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I thought this was a great article on regression that I wanted to reprint from WorkingRE. You can find the link to the entire article below.
Editor’s Note: In life after Collateral Underwriter (CU), appraisers are eager to understand how they can create statistical support for their adjustments and value results. In this story, author James Swartz provides a good primer for understanding regression and appraising.
Appraising with Regression
By James A Swartz, PhD.
As a real estate appraiser, you are interested in determining how a set of characteristics such as the number of baths and bedrooms, total s As a real estate appraiser, you are interested in determining how a set of characteristics such as the number of baths and bedrooms, total square feet, and others, affects the value of a property. …continue reading the rest of this post: Appraising with Regression
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4 Hours CE: $79
(Required coursework: Meets BREA Laws and Regs requirement)
OREP Member Price: $49
Navigating California’s Laws and Regulations
Presented By: Brian Mathews
Do you fully understand the latest California laws and regulations as they relate to appraisal? The Competency Rule of USPAP requires that an appraiser know and understand the laws and regulations that apply to a given assignment. Satisfy your CE requirement and become a more confident,
Instructor Brian Mathews, an appraiser for 35+ years and an AQB Certified USPAP Instructor since 2005, shows you the state and federal regulations that you need to be aware of to stay out of trouble. Mathews takes a down-to-earth approach in explaining exactly what you need to know. Learn the current terminology, agencies, and requirements that will help you be a better appraiser. This course is hot off the presses and filled with the latest information on state and federal regulations.
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7 Hours CE: $119
OREP Member Price: $99
“I truly want to produce the highest quality appraisals possible and your classes have finally given me to tools and ideas to make that possible.” –Jackie Cox
“Why wasn’t this taught years ago?” –Jackie Henry
“It was a great class, now I need to redo all my reports for the last 30 years!” – Sharon
Presented By: Richard Hagar, SRA
Regulations now require that appraisal adjustments cannot be based upon an appraiser’s opinion. Failure to provide proof and analysis to support your adjustments can mean a rough road from now on: state board complaints, license revocation, panel removal, lawsuits.
And learn how to avoid Fannie Mae’s bad side: Fannie Mae states that the number one reason appraisals are flagged is the “use of adjustments that do not reflect market reaction.”
So get smart(er) and stop taking the same old CE courses. Learn something relevant to today’s business environment. This legendary course taught by Richard Hagar, SRA shows you the accepted methods of providing supportable adjustments. Up your game, avoid time-consuming callbacks and earn approved CE today!
• Real world examples and case studies
• Use proven techniques to defend yourself against state boards, lenders, and disgruntled clients
• Master adjustment methods using the Cost, Income, and Sales Comparison Approaches
Improve your skillset, increase your income by producing a better product and avoid judgment day with this new CE offering.
posted in Appraisal Process Training | Comments Off on How to Support and Prove Your Adjustments
Something’s been gnawing at my craw ever since January when FNMA’s wonderful CU was unleased to the world.
And before that, which still continues, is the AQM process they still use to judge the work of appraisers. No one else has written about this, or even mentioned it, so I will: It has to do with the word “Comp” which is used liberally by FNMA.
What exactly is a “Comp?”
In FNMA’s world, it’s any property that they obtain, either by their vast AVM process which examines millions of property transactions, or properties that have been extracted from appraisal reports submitted by appraisers… yes, your work. In their fuzzy logic, it’s a “Comp” considered for your report if they say it is. It is not!
A true “Comp” is a property viewed and/or analyzed by a real living, breathing, mirror fogging appraiser who compares that sold property against the subject property in terms of multiple features, characteristics and amenities. It is not determined by an AVM or algorithm within the vast bowels of FNMA. Until the property has such analysis done by an appraiser, it is merely a SALE…it is not a “Comp”.
This FNMA lie really became evident to me yesterday (4/20/15) when FNMA released a news release about how CU has been integrated into their on-line Desktop Underwriter software mortgage lenders use, which you can read http://www.fanniemae.com/portal/about-us/media/corporate-news/2015/6239.html?p=Media&s=News+Releases&from=RSS
Within that news release is this quotation from a VP at a mortgage lender: “The collateral information that CU provides is invaluable and simply staggering,” said Breck Tyler, Executive Vice President, Trustmark Mortgage Services.
“CU has aided in providing important comparable data that was previously unavailable or very difficult to get. CU messages in DU will help streamline appraisal review and make the underwriting of an appraisal a much more informed process.”
Then today, FNMA released info directed to Correspondent Lenders who intend to use the CU process in UCDP, but don’t intend to sell the loan to FNMA: https://www.fanniemae.com/content/fact_sheet/collateral-underwriter-non-seller-implementation-guide.pdf which has this statement: “Fannie Mae does not instruct or suggest to lenders that they ask appraisers to address all or any of the up to 20 comparables that are provided by CU for most appraisals.”
I want to repeat what I said above in case you missed the point: A PROPERTY IS NOT A “COMP” UNLESS YOU DETERMINE IT IS AND INCLUDE IT IN AN APPRAISAL REPORT. Otherwise it’s just a “sale”.
If you’re an appraiser who liberally uses the word “Comp” in place of a “property sale” I would ask that you be more careful. If you receive info from a lender, AMC or anyone else who asks you to look at the “Comp” they have provided, correct them and use the words “sale property” until you have determined that it truly is a “Comp.”
I’m also asking members of appraisal organizations and associations to communicate your concern about this lie perpetrated by FNMA directly with them, and ask FNMA to change the word “Comp” used in their CU Reports, news releases, instructional materials, etc. to “Property Sales” so that there is no misunderstanding about the significance of this issue.
If organizations and associations won’t do that on behalf of appraisers, then we might as well kiss the profession of residential real property appraising goodbye. Because if a list of ‘sales’ are considered “Comps” then an actual human appraiser won’t be needed to provide supportable property analysis and market value reports.
