Mary Cummins, Real Estate Appraiser, Real Estate Appraisal, Los Angeles, California, Mary Cummins.

Mary Cummins is a real estate appraiser in Los Angeles, California with 38+ years of experience. Cummins provides real estate appraisals for banks, lenders, mortgage brokers, Appraisal Management Companies (AMCs), lawyers, Courts, factors and private parties for lending, lawsuits, probate, estate planning, divorce and all types of litigation. Cummins provides 1004, 1073, 1025 and other form reports, narrative reports and historical appraisals besides real estate research and appraisal advice.

Showing posts with label fha. Show all posts

Saturday, June 28, 2025

HUD Slashes Appraisal Requirements by Mary Cummins Real Estate Appraiser

June 27, 2025 HUD Secretary Scott Turner released the below press release entitled "HUD Slashes Red Tape to Homeownership Financing Costs." Some of that red tape is related to home appraisals which made some appraisers happy. The press release linked below links to the June 27, 2025 Mortgage Letter which details the rescission of the appraisal requirements, i.e. "Rescission of Outdated and Costly FHA Appraisal Protocols." Some of these changes would disrupt the home loan markets. Below are a few of the changes.

This was crossed out. ~~(I) Economic Life/Section 223(e)The Mortgagee must confirm that the term of the Mortgage is less than or equal to the~~ ~~remaining economic life of the Property.~~ Appraiser not longer has to include economic remaining life. This could be an issue if the loan is 30 years but remaining economic life of property is less than 30 years. This happens with some older homes in average condition not to mention older mobile homes. Older mobile homes generally can't get loans for this reason. I could see people walking from loans when they're underwater just like during the Great Recession.

FHA Minimum Photograph Requirements.

Only front and rear photos are needed. No more angled photos to show all four sides. Sometimes you really need to see all four sides. People generally don't repair the sides as much as the front. I always include photos of the sides whether they ask for them or not. It takes maybe five more seconds.

The street scene no longer has to include a portion of the subject. Then the street scene could be from anywhere and not subject's street. It doesn't take any extra time or effort to include a tiny portion of the subject on the side of the street scene. This doesn't save any time.

Attic and crawl space photos no longer needed. Sure hope someone inspects the attic and crawl space which can hide a lot of expensive damage and problems such as water damage, mold, roof issues, previous fires, original pipes, foundation issues... I've been in attics where I saw holes going to the outside, sagging roof supports, lack of insulation, burn marks, mold, mildew...that weren't caught in any inspection. While it's a hassle carrying a ladder to look in the attic I think it could be important. A head and shoulder view is all that's needed so you could use a stick to prop up panel and use selfie stick to take the photo. If it's no longer needed, I'm sure they'll reduce appraiser fee so while it may be less work, there will probably be less pay.

Photos of common areas of 2-4 units no longer have to be included. Photos of condo common areas also no longer needed. I've seen a lot of 2-4 units and condos with major deferred maintenance in the common areas. This could have a large effect on value especially considering the recent major condo issues with huge special assessments, inadequate insurance and zero replacement budgets. It only takes a few minutes to take common area photos.

Appraiser no longer has to comment on upward or downward future market trends in detail. This will be horrible if we head into another real estate recession like the Great Recession. The 1004MC form, also known as the Market Conditions Addendum, was introduced by Fannie Mae in November 2008 and became a requirement for all one- to four-unit property appraisals delivered to Fannie Mae and Freddie Mac starting April 1, 2009. It was created in response to the 2008 housing crisis to standardize the analysis and reporting of market conditions by appraisers. As it is it's not mandatory with many loans. I still use it to figure out general time adjustments besides AI.

This was crossed out. ~~Additional Appraisal Requirements for 223(e) Mortgages (09/14/2015)~~ "223(e)" refers to a section of the National Housing Act that allows for the insurance of mortgages in older, declining urban areas where there is a need for affordable housing. This section specifically facilitates the purchase, repair, rehabilitation, or construction of properties in these designated areas." Many can't get these loans for good reason. The cost to repair the home is more than the final value of the home. It's not a good investment for the government. The borrowers could end up under water and walk then we have another real estate recession. This has happened before.

This next part could be very problematic as it could allow construction in some flood zones. This will be a huge issue as the government unwinds FEMA and climate change increases. This is a big issue in Florida, Texas, the south. It has to do with building above the high tide line which has been rising for years. People shouldn't build in those areas because they will lose their home in the next storm and now FEMA won't even help them. Many areas in Florida are at risk of losing their roads and highways to sea level rise and storms.

"Rescinded the Federal Flood Risk Management Standard (FFRMS) for New Construction Eligibility. Rescinding the FFRMS restores the previous established policy, thus removing what would have been limits on the land available for development and eliminating increases in the cost of construction for FHA-insured single-family properties, which would have exacerbated the insufficient supply of affordable housing for the next generation of homebuyers."

Here's another troubling change. "Rescinded the Mandatory Pre-Endorsement Inspection Requirements for Properties Located in Presidentially-Declared Major Disaster Areas. Modifying FHA disaster inspection requirements aligns FHA’s policies with industry standards and allows lenders the discretion to assess property condition and determine appropriate risk-based actions prior to endorsement. This update reduces costly and unnecessary delays and will improve the bandwidth of home property inspectors that are often overwhelmed following a natural disaster."

