Appraisal Management News

Archive for August 2011

UAD Update

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National Association of Appraisers

  1. Below is a complete copy of an email from Bob Murphy at Fannie Mae. It is provided as an urgent matter. The mistake probably was based on the FHA announcement.
  2. Fannie/Freddie have recently updated their UAD instructions, primarily to add in most sections that the appraiser may/should add comments/clarifications when necessary. The report doesn’t change except for the standardization. The UAD does not substitute for text comments in either the comments section or addenda.

The email states the following:

We are reaching out to you to help us reinforce the GSE’s September 1, effective date for Uniform Appraisal Dataset (UAD) forms.

Yesterday, several news outlets published articles incorrectly reporting that the UAD effective date was pushed back to January 2012.  The GSEs (Freddie Mac and Fannie Mae) have NOT changed their UAD effective date of September 1, 2011. The January 1, 2012, effective date is the adoption date for FHA, which recently announced it will adopt the UAD and two of the UAD compliant appraisal reporting forms.   More information on FHA’s adoption of the UAD is available in their Mortgagee Letter 2011-30.
If you should receive any inquiries regarding the press coverage, we would appreciate your help in sharing the following key message:

  • The GSEs have not changed their UAD effective date.  September 1, 2011 remains the effective date for appraisal reports to be completed in compliance with the UAD for conventional mortgages sold to the GSEs.  
  • The January 2012 date is the effective date for the use of the UAD for FHA.  More information on FHA’s adoption of the UAD is available in their Mortgagee Letter 2011-30.

Additionally, we are posting reminders on our Websites about the September 1 effective date – and wanted to ask you to help us and do the same (if you have not already).  A suggestion is below.
"Reminder:  September Uniform Appraisal Dataset Effective Date is Approaching -  Fannie Mae and Freddie Mac are requiring UAD forms for all appraisal report forms with effective dates of September 1, 2011 or later."

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Written by appraisalmanagementnews

August 29, 2011 at 9:32 pm

Posted in UCDP

Top 7 Real houses inspired by fiction

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Buzz Buzz Home

While compiling this list we learned that some people are really devoted to emulating their favorite fictional characters. Like, really really devoted! After all, how much do you have to love Lord of the Rings to commit to living in a hobbit house? We’re guessing an awful lot considering those low ceilings would surely make things difficult. Let’s have a look at these real life imitations of houses you just might have grown up watching on TV!

Pink overload! This could only be the Barbie house. Let’s move on and give Barbie and Ken their privacy.

Coming straight out of Gotham City, we’re convinced that this HAS to be Batman’s house. Whoops, we mean Bruce Wayne.

Looking like it came from the town of Bedrock in the Flintstone, this rock house is actually located in Portugal and is quite popular with the tourists. 

We’re not Hello Kitty experts, so we’re not sure how close this gets to looking like Hello Kitty’s real house. Did Hello Kitty even have a house? We’re confused, but it could just be a side effect from all the pink.

We’d be too tempted to hop on and fight the Red Baron with this one, so we’d keep our distance from the Snoopy house (okay, information kiosk, but it still counts!)

Anyone born after 1980 should be ashamed if they didn’t recognize this as the Simpsons house. Hardcore Simpsons fans should be ashamed that they didn’t notice that the address on the house is incorrect. The Simpsons lived at 742 Evergreen Terrace, not 712!

Given that The Hobbit film is coming out next year, we’re guessing that whoever lives in this house will be getting a lot more attention soon.

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Written by appraisalmanagementnews

August 29, 2011 at 8:54 pm

Posted in Cool Pictures

Appraisal Overhaul Pushed Back to Jan 1

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Reverse Mortgage Daily

The deadline for implementing new Uniform Appraisal Dataset (UAD) requirements has been pushed back to January 1, according to Mortgagee Letter 2011-30, released on Monday. As specified in the mortgagee letter, the new UAD requirements will go into effect for all case numbers assigned on or after January 1, 2012 and for all appraisals performed on HUD real estate owned (REO) and Pre-Foreclosure Sale (PFS) properties with an effective date on or after January 1, 2012.

The requirements under the Federal Housing Administration aim to streamline the appraisal process and make appraisals more uniform. Appraisal management companies are working to teach and train appraisers to use the UAD, which essentially revolutionizes the way appraisals are documented by setting standards throughout the appraisal process.

The UAD is one component of a larger effort toward improving the appraisal process; additionally, a Uniform Uniform Collateral Data Portal (UCDP) will enable lenders to submit appraisal report forms electronically. The mortgagee letter specifies that mortgagees may use either format in advance of the January 1 implementation date.

Previously, the implementation date for the UAD was September 1. AMCs have told RMD that they are shifting their processes in advance of the deadline.

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Written by appraisalmanagementnews

August 24, 2011 at 8:52 pm

Posted in UCDP

Bernanke’s big Jackson Hole speech could rattle the markets

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Whether the Federal Reserve likes it or not, its unprecedented monetary polices over the last few years have conditioned the financial markets to expect a helping hand when the going gets tough.