So, you may distribute this message to anyone.
By Dave Towne, AGA, MAA Owner / Educator Towne Appraisals, Mount Vernon, WA Dave Towne in e-AppraisersDirectory.com
The Federal Housing Administration recently announced changes to its appraisal policies found in the Single Family Housing Policy Handbook, or HUD Handbook 4000.1. FHA appraisers must be in compliance with these changes by September 14, 2015 (note the previous compliance date was June 15, 2015).
To help get you started on the changes, we compiled the most frequently asked questions about the new FHA Handbook 4000.1. All of the questions came from students attending our Live Webinars: HUD Handbook 4000.1: Changes, Big and Small.
Is the new FHA Single Family Housing Policy Handbook 4000.1 intended to replace current HUD handbooks, including 4150.2?
Handbook 4000.1 is intended to supersede several HUD Handbooks in their entirety, including 4905.1 – Requirements for Existing Housing One to Four Family Units, 4150.2 – Valuation Analysis for Single Family One to Four Unit Dwellings, and 4240.4 – 203K Rehabilitation Home Mortgage Insurance.
What is the effective date for the requirements of Handbook 4000.1?
The requirements in Handbook 4000.1 apply to case numbers assigned on or after September 14 2015. In industry conference calls, HUD officials have encouraged appraisers and mortgagees to begin using the new Handbook immediately, although they are not required to do so until September 14.
Are appraisers required to complete a three-year sales history on the comparable sales in FHA appraisals?
One of the significant changes to FHA policy is the requirement for appraisers to complete a three-year prior sales history of the comparable sales and listings used in the appraisal. This is outlined in the Appraisal Report and Data Delivery Guide issued by HUD. In addition, two sources are recommended for this prior sales history search – local MLS and local public records, at a minimum.
How should an appraiser handle the prior sales history requirement in non-disclosure states?
According to the Appraisal Report and Data Delivery Guide, page 34: “A property’s location in a ‘non-disclosure state’ does not remove the appraiser from the requirement to research, report, and analyze the prior sale history of the subject and comparable properties.” The appraiser must make an attempt to obtain this information and is required to report the information that is reasonably obtainable. The appraiser must also “describe the difference between recent transfers versus the current sale or offering and the effect on the appraisal problem.”
Has HUD/FHA changed any of the requirements for observing the attic and crawl space?
No; the requirements for an appraiser to observe the crawl space and attic have not changed. FHA prefers that the appraiser make a full entry into the attic or crawl space, but if that is not possible, a minimum entry of “head and shoulders” is acceptable. If the attic and/or crawl space are not accessible, the appraiser must state that fact in the appraisal report. The mortgagee will determine property eligibility.
Is it true that FHA has removed the fall distance requirement for electric power line towers and other towers?
Yes! The requirement to check fall distance no longer exists. An appraiser is still required to notify the mortgagee if the dwelling or related property improvement is located within an easement or if they appear to be located “within an unsafe distance” of a power line or tower. In addition, neither power transmission lines nor local distribution lines may pas directly over the dwelling, any structure or related property improvement such as pools and spas.
Is it true that the new Handbook 4000.1 contains a requirement for appraisers to operate the appliances in the subject property?
Yes. The Handbook states “Cabinets and built-in appliances that are considered Real Property must be present and operational.” The Handbook goes on to state, “The Appraiser must operate all conveyed appliances and observe their performance.” In industry conference calls, representatives from HUD have reiterated this requirement.
What is the appraiser’s responsibility regarding MPR repairs?
The appraiser is responsible to observe, analyze and report all repairs necessary for the subject property to meet HUD’s minimum property requirements (MPR) for existing properties or minimum property standards (MPS) for new construction. In addition, the appraiser must provide a cost to cure and a photograph of the deficiency. The mortgagee (i.e., the underwriter) will determine which repairs are required. The mortgagee has the authority to require additional repair items, and/or to waive any or all of the appraiser’s identified repair items.
If you have more specific questions about the NEW FHA Handbook 4000.1, check out our upcoming Live Webinar: HUD Handbook 4000.1 Changes, Big and Small or enroll in an online or live CE FHA seminar today.
APB Valuation Advisory #3: Residential Appraising in a Declining Market, includes guidance on:
– How Should an Appraiser Define a Declining Market
– What Databases are Available to Support a Market Trend Conclusion?
– What are Some Alternative Value Definitions?
– Defining a Market vs. a Neighborhood
– Verification of Data
– Support for Adjustments
– Integration of the Opinion of Market Trends into the Appraisal Analysis
– Using Statistical Tools to Develop a Rate of Change in the Market
My comment: better late than never, now that some markets are increasing or stable. Worth reading. Good analysis of the issues with practical advice. .
click here to download
Timothy McCarthy filled out an appraisal form noting UAD changes that will need to be made.
Hopefully everyone at this point has updated their appraisal software with UAD functionality, but this is a nice reference to double check your information.
I haven’t tried any of their training courses before, but I am going to try out some of their UAD training since I use ACI.
Date Time Event Registration
June 22 3pm ACI Report Essentials Register
June 28 10am New! How to Comply with UAD Using ACI Software Register
June 29 3pm ACI Track Essentials Register
June 29 4pm New! What Is UAD? Register
June 30 2pm New! How to Comply with UAD Using ACI Software Register
June 30 5pm New! What Is UAD? Register
A unique 4 hour CE program designed to look at California’s Appraisal Profession
“Here Today – Where Tomorrow – A Profession in Transition”
Mr. Bob Clark, Director, California Office of Real Estate Appraisers (OREA)
Mr. George Dell, ASA, MAI, SRA, Valuemetrics, Inc.