I remember the 1994 earthquake in LA. I had inspections scheduled but no phone to contact clients to see if I should change the appts. My first two appointments were totaled by the earthquake. I later had to do reinspections for properties in the middle of financing to make sure they weren't damaged. Most were damaged. Not only that but values plummeted after the earthquake. Why would the government want to give the same loan amount to a property which is probably greatly devalued or worth almost nothing? The government has to bail out the loans and banks.

From the same press release, "During the first Trump Administration, HUD made targeted technology investments through FHA Catalyst that have substantially improved FHA’s collateral valuation analytics. As a result, FHA is now able to extend the benefit of these investments to borrowers, lenders, and taxpayers in the form of streamlined appraisal procedures, lower costs, and quicker turn times."

FHA Catalyst and AVMs: The FHA Catalyst system, which HUD has invested in, is a platform designed to modernize the FHA program by facilitating the electronic submission and processing of appraisals. It has also improved FHA's collateral valuation analytics, which suggests a role for AVMs within the FHA program.

The increased use of AVMs could be problematic as we all know how deeply flawed AVMs can be. The borrowers who will agree to an AVM value will have older homes in less than average condition without upgrades, views and in less than desirable locations in a neighborhood. These homes would receive a higher AVM value than market value by a live appraiser. Borrowers with fully upgraded, remodeled home on prime lots with prime views would get a lower AVM value and probably get a loan elsewhere. This means most AVM loans could be under collateralized. The resultant loans would be riskier for the government and investors not to mention the stock market.

I see some red flag issues with these recent HUD changes. They will reduce the confidence in real estate appraisal valuations, home loans and the real estate market in general. It will also upset asset backed securities markets and the stock market. Lenders, banks will make a lot more money at the expense of the homeowner and US tax payer. Similar loosening of regulations and changes were made before the Great Recession which is what caused the Great Recession. History has a tendency to repeat itself. We don't seem to learn.

While HUD can make administrative changes on its own sometimes they need the approval of Congress to make major changes in housing programs and funding. Maybe there should be some oversight on these changes such as the Finance Committee. In this new era of the government making executive orders without any approvals, oversight or even investigation this will probably stand as is.

"HUD Slashes Red Tape to Cut Homeownership Financing Costs

FHA eliminates 12 costly and burdensome policies in sweeping rollback"

https://www.hud.gov/news/hud-no-25-086

"Rescission of Outdated and Costly FHA Appraisal Protocols"
https://www.hud.gov/sites/dfiles/OCHCO/documents/2025-18hsgml.pdf

Marhttps://www.hud.gov/sites/dfiles/OCHCO/documents/2025-18hsgml.pdfy Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.

Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

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Mary Cummins

Mary Cummins of Cummins Real Estate Services has been in real estate since 1983, over 35 years. She is licensed by the Bureau of Real Estate Appraisers. Mary Cummins was an agent and broker licensed with the California Department of Real Estate selling residential income, commercial buildings, raw land and homes for Merrill Lynch Realty in Beverly Hills and Westside Properties in Los Angeles before concentrating on appraisals. Mary Cummins currently provides real estate appraisals, expert witness testimony, historical research, legal real estate research for mortgage brokers, banks, lawyers, factors, insurance companies, financial consultants and private individuals. Mary Cummins was born and raised in Southern California. Cummins attended Beverly Hills Good Shepherd Catholic School and Beverly Hills High School. Besides being on the Dean's list, Mary Cummins was a top ten national swimmer and competed on the men's water polo team. Mary Cummins began college at the age of 15 attending the University of Southern California on scholarship, majoring in Psychology/Sociology. http://www.animaladvocates.us http://www.facebook.com/AnimalAdvocatesUSA

Friday, May 24, 2024

False Bias Claims Against Appraisers - Six Main Cases in the Media by Mary Cummins Real Estate Appraiser

mary cummins, real estate appraiser, real estate appraisal, los angeles, california, bias, discrimination,race, racial, white, black, latino, andre perry, hud, george floyd, lowball, lowball,

Below are six of the main falsely alleged racial bias cases against real estate appraisers. When I heard about the first case I assumed the appraiser maybe was racist or was incompetent. Who would make such a hurtful false claim if it weren't true? I would have been the first to take the appraiser out behind the proverbial woodshed for a talking to.

After fully researching the properties and values, I realized the claims were false. I continue to research new cases and have not found one yet where the lower appraiser was in the wrong. I definitely found no biased or racist behavior on the part of the lower appraisals. I have found that the second or higher appraiser has been in the wrong either through bias or incompetence. If I knew who they were and had a copy of the report, I would report them.

In these cases the borrowers truly believed that they had been discriminated against. I understand after a lifetime of discrimination one could assume anything they don't like is the result of discrimination. Sometimes though there is a perfectly good explanation for something we don't like that has nothing to do with race, color, gender...

I did notice four similar things with all of these cases. One, the homes all have complex physical issues. Two, the homes are all located on the edge of neighborhoods nearer to higher valued areas. Three, property values were rising quickly. Four, some of the homes had external factors which greatly affected value. These four factors make for a complex appraisal assignment. If the correct comps are not chosen, evaluated, adjusted properly, values could vary by a large amount. The end result could be incompetence in the form of a higher appraisal.

The first issue has to do with complex physical characteristics of the subject property. Something that I noticed with all of these cases is that they're not newer homogeneous tract homes. All of these homes are complex. The homes are complex because some are much older, in C4-C6 (fair) condition, have unpermitted additions, illegal bedrooms/bathrooms, are on severe slopes, were built to Q5-Q6 quality (low), built on reclaimed swamp land, have varying views... The difference in value could be attributed to differences in actual legal size, real bed/bath count, view, condition or upgrades compared to other homes which sold for more.

