A quartet of appraisal trade groups this week offered the Senate Banking and House Financial Services Committee proof that the problem of pressure on appraisers is reaching pandemic proportions.
The lawmakers now have the ball and what they do with it could go a long way in determining the future health of the appraisal industry.
The Appraisal Institute, American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and National Association of Independent Fee Appraisers sent each member of the committee a copy of the executive summary of October Research Corp.’s 2007 National Appraisal Survey. They also included a number of recommendations for lawmakers to consider.
One objective is to identify mortgage-related fraud as a criminal act and establish penalties that are consistent for appraisers, mortgage brokers, lenders, realty agents and others involved in fraudulent activity related to a mortgage transaction.
There are a number of other equally important objectives that Valuation Review will discuss in the coming weeks.
The trade groups contend that an increase of resources for law enforcement agencies to investigate and prosecute mortgage fraud cases is also needed.
Every good battle has a two-pronged attack and this fight shouldn’t be any different.
In addition to seeking new legislation to toughen penalties and increase education and professional requirements, the appraisal industry needs to attack the problem from a second side.
The valuation industry must define best practices and make sure everyone in the valuation process is talking the same language. Click here for the full article.
The slump in the Bay Area housing market continued in December as home prices remained flat and sales slowed to a crawl.
The median price paid for a home in the Bay Area's nine counties rose just 0.5 percent to $612,000 in December from $609,000 a year earlier, according to DataQuick Information Systems.
The number of homes sold in December fell almost 20 percent from a year ago, in line with the size of declines of recent months. The drop extends a streak of monthly sales decreases dating back to April 2005.
"We're still in the middle of the housing-market correction, both in terms of price and volume," said Stephen Levy, director of Palo Alto's Center for the Continuing Study of the California Economy. "I still think we're nearer the beginning or the middle of a longer correction."
The resale-housing market fared better than the new-home market, as the median price of an existing home rose 1.9 percent to $645,000 from $633,000 in December. Contra Costa and Alameda counties reported the biggest median price increases with gains of 5 percent and 3.3 percent, respectively, while Marin County posted a drop of 5 percent, the biggest of any county.
Click here for the full article.
We are told on one hand that we are just seeing a minor slow-down, and everything will be all right. On the other hand, we are warned of a coming meltdown of unprecedented proportions. In order to understand for ourselves what is going on, we must understand the dynamics of the housing market.
Housing is unlike any other asset. If, for instance, you want to sell a stock, you just sell it. There is a pool of ready buyers willing to buy the stock on the open market. Housing, on the other hand, being such a large, indivisible asset, is much more difficult to move.
For example, let's say Abel needs to sell his house, and Brian wants to buy it. Brian, however, must first sell his house to Charlie. Charlie must first sell his house to David, and so on until someone buys a house from someone who does not first need to sell his own house.
If we would put a dot on the map for Abel, Brian, Charlie and David's houses, then connect the dots, from Abel to Brian, Brian to Charlie and so on, we would have a line zig-zagging across the map. This line from end to end represents one successful housing transaction. The only way for any one in the chain to complete the sale or purchase of his house is for everyone else in the chain to complete the sale or purchase of every house.
The housing market consists of a large number of these “lines” of transactions. Think of the map looking like a bowl of spaghetti with all of these extending through it. Typically when talking about a system, this kind of relationship is called a “chain” with, in this case, each link being a purchase or sale of a house. The number of successful real estate transactions is determined by the number of these chains that form, times the average number of links on each chain. You can increase the amount of successful transactions by either lengthening the chains or making more of them. Click here for the full article.
The new appraisal forms mandated by Fannie Mae effective November 1 will likely cause an increase in appraisal fees [MCall] because they will take longer to fill out and place much more liability on the appraiser for expertise he or she generally doesn’t have.
When Fannie Mae redesigned the forms, the appraiser’s role took on the that of a home inspector which is a different discipline that appraisers are not trained for. The problem is the new forms are written in such a way that they hold the appraiser responsible for the condition of the property, says Barbara Decker-Spence, an appraiser in Allentown, who has led seminars on the changes for area real estate agents, lenders and appraisers. Click here to see the full article.