mac are reminding interested parties that December 1, 2011, is a pretty important date for the Uniform Mortgage Data Program (UMDP). Going foward, Uniform Loan Delivery Dataset (ULDD) data points must be collected and submitted to the GSEs for loans delivered on or after March 19, 2012. If an appraisal report is required the report form must be submitted to the Uniform Collateral Data Portal (UDCP) for mortgages dated on or after December 1, 1012 and submitted to the GSEs on or after March 19, 2012. You can get more on this fun at Freddie Mac’s UMDP Web page or Fannie Mae’s UMDP Page.
in related news…
The US Department of Agriculture’s (USDA) Rural Development announced that the Uniform Appraisal Dataset will apply to the Single Family Housing Section 502 Guaranteed and Direct Loan Programs effective January 1, 2012. For those interested in knowing this means that UAD is required for loans insured by the Federal Housing Administration (FHA) and Rural Development and is optional for loans guaranteed by the US Department of Veterans Affairs (VA).
Earlier this month, the National Association of Realtors (NAR) held its Annual Convention in Anaheim, California. While your friends at Appraisal Insight spent a fair amount of time at Space Mountain and mingling with Mickey and friends we also took in some appraisal action. Credible valuation of real property is a hot topic these days so it should be no surprise that the topic came up in a variety of ways last week. Here’s a quick synopsis of what you missed if you were not there:
Real Property Valuation Committee: Earlier this year, NAR’s Leadership created a Valuation Work Group met via to discuss the creation of a structure that would allow NAR to develop policy on broader valuation issues including appraisals, broker price opinions, automated valuation models, comparative market analyses, and any other models that may be developed in the future. The Work Group presented a proposal to the Leadership Team to reconstitute the Appraisal Committee as a broader-based Real Property Valuation Committee.
The Appraisal Committee will change to the Real Property Valuation Committee starting in 2012. The new Committee will have representation from other NAR Committees including Professional Standards, Federal Housing Policy, Business Issues, and Conventional Finance and Lending. The reconstituted committee will also have representation from RPR and at least 16 seats on will be reserved for licensed or certified appraisers.
Regulatory Issues/RES Forum: The forum, held Saturday morning, focused on how the average real estate agent can best navigate the appraisal process. A panel discussed how to ensure credible valuations on real property and steps agents can take if they believe the value is not credible. The panel included NAR’s Appraisal Committee Chair, Frank Gregoire, Marty Wagar of Midwest Appraisal Management Group, Anna Ruotolo of RPM Mortgage, and was moderated by Mike McHugh of the Empire State Mortgage Bankers Association. You can read more about this topic at the Speaking of Real Estate blog.
Responsible Valuation Principles: The Valuation Work Group also unveiled an early draft of Responsible Valuation Principles for NAR. While we can’t share many details, the Principles will be the foundation for NAR’s policy on valuing real property – from appraisals to broker price opinions to automated valuation models. NAR’s Board of Directors moved the Principles to a work group that will be put together early next year. This Work Group will work out the details of the Principles and recommend them for adoption at a future date.
Today the Federal Housing Finance Agency (FHFA) announced changes to the Home Affordable Refinance Program (HARP) to “attract more eligible borrowers who can benefit from refinancing their home mortgage.” The announcement was made in conjunction with the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac. HARP will now allow borrowers to refinance even if they are underwater. According to the Wall Street Journal, only 894,000 borrowers have used HARP, of which 70,000 were underwater.
FHFA announced several enhancements to HARP, including eliminating the appraisal requirement. The appraisal is no longer required if a reliable automated valuation model (AVM) estimate can be provided by the GSEs.
Other enhancements include:
- Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
- Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
- Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac; and
- Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.
The Appraisal Foundation (TAF) announced that the 2012-2013 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) is now available. This edition of USPAP will be valid for two years beginning January 1, 2012 through December 31, 2013. According to a TAF press release “the new edition includes the standards of professional practice for all appraisal disciplines as well as guidance from the Appraisal Standards Board (ASB) in the form of USPAP Advisory Opinions and USPAP Frequently Asked Questions (FAQs).”
You can purchase a hard copy of USPAP at the Foundation Store for $75 or the PDF for $60.