The second issue has to do with the homes being located nearer to the boundary of two dissimilar neighborhoods. This caused the second higher appraiser to choose non-comparable comps in a totally different neighborhood than the subject. The Marin case is a prime example of this. There were few larger recent sales in the same area because most homes are smaller and there were few sales overall. The higher appraiser chose comps in Mill Valley which has more larger homes which sell for twice as much as Marin. They are not comparable areas to say the least. It's like comparing homes in South Los Angeles to Beverly Hills.

The third issue is quickly appreciating values. All of these cases happened when homes were appreciating over 15% per year. If you appraise a $100,000 home January 1 for $100,000 then appraise it again 12/31 of same year, the value would be $115,000. That doesn't mean the first appraiser low-balled $15,000. Both appraisals are correct. Sometimes the area was also revitalizing (some call it gentrification) so values went up 25-30% per year. Revitalizing happens when people are pushed out of more expensive areas into nearby less expensive areas causing the area to improve and property values to rise.

The fourth issue is external factors which greatly affect value such as location on a busy highway (Maryland case). Homes located on busy highways are worth less than homes located on cul-de-sacs, private lanes, small residential streets and streets with no through traffic. Another example is homes built on reclaimed swamp land on unbuildable sloped inclines (Marin case). Yet another example is homes a mile from the ocean near the freeway being compared to homes on the ocean with a full ocean view and a boat dock (Florida case).

There is another issue which contributed greatly to these false complaints which is not related to the actual appraisals or homes. It is Andre Perry's false, fabricated, misleading paper and book titled "Know Your Price." Andre Perry falsely stated that racist real estate appraisers lowball black people's homes by $46,000 per home just because appraisers are all "white male racists." Appraisers weren't even involved in the data used by Perry. The truth is people who make more money have more money and buy more expensive homes in more expensive areas. They also buy more expensive cars, clothes, jewelry... Whites make more than blacks and Latinos. Most of that racial wealth gap is actually reflected in higher earners. No homes were low-balled in Perry's data. People read articles about the paper and assumed it was true. Politicians even used the faked paper to campaign to black people for votes and campaign donations.

In all of these huge false appraisal bias cases in the media we had a borrower who automatically assumed racism, a home with intrinsic, extrinsic negative value issues located in a revitalizing appreciating area near a neighborhood which is worth much more. All of these factors combined contributed to a huge explosion of misdirected hate against appraisers especially after George Floyd's murder and Andre Perry's fake paper. It will take years to deal with the false narrative of the alleged "racist old white male" appraiser. The media is directly complicit for wanting to sell advertising to make money by inciting racial divide and hatred with their misleading stories. I didn't see one article where they had an appraiser review the appraisals or give their opinion of the cases. I contacted the writers and no reply. Shame on the media for promoting false hateful racist stories.

20 Pacheco, Marin, California - Tenisha Tate, Paul Austin

https://mary--cummins.blogspot.com/2021/02/alleged-discrimination-home-appraisal.html

1329 Fall Creek Pkwy E Dr, Indianapolis, Indiana - Carlette Duffy

https://mary--cummins.blogspot.com/2021/05/homeowner-claims-discrimination-in-home.html

4132 Sherwood, Jacksonville, Florida - Abena Sanders Horton, Richard Horton

https://mary--cummins.blogspot.com/2020/08/black-homeowner-claims-discrimination.html

5924 Martin Luther King, Oakland, California - Cora Robinson

https://mary--cummins.blogspot.com/2021/07/racial-discrimination-alleged-by-cora.html

Allendale, Oakland, California

https://mary--cummins.blogspot.com/2024/06/details-about-alleged-racial-bias-case.html

209 Churchwardens Rd, Baltimore, Maryland 21212 - Nathan Connolly, Shani Mott

https://mary--cummins.blogspot.com/2023/01/maryland-lawsuit-alleged-racial.html

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.

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Mary Cummins

Friday, January 12, 2024

McKissock Learning Will No Longer Offer PAREA Due to Costs by Mary Cummins Real Estate Appraiser

mckissock learning, mckissock,appraisal institute, parea, real estate appraiser, mary cummins, real estate appraisal, training, certified, residential, license, hud, fha

PAREA is the Practical Applications of Real Estate Appraisal. In order to become a licensed appraiser you currently need about a year or two and 1,000-1,500 hours of training experience as a trainee with another licensed and generally certified appraiser. You also need basic classes and other requirements. Because it was so difficult to find mentors willing to train trainees for free the government allowed the PAREA training alternative to hours with a live mentor. Real Estate Appraiser education provider McKissock Learning was going to be one of the government approved companies, organizations offering PAREA training. The Appraisal Institute is another organization offering the training.

Yesterday January 12, 2024 McKissock emailed people who were interested in the program that they would no longer be offering the PAREA program. See below email.

"Happy New Year to you and yours. We hope this letter finds you well. With a strong commitment to responsibility and transparency, we want to inform you about a significant decision regarding the McKissock PAREA (Practical Applications of Real Estate Appraisal) project.

After careful consideration and thorough evaluation of various factors, we have made the difficult decision to cancel the McKissock PAREA project. We understand that this news may be unexpected, and we want to provide you with a clear understanding of our reasoning and the steps we are taking moving forward.

One of the primary factors contributing to the cancellation is the substantial resource cost required to provide a product of the quality we envisioned. In our pursuit to deliver a premium solution, the associated costs exceeded initial estimates, resulting in a higher-end price to our customers. Regrettably, we recognize that this higher cost would inadvertently create a new barrier to entry into the appraisal profession – specifically, a financial obstacle."