That’s why all eyes will be on Ben Bernanke, the central bank’s chairman, when he speaks Friday at the Fed’s annual symposium in Jackson Hole, Wyoming.

With the stock market mired in a month-long slump and both the U.S. and euro zone economies in danger of sliding into recession, investors are bracing for a possible repeat of last year’s performance, when Bernanke hinted the Fed would act if conditions deteriorated.

Two months later, the central bank began pumping $600 billion into the financial system through direct purchases of Treasury debt, a second round of stimulus that markets dubbed "QE2."

While the jury’s still out on how effective these purchases have been, few are ready to rule out QE3 entirely.

Wyoming may conjure up images of the American Wild West, but markets aren’t expecting Bernanke to ride into the mountain resort with guns blazing — at least not yet.

While the economy has taken a turn for the worse — growth ground to a halt in the second quarter and nearly flat-lined in the first — there’s a sense that the Fed will want to wait a bit longer to assess the impact of its past stimulus.

Other Fed policymakers have sought to downplay expectations of an imminent QE3 announcement. St. Louis Fed President James Bullard was quoted in Japan’s Nikkei newspaper saying that while the Fed could buy more bonds if the economy weakened, the time was not right for such a move.

"Going into Bernanke’s speech at Jackson Hole, people are positioned for a significant shift in policy. (But) we think financial market conditions have to deteriorate even further for more QE3," said Simon Derrick, head of currency research at Bank of New York Mellon.

Nonetheless, traders are still expecting Bernanke to signal in some shape or form that he hasn’t run out of bullets and could start shooting again if need be.

"Based on our conversations with clients, we believe investors would be very surprised if the speech did not include a discussion of asset purchases," strategists at Goldman Sachs wrote in a note to clients.

They said this could involve the Fed reinvesting proceeds from maturing assets into 10- and 30-year Treasuries to hold long-term interest rates low.

"I think we’ll see (QE3) because America needs growth, but I don’t think we’ll necessarily get it on Friday," said Neil Dwane, chief investment officer for Europe at RCM.

Current market moves reflect this. While still down about 15 percent from late July, the S&P 500 rallied smartly Tuesday and the dollar has struggled against major currencies.

More stock market gains could be in store if Bernanke gives a strong hint of future action. After Bernanke’s speech last August, the S&P 500 began a rally that took it up nearly 25 percent by May 2011.

Pulling the trigger now would have the element of surprise going for it and might spark the most aggressive market moves.

There’s been some talk in bond market circles that the 10-year yield’s dip below 2 percent reflected a pricing in of QE3, though those moves probably had more to do with recent dismal jobs, manufacturing and growth data.

Still, there are impediments to launching QE3.

For one thing, Bernanke already caught investors off guard earlier this month and slowed a market rout when the Fed pledged to keep interest rates near zero until at least 2013.

Steven Bell, director of GLC Ltd, a global macro hedge fund in London with $1 billion in assets, also noted that higher inflation may make the Fed cautious. "We have core inflation going up," he said. "It may be low but it’s still going up."

Political opposition is also on the rise. Texas Governor Rick Perry, a candidate for president, even said he would consider it "treasonous" if Bernanke "prints more money between now and the election" in 2012.

That populist anger stems partly from the fact that Fed policies have done little to increase hiring or spark a housing market recovery.

"The history is $600 billion (in bond purchases) hasn’t really made any difference to the U.S. economy," Dwane said. "It’s still where it was when he was talking about it last August: nearly in recession."

If QE3 fails to boost growth or stokes inflation, markets may wish the Fed had done nothing.

"Investors are becoming more cynical," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Central bankers and governments seem to playing the role of the Dutch boy trying to plug holes in the dike."

A humdrum speech that neither announces plans for QE3 or even hints at the Fed’s willingness to act is probably the most unlikely scenario, as far as markets are concerned.

If Bernanke did go that way, it could signal that the hawks were gaining the upper hand. Three Fed policymakers voted against extending the zero interest rate pledge to 2013 and have argued that the Fed cannot do much more to boost growth.

Fred Dickson, market strategist at D.A. Davidson & Co, noted that policy remains very loose even without QE3. In addition to holding rates near zero, the Fed has said it will reinvest the proceeds of maturing assets on its "extraordinarily large" $2.8 trillion balance sheet.

"So they have a stealth QE3 policy in place already," he said.

No mention of future easing would likely hurt stocks but should spark a short-term dollar rally. Treasuries would likely fall as expectations of more Fed support faded.

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Written by appraisalmanagementnews

August 24, 2011 at 8:33 pm

Posted in Federal Reserve

Former Ginnie Mae execs submit GSE reform plans

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Former Ginnie Mae presidents Robert Couch and Joseph Murin said the future structure of Fannie Mae and Freddie Mac should be based on the agency they used to lead, according to a letter they sent to Republican lawmakers last week.