On September 19, 2011, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) announced it will re-propose it’s rule on the definition of a fiduciary. The rule was proposed to protect business owners who offer retirement plans and those who invest in these retirement plans and IRAs. The proposed rule defined a fiduciary as giving investment advice to an employee benefit plan or a plan’s participants and imposed a number of duties “including a duty of undivided loyalty, a duty to act for the exclusive purposes of providing plan benefits and defraying reasonable expenses of administering the plan, and a stringent duty of care.”
The National Association of Realtors (NAR) submitted comments on this proposed rule because it would have required appraisers to have a fiduciary responsibility to retirement plans in cases where the plan is involved in the purchase or investment of real property. NAR argued that appraisers are required to be independent and should not be considered a fiduciary. Yesterday’s announcement states that the agency is revising provisions of the rule including the application of the regulation to appraisers.
For those keeping score at home, the US Department of Veterans Affairs (VA) announced that it will not require Uniform Appraisal Dataset (UAD) compliance for appraisal reports on VA backed loans. VA will accept appraisal reports that are in compliance with UAD and is preparing a circular with more detailed information for a future release.
September 07-08, 2011 – Charlotte, NC. FHA Appraiser and Lender Training. The credit training includes an overview of 203k, 203k Streamline and Energy Efficient Mortgages. In addition we will review recent Mortgagee Letters and discuss general underwriting do’s and don’ts. The appraiser training will cover recent Mortgagee Letters, appraising HUD REO properties, 203k inspections, and defining required repairs vs. cosmetic deficiencies. Registration required, no fee. More info HERE.
September 08, 2011 – Anchorage, AK. FHA Appraiser Training. FHA will be conducting a 4-hr instructor-led live class on how to complete an FHA appraisal and highlight recent program changes that affect FHA appraisal protocol. This training is highly valuable for appraisers who would like to be added to the FHA Appraisers Roster, and an excellent review for those who are currently on the Roster. Registration required, no fee. More info HERE.
September 14-15, 2011 - Portland, OR. Annual NAIFA State Conference. Come join the Rose City Chapter of National Association of Independent Fee Appraisers (NAIFA) for their Annual State Conference. This 2 day conference will cover “Completing Today’s FHA Appraisal”, presented by FHA Santa Ana Homeownership Center instructors (7 Hrs CE); NAIFA will present “Operating an Appraisal Business” along with other property related topics. Registration required, Fee. For more information: http://www.ifanw.com/images/stateedconf2011.pdf
September 20-21, 2011 – Fort Worth, TX. A Day with FHA & The FHA Appraisal. Join the Fort Worth Mortgage Bankers Association and FHA’s Denver Homeownership Center in Dallas/Fort Worth for two days of training. Underwriters, processors, loan officers, managers, and appraisers will benefit from this opportunity. Classes will borrower eligibility, underwriting appraisals, refinances, troubleshooting, FHA connection, and more. Certificates will be issued to all attendees and six hours of CE Credit will be obtainable for Appraiser Licensing. There is limited seating; register early to ensure attendance. Registration required, fee. For more information please visit: http://www.fortworthmba.org/
September 21, 2011 – Webinar: HUD Appraiser REO Training – The Atlanta Homeownership Center is presenting a webinar on the REO M&M III protocol and HUD’s guidelines for FHA appraisers. Learn the general principles of the REO M&M III program. This training will explain the responsibilities of the M&M III partners and how FHA appraisers should appraise HUD REO properties. This training is designed for FHA appraisers, Lenders, Real Estate Listing Brokers, M&M III partners: Asset managers, Field Service Managers, Mortgage Compliance Managers, Loan Officers and Sales agents. This webinar is a semi-technical appraiser training. Training will be at:10:30AM-1:00PM Eastern Standard Time. Registration required, no fee. More info HERE.Course Materials can be downloaded here.
Save the dates for FHA Appraiser and Lender Training:
September 13-14, 2011 – Tampa, FL; September 27-28, 2011 – Chicago, IL. The lender training will include an overview of 203k, 203k Streamline and Energy Efficient Mortgages. In addition we will review recent Mortgagee Letters and discuss general underwriting do’s and don’ts. The appraiser training will cover recent Mortgagee Letters, appraising HUD REO properties, 203k inspections, and defining required repairs vs. cosmetic deficiencies. Location details to be announced. Registration is not yet open.