The cost of the program was always a major issue and hurdle to entrance in the field. You couldn't even start the program without first paying for and taking $1,700 worth of McKissock classes. The Appraisal Institute stated the PAREA program would cost about $10,000 per a July 19, 2023 webinar. All of the training would be online. There would be no in person mentorship.

From a monetary point of view the expensive cost of the training might be a total waste without real mentorship. This is not a trial an error occupation. You need someone training you in the beginning. You won't make any money if you don't know what you're doing. The only people who could end up making money from the training were possibly the training organization. They'd make money from government grants, nonprofit grants and class fees from paying students. It'd be like those worthless online degrees.

Another main problem is the real estate appraisal market today is at its absolute lowest point. There's very little lending work. The main cause is our current high interest rates. No one is selling if they have to buy another home. Why lose a 2.5% interest rate and triple your monthly mortgage at 7.5% or so. No one would want to refinance for the same reason. Sales volume is at its lowest in about 20 years per Ryan Lundquist's fantastic statistics. I've seen the same in Los Angeles, California.

Another even bigger issue is the use of live appraisers has been decreasing recently because of appraisal waivers, AVMs (Automated Valuation Methods) and hybrid type appraisals. Even though a live appraiser is used for part of the hybrid appraisal they aren't being paid as much as a full appraisal, i.e. $75-$165 vs $300-$500. The few full inspection appraisals done by live appraisers are very complex appraisals which only appraisers with many years experience are allowed to do. There's just not as much work today for anyone.

Previously the government said there were not enough appraisers and now there are definitely way too many. If you look at Facebook appraiser groups, everyone is hurting. Many have retired or had to get side gigs. If a fully trained and experienced appraiser of 20 years can't get work, a newbie has no chance at making enough money to survive. Even people with 20-40 years of experience are quitting due to lack of work.

You'd have to really be an idiot to shell out $1,700 for basic classes, $10,000 for PAREA, $6,000 appraisal costs first year just to make no money. Few can afford that upfront cost even if they could make the money back in a year or two. Another huge hurdle is lenders only use appraisers with three years minimum experience. No one would hire you fresh out of PAREA.

I believe that McKissock realized there probably won't be enough people willing to pay for the classes at the moment to justify their training costs. They couldn't make enough profit off the program today. Even if the government and nonprofits offered grants to pay for the training the students probably wouldn't get any work from the program. No one would be happy. There would be a lot of online complaints.

I'm actually glad McKissock is not continuing with the program at this time for the sake of the potential new appraisers. Now is not the time to start out as an appraiser because of the market conditions. I would at a minimum wait until things rebound when rates go down. Maybe by then there will be an affordable PAREA program maybe subsidized by the government for people who can't afford it. You'd still need live experience and will have to deal with all the other issues noted above but it'd be better than what we have today.

*FTR I've been taking classes with McKissock since they first started around 1990. Back in the day they only offered in person classes taught by the McKissock's out of a small classroom in Orange County, California. Today I take bundled classes with Calypso because they're cheaper.

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Mary Cummins

Thursday, July 20, 2023

PAREA Update from David Samnick - Practical Applications of Real Estate Appraisal , comment by Mary Cummins

parea, practical applications of real estate appraisal, mary cummins, real estate appraiser, real estate appraisal, los angeles, california, hud, ai, appraisal institute, mckissock, aqb, Appraiser Qualifications Board, mentor, trainee, license, certified residential,

I haven't been following PAREA as closely as I should have but thankfully appraiser David Samnick has been following it. He attended an Appraisal Institute meeting yesterday about the program. It's disheartening to say the least. The purpose of PAREA was to make it easier, cheaper and faster for new appraisers to get the training and hours of real life experience they need to get their license. A main purpose was to help diversify appraisers by making it cheaper and getting rid of the mandatory mentor/trainee. Lower income people can't work as a trainee for free for two years. I wrote a few articles about this huge obstacle to getting a license. Here's one from June 2021. https://mary--cummins.blogspot.com/2021/06/difficulties-becoming-real-estate.html

This post below by David Samnick makes it clear that AI and others such as McKissock have used the issue of diversity just to line their pockets with money. The Appraisal Institute, McKissock make money selling education hours to appraisers. AI got a grant from the government to work on PAREA. May 18, 2023, the AQB approved the first PAREA program, belonging to the Appraisal Institute (AI). I wish I were wealthy and retired so I could train people for free. I'd only train POC if that were legal and not discriminatory.

"Practical Applications of Real Estate Appraisal (PAREA) is a program that aims to revolutionize the real estate industry by increasing the number of appraisers. However, after listening to the Appraisal Institute speaker at yesterdays board meeting it quickly became evident that this initiative is a complete failure.

A) You cannot start PAREA until you have received all your real estate appraisal education. 94 hours = $1,700 per McKissock

B) Appraisal Institute speaker said that most AMC's/banks won't accept licensed appraisers work so he suggests going the CR route. Cost to become a CR appraiser through PAREA - $10,000

C) PAREA is a complete online course. Zero mentorship in the real world. No physical measuring. No driving. No real time experience. No true mentorship.

D) No discussion with the PAREA student about the pay to play. Multiple MLS services, E&O insurance, business expenses, accounting, appraisal software, computers, reliable transportation, and other miscellaneous expenses. Total costs can exceed $6,000 per year.

E) The Appraisal Institute said that this would increase diversity into the appraisal field yet could not tell us the breakdown of how many applicants were minorities.

