Appraisal Alert is a weekly roundup of news, information and trends in the appraisal industry.
The National Appraisal Volume rose 0.66% the week of 9/6/15.
“This is good volume given the Labor Day holiday this week,” says Kevin Golden, director of analytics for a la mode inc. “The fears of a rate hike from the Fed are encouraging deals already in the pipeline to get done.”
HousingWire is partnering with a la mode, inc., an appraisal forms software company which has tracked the appraisal volume throughout the country since 2006, to provide a weekly read on appraisal volume. Appraisal volume is an indicator of market strength and has a few advantages over mortgage applications, especially since fallout is less for appraisals since they are ordered later in the mortgage process after credit worthiness has been approved.
Here’s the latest appraisal volume:
(Source: a la mode)
Nearly 20 trade groups representing appraisers, lenders, banks, credit unions, title companies and others are urging federal regulators to provide guidance on how they plan to enforce a new mortgage disclosure regime that goes into effect Oct. 3.
The implementation of the Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosures poses significant "challenges" for mortgage lenders, according to a letter signed by the 18 groups.
The Consumer Financial Protection Bureau has indicated that regulators will be "sensitive to the good-faith efforts" of lender efforts to comply with what is known as TRID. But the trade groups want more specifics from regulators on what that means. Though the CFPB wrote the rule, enforcement of the new disclosures is spread out among various regulators.
"We urge the Federal Financial Institutions Examination Council to provide needed certainty by articulating precise policies for examining and supervising financial institutions for the initial months after the TRID implementation," the Sept. 8 letter says. "The FFIEC should formally implement a clearly articulated transition period that addresses how regulators will oversee and examine regulated institutions for TRID compliance during this transition period."
The signers note that the TRID framework represents a "sea change for every participant in the mortgage lending process," including borrowers, lenders, appraisers, real estate agents, mortgage brokers, builders and other service providers.
The industry groups that signed the joint letter are: American Bankers Association, American Land Title Association, American Escrow Association, The Appraisal Firm Coalition, Appraisal Institute, Collateral Risk Network, Consumer Bankers Association, Community Home Lenders Association, Consumer Mortgage Coalition, Community Mortgage Lenders, Credit Union National Association, Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association, National Association of Home Builders, National Association of Mortgage Brokers, National Association of Realtors and Real Estate Services Providers Council, Inc.
A lawsuit in Texas involving tax appraisal values versus market values could disrupt real estate throughout the Lone Star State.
Here’s what’s happening:
Our current property tax system, and those decrying Austin’s lawsuit, support an alternate view where the explicit goal is to allow some properties to be valued at something other than market value. This is fundamentally unfair.
The debate over the challenge is simple. If there are two comparable properties, one valued at market value and the other not, this is not fair. The city believes the remedy should be to value both at market value. Opponents of Austin’s challenge, sometimes those whose business it is to lower their clients’ taxes, argue the value discrepancy should be reconciled at the other-than-market value. But two wrongs don’t make a right. Our system should be uniformly fair, not uniformly unfair.
To be very clear, Austin is not seeking more tax revenue. In fact, it is quite the opposite. Our new City Council has just lowered tax rates — and Austin’s property tax bills — for the first time in at least 25 years. This challenge is not about how much we pay, but only about how we fairly apportion that tax burden between us.
What’s also unfair about the current system? Our property tax system allows the winner of a tax challenge to get reimbursed attorney fees, but defines who “wins” in a way slanted substantially in favor of a property owner. This unfairness is so great that many property owners file challenges because they know they can use the threat of this imbalance to force a resolution in their favor.
Additionally, Texas is one of only a handful of states that still prohibit learning what properties are actually selling for on the market. Sure, some piecemeal and selective data is available. But is it truly representative? Let’s be frank: When folks say they don’t want disclosure of sales data, isn’t it usually because, in many cases, the true value would be more than tax value?
The property tax system protects this unfairness by discouraging challenges to appraisals by cities. The system seems to require thousands of individual property owners to be named and served in such lawsuits. Since individual property tax valuations can’t be increased in the city’s lawsuit without property owners having a right to appeal, the law’s requirement causes confusion and is a waste of resources. Austin is challenging that part of the process, too.
David Bunton, president of The Appraisal Foundation, also has a column in the HuffPo this week, explaining to homeowners about comps and appraisals. Here’s a taste:
In the vast majority of residential appraisal assignments, the number one tool an appraiser relies on when valuing a home is comparable sales (comps), which refer to recent sales of nearby homes that are similar, or comparable, to the home that's the subject of an appraisal. However, the concept of comps and exactly how and when an appraiser uses them can be confusing.
What are comparable sales?
When valuing a home, an appraiser collects data on the sale prices of similar homes to help develop a credible opinion of value. Generally speaking, comps that have sold most recently and are most similar in location and physical characteristics to the subject property are selected for further analysis. It's important to note that active listings or pending sales may not be primary indicators of value, or comps. A similar home truly counts as a comp if the sale has closed. That's because homeowners are free to ask for as much money as they'd like when putting their home on the market, but that doesn't mean that their property is actually worth that amount. Rather, the final sale price most accurately reflects the market value of a home, which is why appraisers rely on that data when completing an assignment. Many of the lenders and insurers of loans also require appraisers to utilize at least three closed sales as comps.
Read the full thing here.
Comergence, a provider of third-party vendor and risk-management platforms for the mortgage industry, announced the hiring of Jamie Giorello as business development manager.
In this role, Giorello will assist lenders and appraisal management companies in leveraging Comergence’s third-party oversight services.