In the letter sent to Sen. Richard Shelby (R-Ala.), and Reps. Spencer Bachus (R-Ala.) and Scott Garrett (R-N.J.), the former Ginnie chiefs expressed concern over the health of the secondary mortgage market and its weight on the economic recovery.

"Any effort to replace Fannie Mae and Freddie Mac with a new framework must be designed to provide a steady flow of mortgage finance to consumers in all economic cycles while protecting taxpayers from undue risk," Couch and Murin wrote. "We believe the Ginnie Mae guarantee program provides an effective model to achieve these objectives."

Outside of fringe and sometimes duplicitous reforms, Congress has yet to take up meaningful legislation to revamp the future housing finance system. Even though the Obama administration submitted three options for winding down Fannie and Freddie in February, news reports surfaced last week that some within the administration may be opting to maintain a large government role.

The Treasury Department maintains its commitment to the original options.

Regardless, it grows increasingly unlikely that Congress will pass GSE reform before 2013, leaving plenty of time for proposed plans.

Couch and Murin said an ideal solution would be remove the federal government altogether but the current financial market could not fill the void and support long-held features of the housing finance system such as the 30-year, fixed-rate mortgage.

"Until financial markets settle down, federal credit backing is required," they write. "In the meantime, based upon our experience, we believe that it is possible to design a guarantee that sustains the long-term mortgage market while protecting taxpayers from undue risk."

All this they said can be borrowed from Ginnie Mae, which guarantees the timely payment on securities backed by Federal Housing Administration and Department of Veterans Affairs loans.

They suggested placing a guarantee only on securities backed by the safest loans. They said shareholders and credits in the private replacements of Fannie and Freddie should be wiped out before the guarantee is triggered.

The guarantee pricing would also be increased to protect against a possible 20% to 25% drop in home prices as opposed to what Fannie and Freddie charged, which covered a 10% decline.

In many areas, the housing downturn cut prices in half since 2007.

Couch and Murin suggested also including a "recoupment" provision requiring other firms to step in and repay taxpayers should catastrophe strike.

"Without properly protected private investors, we would not have a reliable market for long-term financing of mortgages," Couch and Murin write. "As the Ginnie Mae example continues to show, a limited federal guarantee would ensure a steady flow of mortgage finance and can be designed and priced to shield taxpayers from undue risk."

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Written by appraisalmanagementnews

August 24, 2011 at 8:13 pm

Posted in GSE

FHA mortgage delinquencies resurge in second quarter

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After a hitting a three year low earlier in 2011, the Federal Housing Administration delinquency rate jumped more than a full percentage point in the second quarter, according to analysis from investment bank Keefe, Bruyette & Woods.

The Mortgage Bankers Association reported delinquency rates on all outstanding mortgages ticked up 12 basis points in the second quarter to 8.44%. KBW analysts said resurging FHA delinquencies drove the increase as its larger book of business began to season.

"We believe that an increase in delinquencies in the FHA program was the biggest contributor to the pickup in overall national delinquencies in the second quarter," KBW said.

From the start of 2009 to the end 2010 the amount of loans, current or delinquent, in the FHA servicing portfolio increased from 3.8 million to nearly 5.7 million as the frozen mortgage market depended upon it, Fannie Mae and Freddie Mac to finance and guaranty 95% of the market.

At the same time, delinquencies began to fade. The percentage of past-due loans declined from a high of 14.5% in the third quarter of 2009 to a low of 10.6% in the first quarter of 2011, still 60 bps above the low in the first quarter in 2007.

"While this could partially reflect an improving book of business, we believe that much of it reflected the sharp growth in new loans," KBW said.

But in the second quarter, the delinquency rate jumped to 11.7%. Seasonally adjusted, the increase was 59 bps to 12.62%.

Mirroring the MBA report, the FHA second-quarter delinquencies increased the most in the early stages of default, according to KBW. For instance, 30-day delinquencies increased 87 bps to 5.27% in the second quarter, while those in 90-day delinquency dropped 5 bps to 4.55%. Seriously delinquent loans, those in 90-plus day delinquency or foreclosure dropped 13 bps to 7.65%.

"FHA delinquency rates fell in 2010 as the FHA loans outstanding grew very sharply. We believe that the moderation in FHA loan growth will likely result in further increases in delinquencies on this portfolio which will likely push up the national averages," KBW analysts said. "However, this credit risk resides with the government since these loans are guaranteed by FHA."

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Written by appraisalmanagementnews

August 24, 2011 at 8:08 pm

Posted in Mortgage News

UAD/UCDP Seminar

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Coester Appraisal Group’s educational slideshow regarding the upcoming requirements for the Uniform Collateral Data Portal/Uniform Appraisal Dataset.

Written by appraisalmanagementnews

August 23, 2011 at 7:34 pm