F) PAREA graduates will be scooped up by AMCS to sign off on Hybrid reports performed by third party data collectors.

G) PAREA graduates have no geographic competence.

H) Total cost for PAREA at the end of the day = $17,700 and potentially more.

The Average Joes argued several points in the board meeting.

A) A graduate of the PAREA course would be paid and treated like a trainee as they have no real-world experience.

B) We could have more appraisers back into the industry if banks/amcs would allow appraisers to use their trainees.

C) Reinstate Licensed appraisers to be able to mentor new trainees. This would introduce the next generation of appraisers into the business.

D) Petition FHA to reinstate any licensed appraiser who took the FHA course and had to pass the test.

E) More appraisers would hire trainees if the AMC model wasn't taking so much money out of the pockets of working appraisers. Work is slow. Most have the mentality that my bills come before your bills.

In closing PAREA launched in 2019. And the program has not been successful in diversifying the appraisal profession. In fact, a study by the Appraiser Qualifications Board found that the PAREA program has had a negative impact on diversity in the appraisal profession.

The study found that the PAREA program is disproportionately used by white appraisers. In fact, white appraisers are more than twice as likely to use the PAREA program than minority appraisers. The study also found that the PAREA program is not as effective in providing a more accessible pathway to licensure as the traditional apprenticeship model."

https://www.linkedin.com/feed/update/urn:li:activity:7087764386198556672/

Below was stated May 2023 by AI. “Market research has shown that value proposition—what PAREA is worth to someone in the marketplace—is around $5,000,” DiBiaso said. “Our pricing strategy may be different than that and include scholarships and discounts and payment plans. We have a commitment to The Appraisal Foundation that we will give preference of our scholarships to minorities, veterans, and people who indicate a willingness to serve in rural areas. The scholarships will come from a number of different sources including AI.”

McKissock stated their program will be ready June 2023. “We are investing heavily in the technology tools that appraisers use,” Nancy Gerome said, McKissock’s appraisal general manager. “Our hope is to have them consistently trained. You’ll get all different types of properties and scenarios because we’re leaning into the technology and experience. We’re trying to be thorough, that’s why we’re taking our time. We want to get it right.”

McKissock staff is preparing their launch to accommodate thousands of trainees, over a staggered period. They estimate the average time a person will take to complete the program is six months. The cost for participating is not yet determined. Staff did confirm there will be a “buy now, pay later” option, as well as scholarships.

“We are building a scholarship program because we know one of the goals of PAREA is to bring diversity into the profession, and we want to make it as affordable as we can,” Gerome said. Those interested in participating in a PAREA program of either McKissock or AI need to have already completed their Qualifying Education. "

Clearly when the government said there was a probably with diversity among real estate appraisers and the government would give money to help diversify appraisers all these companies heard was MONEY. They will just be training more appraisers for more money and the appraisers will probably all still be mainly older white men.

Appraisal Institute talks about grants and scholarships for POC and women all the time. I tried to apply and they said I have to pay to join their organization before they'd even talk about it. What if I had no qualifications or were denied? I'd be out the membership fee which is not cheap. It normally costs $15,000 to become an AI MAI appraiser even though I have 40 years of experience and have taken every publicly available real estate appraisal class in existence over the last 40 years. This is clearly a racket when you consider the government gave them money for the program. Gate keeping with a membership fee to the Appraisal Institute before you can access government funding.

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Mary Cummins

Monday, August 22, 2022

Resources for Appraisers to Legally Complete Appraisal Assignments, Mary Cummins Real Estate Appraiser

hud, fannie mae, freddie mac, uspap, appraisal foundation, gse, fha, mary cummins, real estate appraiser, real estate appraisal, los angeles, california

Below are links to resources to help appraisers legally complete appraisal assignments. They are statutes, rules, regulations and the law related to appraisal practice from HUD/FHA, GSE's Fannie Mae and Freddie Mac and other resources.

The Appraisal Foundation – Appraisal Standards Board (ASB), USPAP, Valuation Advisory Statements.

Appraiser Resource Pages

Guides and Handbooks

Fannie Mae Selling Guide – Part B4-1
Freddie Mac Seller/Servicer Guide – Topic 5600
HUD Housing Handbooks – HUD Handbook 4000.1
HUD Appraisal Report and Data Delivery Guide

Appraisal and Property FAQ

Uniform Appraisal Dataset (UAD) – Appendix D and other resources

Unacceptable Appraisal Practices and Fair Housing

Fannie Mae Unacceptable Appraisal Practices
Freddie Mac Unacceptable Appraisal Practices
HUD Mortgagee Letter 2021-27 – Fair Housing and General Appraisal, reference to I.B.1.d.i, II.A.3.a.v, II.D.2.

House Price Indices

Internal Revenue Service

*Links and linked data are subject to change. This article is as of the date of posting.

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Mary Cummins

Thursday, February 3, 2022

Interview President Appraisal Institute Jody Bishop by Mary Cummins Real Estate Appraiser

https://www.youtube.com/watch?v=HaFfhOo1Edk&t=1830s

"Today’s (February 2, 2022) Buzzcast interview is with Jody Bishop, the new President of The Appraisal Institute. We sat down with Jody and Joan Trice, Founder of Allterra Group, LLC to discuss what the outlook for the Appraisal Institute is for 2022 and what appraisers can expect from their initiatives."

You can go to the video, click the three dots bottom right then view the transcript. Joan Trice JT asked the questions and Jody Bishop JB replied. Below are my notes.

JB: The AI Board couldn't get together until May for a few reasons I won't mention. We used a consultant to handle the meeting to be neutral. We have five top priorities: modernizing education and production, new technology and social media, develop plan to recruit and retain professionals, implement PAREA and develop diversity equity and inclusion action plan. It's time to work to meet our goals. We need a cultural shift to refuse other ideas so we can finish the top 2, 3 or 5 goals. Then we'll be successful.

JT: What about the diversity program?

JB: We already have some effort with the appraisal diversity initiative ADI. Someone gave $3M to the program for the next three years. The National Urban League held symposium to recruit women and POC. We gave grants for initial licensed education, textbook. We started a women's initiative committee a while back. Hope to have a plan by Q3.

JT: Will AI be matching candidates with supervisors?

They will take an AI class. We're working on PAREA. AI was given/gave? $500K to write a program on producing PAREA. We will have students do a robust case study. It will take them through an appraisal of a house. We will have mentors going through the program. They should be highly trained after process. (They will do only one home appraisal? Maybe they need to at least do one home, one condo, one 2-4 units?)

Commercial by AI. Become a member today! :-D Their membership has gone from 25,000 to 17,000 today. They've lost almost 30% of their members while their salaries, expenses and travel expenses have increased.

JT: What is your personal agenda, strategic plan?

JB: I have to give board information they need to make decisions. I have to make sure they don't get distracted with other items. We're working through a cultural shift. Other goals are better communication and messaging.

JT: There is the clear report, appraisal subcommittee report, review of USPAP, Fannie Mae just launched their study on racial bias, PAVE report coming any minute. Any thoughts where PAVE will come down?

JB. We met with PAVE folks. We arranged for drive-by appraisal ride-along. They watched appraiser measure property. It was helpful for them. We're trying to educate these folks about what appraisers really do. They're discovering there's more to it than just the appraiser running amok out there. All these reports of appraisals but we don't have enough information to see what is really going on. We have a team that has studied various reports, Andre Perry's, Freddie Mac, AIE report. We're looking at Fannie Mae report. We looked at appraisal gap in Freddie Mac report. (He summarized their report per FM). FM looked at refinances.They compared appraisals to avm values. It really wasn't undervaluation going on. Maybe there was renovation work in white areas? They're going to look more.

We're trying to educate about history of diversity, redlining, restrictive covenants... It's helpful to learn what happened in the past to understand the concerns today.

PAVE will come out in a week or so. Clear study, ASC, looking at Appraisal Foundation as well. The most glaring thing is wanting to allow appraiser to be liable to the borrower. It makes me nervous too.

Commercial. LiDar measurement. Remote evaluations. incenteram.com

JT: Should the borrower be intended user of report?

JB: It's concerning. You can be sued no matter what disclaimer is in the report (who is the intended user). It gives borrower power to go after appraiser. If we start adding onerous new regulations, liability, it could dissuade new appraisers.

JT: You can't serve two masters. We don't give them cover to tell the truth. If the appraiser says property in bad condition, lender would put pressure on appraiser not to be honest. The borrower would be angry if appraiser is honest. If it's a hoarder house and appraiser states that, borrower would be insulted.

JB: We should not have flag words (such as hoarder). That's why codes Q, C are better. C4 is not hoarder. Your camera can take 1000 pics. Photos can save you the heartache.

JT: I'm a fan of transparency but would be better for borrower to get a summary of report but not the report with the UAD codes which they don't understand.

JB: Hybrids. The appraiser would not be influenced by anyone at the house. Appraisers don't see the borrower at purchase appraisal but may at refinance appraisal inspection. With hybrid there is no connection between appraiser and borrower. The gold standard for appraisal is full inspection, drive the neighborhood, see the comps themselves. That is the argument against AVMs. There is a push to AVM but want to enhance it somehow. The best thing to happen to appraisers is the Zillow news that AVMs are not accurate. The Zillow (failure) was great timing for the PAVE report, Joe Biden team weighing in.

Mary Cummins

Saturday, November 6, 2021

Why Real Estate Appraisers Blur Photos in Appraisals by Mary Cummins Real Estate Appraiser

"A former Green Beret and one-time congressional candidate arrested last month for his alleged participation in the Capitol riot was illegally stockpiling explosives prior to being jailed on charges related to the Jan. 6 pro-Trump siege, according to an FBI search warrant filed Friday in Washington, D.C. federal court. When federal agents searched 47-year-old Jeremy Brown’s Florida home in October, they reported finding a short-barrel rifle, a sawed-off shotgun, more than 8,000 rounds of ammunition, and two hand grenades. But it was a picture included in a sales listing for his house on Zillow that led to his latest troubles. In a photo from “what appears to be Brown’s office,” FBI agents spotted a whiteboard with columns labeled “Food,” “Clothing,” “Shelter,” “Currency,” “Communicate,” “Move,” and “Shoot,” the warrant states. In the “shoot” column, it continues, “there are numerous firearms listed and explosive devices such as ‘flash bangs.’” The entry on the whiteboard indicated that Brown had the flash bangs “on hand,” the filing says, adding that Brown “is not registered to possess explosive devices.” "

In this case a real estate agent or maybe just a photographer did not blur any photos or remove items in the listing of a home for sale on Zillow. This was not for an appraisal or loan. While real estate agents cannot discriminate I don't believe Zillow or the agent have a responsibility to blur out images of personal items in listing photos so others can't discriminate. I do know that real estate agents generally tell all of their clients to remove all items of a personal nature especially photos for the listing photos and showings if not until the home is sold. This is for staging purposes so the buyer can envision themselves in a clean and less cluttered home so the home will sell more quickly and for a higher price.

Appraisers on the other hand have to blur out photos of all people and personal items. We blur out people in photos, people in paintings, any religious items, personal collections such as gun collections, yard signs, political signs and other items of a personal nature in the home.

I would have blurred out the guns but probably not the list of items on the wall because I wouldn't have noticed it. I don't really look at personal items when I'm appraising as I'm concentrating on the structure. I only notice the photos when I'm writing the report and adding the photos. Then I intentionally look for anything personal so I can blur it. I would assume that someone would hide something they really, really don't want anyone to see in their home before they enter. I'm assuming the guy just didn't realize people would know who he was and put two and two together.

The purpose of blurring images of all people, religious items ... is so no one can say that the lender's decision to loan or not to loan was based on discrimination based on race, color, sex, religion, national origin, marital status.... Appraisers are also not allowed to discriminate against the home owner, borrower, or state anything that might be considered discriminatory in the appraisal report. There is no law that states Appraisers have to remove or blur these items. It's the lender instructions to the Appraiser. Obviously we see the images and items and sometimes people in person so blurring them from photos won't remove them from our memory.

I found this regulation about discrimination in relation to lenders. The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction. It's based on Fair Lending Laws and Regulations per the Fair Housing Act. The link below goes into more detail about fair lending and discrimination.

https://www.fdic.gov/resources/supervision-and-examinations/consumer-compliance-examination-manual/documents/4/iv-1-1.pdf

The reason for blurring the photos is because the lender does not want a discrimination complaint or lawsuit even a frivolous one. If the lender is a bank it's even more important. Banks have to comply with many complex regulations related to non-discrimination of borrowers. They must have so many branches in areas which are predominantly low income and of color if they want to operate a bank even if the branches lose money. One complaint even a frivolous could harm the bank's legal standing as a bank and it's reputation and business.

The alleged January 6 rioter appears to be a not too bright criminal. I've found people who believe in conspiracy theories such as the "stolen" 2020 election, Pizzagate, JFK is still alive, are not the sharpest tools in the shed. They lack critical thinking and common sense which is a shame for everyone.

Mary Cummins

Friday, August 6, 2021

First Interagency Task Force Meeting on Property Appraisal and Valuation Equity (PAVE) - PROBLEMS, by Mary Cummins

pave task force, hud, mary cummins, real estate appraisal, bias, discrimination, value, valuation, loans, fha, joe biden, white house, marsha fudge, meeting

The first White House Interagency Task Force Meeting on Property Appraisal and Valuation Equity (PAVE) was August 5, 2021. "Task Force members discussed how current appraisal practices are a significant contributor to the disparity in housing values. The practice of comparing properties within similar neighborhoods can be a proxy for racial demographics, which leads to the perpetuation and exacerbation of the legacy of segregation and redlining."

Racism exists. We should do everything we can to fight it. I fully support helping people of color buy and maintain homes. I've studied segregation, redlining and their effects on community. That said doing away with the main valuation method of assets used around the world would be ridiculous and destroy the economy and our government.

Matched pairs analysis is how ALL assets in the world have been valued since the beginning of civilization. It's how all real and personal property are valued, traded, insured, assessed for taxation purposes, bought, sold, used for loan collateral, used as a basis to settle court disputes... The government is the one who mandated that real estate appraisers compare like to most similar like. It's also called the sales comparison approach.

The purpose of the sales comparison approach using matched pairs analysis is to provide the "most accurate scientific measure of value." "The major supposition of the sales comparison approach is that market value of the subject is related to comparable property values within the same market area." This is how real estate agents and sellers determine a list price for a property. It's also how agents and buyers determine an offer price for the property. This is how the tax assessor assesses your property for taxation purposes. The sales comparison approach is the most accurate method to value homes for many purposes.

Based on what has been said by the Task Force members so far I am betting that they want appraisers to use only HIGHER sold comparables from areas with more valuable homes to appraise lower valued homes in areas with a higher percentage of POC. I am assuming this will only be for government and government insured appraisals, loans for POC but am not certain if it will be for everyone in certain areas of lower valued homes. Private banks and lenders would never go for this. Everyone knows the value of property is based on three main things, location, location, location. There are clearly major problems with this approach.

The actual value of property. "The fair market value is the price a home would sell for on the open market under normal conditions." Even if the government forces appraisers to use sold comparables from homes in Beverly Hills to appraise homes in East Los Angeles that will never fool home buyers or sellers. If you want to buy, can afford to buy a $100,000 home, you will look at homes for sale around that price range in an area you like. You buy the home with $10,000 down. It appraises at $100,000 which is market value determined by an appraiser. You get sick, lose your job, sell your home or lose it in foreclosure. It sells for $100,000 and the $90,000 loan is paid off.

Let's say instead you offered $100,000 on a home with $10,000 down payment but the appraiser said it was actually worth only $50,000. If you buy it for $50,000, you're okay. Instead you demand another appraisal using sold comps in a more valuable area maybe a beach front property to appraise a tear down shack in Pacoima. The next appraisal is $100,000. You again get sick...You couldn't sell it for more than $50,000 or were foreclosed upon. The bank just lost $40,000 which you now owe to the bank even though you have no home. Many of these loans are backed by the government. The government aka the taxpayer loses that money. The banks and government are in trouble when this happens to many people like it did during the Great Recession of 2008. We are at a home price peak so this is a major concern.

I bring up this example because this would be mortgage fraud. The appraiser and lender would be complicit. This actually happened and people were criminally convicted of fraud. One such case was Victor Noval who defrauded the US Government HUD of $60,000,000 in this scheme. They used HUD money to buy property whose value was inflated by a con artist appraiser using higher sold comparables in other superior areas and other tricks. HUD Secretary Andrew Cuomo stated in response to this crime in 1997 per the Los Angeles Times "Any con artist who tries to rip off HUD and the American taxpayer will be caught and prosecuted to the full extent of the law." The taxpayer ends up paying for any loss in government backed loans. Any program to artificially inflate the value of homes to secure government insured funding would be bank fraud and fraud against the government. For the government itself to suggest these federal crimes is ludicrous!

Another thing to consider is that lenders make the loans then sell them so they can use that money to make more loans. No one would buy the loans if there is no market value appraisal. No one would know what they are worth except less than the loan amount. They'd sell at a huge discount if they could be sold at all. Investors also bundle these bank and government insured loans as mortgage backed securities and sell them in the secondary market to pension funds, investment funds... Again, what are they worth? We have no idea because there is no appraisal of its real market value. Generally investors look at market value of the property, loan to value ratios, loan balances, rates, equity, payment history, loan delinquency rate ... to determine value of the investment. No one would invest in these loans if they have no idea what they are worth. That's money lost for new home loans. Now new home buyers can't buy homes. You just shot yourself in the foot.

Let's say investors invest in these loans anyway and the economy flounders. People are foreclosed upon and lose their homes which sell for less than the loan balances. The banks and government lose money on the loans. Homeowners still owe the balance of the unpaid loans. The mortgage backed securities also sell on the stock market causing the stock market to dump. This happened in the Great Recession when all those loans went south. The banks and Wall Street had to be bailed out. Government then had to develop new regulations to make sure this wouldn't happen again. Here's an idea. How about not starting new programs which set homeowners, banks, investors, taxpayers and the government up for failure from the start.

What if POC in areas with mainly POC get a higher appraisal and then a larger loan using this new appraisal method? Do you raise their tax assessment value and taxes? That would raise the property taxes of neighbors pushing out poor and elderly people. Because home value correlates with home rent it would also raise corresponding rent of non owners who would have to move. Can wealthy people use this same new appraisal method to lower the value of their property to pay less property tax, give their spouse less in a divorce settlement or give the government less in capital gains taxes? What happens when POC get a bigger loan because of the higher appraisal but they can't afford to make the payments and lose their home? That happened during the Great Recession when home values appreciated quickly for real. While members of the Task Force stated POC would take that new make believe home equity money and invest in college educations, new businesses, health care, home improvement or retirement accounts to improve their financial situation and the community they invested in personal items instead. Our nation is still recovering from the Great Recession. This new appraisal method would open up an economic Pandora's Box while home prices and real home equity are already increasing rapidly.

The Task Force has 180 days to come up with a real plan. I hope someone who knows something about real estate appraisal, investments, loans and the economy speaks up before then. If not, it's the home buyers, home owners, banks, government and taxpayers who will be hurt by this mess of an idea.

#pavetaskforce #hud #realestateappraisal #bias #discrimination #value #valuation #homeloans #loans #fha #joebiden #whitehouse #marciafudge #meeting #August52021 #PropertyAppraisalandValuationEquity #PAVE #segregation #redlining #racial #occ #ftc #fdic #cfpb #fhfa #asc #susanrice

The rest of the press release is below. It's also linked.

"The group identified near- and long-term opportunities to advance equity in home appraisals that will help narrow the racial wealth gap and reinvest in communities that have been historically left behind. The Task Force Members will work together and consult with civil rights organizations, advocacy groups, industry, and philanthropic entities to drive change.

Additionally, Task Force members agreed that the scope of the Task Force will be to:

Ensure that government oversight and industry practice further valuation equity;

Combat valuation bias through educating the consumer and training the practitioner;

Ensure equity in valuation by making available high-quality data;

Create a comprehensive approach to combating valuation bias through enforcement and other efforts.

The Task Force is chaired by Secretary Fudge and Ambassador Rice, and includes cabinet-level leaders from executive departments and additional members from independent agencies. The Task Force will deliver a final action report within 180 days.

The Task Force membership is comprised of the following officials: (I added their names)

Secretary of Housing and Urban Development (co-chair) Marcia Fudge

Assistant to the President for Domestic Policy (co-chair) Susan Rice

Director of the National Economic Council Brian Deese

Attorney General of the United States Merrick Garland

Secretary of Agriculture Tom Vilsack

Secretary of Labor Marty Walsh

Secretary of Education Miguel Cardona

Secretary of Veterans Affairs Denis McDonough

Comptroller of the Currency (OCC) Michael Hsu

Chairman of the Board of Governors of the Federal Reserve Jerome Powell

Chairman of the Federal Trade Commission (FTC) Lina Khan

Chairman of the Federal Deposit Insurance Corporation (FDIC) Jelena McWilliams

Chairman of the National Credit Union Administration and the Federal Financial Institutions Examination Council Todd M Harper

Director of the Consumer Financial Protection Bureau (CFPB) Dave Uejio

Director of the Federal Housing Finance Agency (FHFA) Sandra L Thompson

Appraisal Subcommittee (ASC) James Park

https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/readout-of-the-first-interagency-task-force-meeting-on-property-appraisal-and-valuation-equity-pave

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.

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Mary Cummins

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

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