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 fhfa. Show all posts

Friday, December 13, 2024

Appraisal Institute States FHFA Study is Deeply Flawed, Comments by Mary Cummins Real Estate Appraiser

Appraisal Institute states FHFA "study" is flawed. The "study" also used the Zillow Home Value Index aka Zestimate which includes tax assessor data, MLS listings, public data, info provided by alleged property owners... The data, analysis and conclusions are all flawed. GIGO, Garbage In Garbage Out. No one would ever publish their paper in a peer reviewed journal for those reasons yet the government sends it out as "factual research." Biased. #appraisalinstitute #FHFA #zillow #zestimatefails #Zestimate #marycummins #realestateappraiser #realestateappraisal

From the article.

"A study on the use of time adjustments by appraisers conducted by two researchers at the Federal Housing Finance Agency in November contains serious flaws that misrepresent the appraisal process and further demonize the appraisal profession regarding racial bias. The study, Underappraisal Disparities and Time Adjustments to Comparable Sales Prices in Mortgage Appraisals, contends appraised values often fail to reflect rapidly increasing home prices in competitive markets. It further casts housing equity concerns, claiming that time adjustments are used less in curing “underappraisal” in majority Black and Hispanic neighborhoods than in major White neighborhoods. The study suggests appraisers should use automated valuation models and lenders should randomly assign appraisal orders to mitigate bias.

For one, the assumption that appraisals should perfectly mirror the pace of rising market prices oversimplifies the role of appraisers and the appraisal process. The study does not sufficiently account for the complexity of making time adjustments in markets with uneven price growth or where transaction volumes are low, limiting the availability of comparable sales.

The study also interprets caution by appraisers as “underappraisal,” when this may represent a prudent check against market volatility. In rapidly appreciating markets, appraisals may appear low compared to contract prices, but this could serve as a risk-mitigation tool, in protecting buyers from overpaying during speculative bubbles.

Further, the research ignores critical dynamics of the appraisal process in how comparable sales may be accounted for by appraisers in the narrative section of appraisals. For example, in some markets, a market change might occur with an increase of as much as 1% per month. Therefore, a comparable sale that is as recent as 2 or 3 months ago, could require a 2% or 3% positive adjustment to the sale price. On the other hand, with a market that is moving at a mere 3% a year, then a three-month old sale would correspond to only a .75% adjustment. An appraiser might well not apply such adjustment, as it could be argued as being of virtual rounding error. An appraiser might well handle the issue in the reconciliation of the three to four or more comparable sales presented in the sales comparison approach, which is completely overlooked by the study.

There may be a myriad of other factors at play. For instance, and for whatever reason, an appraiser’s analysis could indicate that one of the comparable sales sold on the “high” side. Applying a time adjustment for an above-the-market sale, while requiring explanation, might not be appropriate at all.

The study also leans heavily on the use of automated valuation model information from Zillow, which has its own credibility and accuracy problems."

Read the rest at the link.

Link to article

https://www.appraisalinstitute.org/cmspages/newsletters/getemailbrowsercontent.ashx?issueGuid=a47d3875-adac-4c06-976f-a74cf075c4f3&recipientEmail=adomatis%40hotmail.com&hash=dee4bfd3032a0548215443494269a5ad0ce160df6bf2e9f5eb5bd5cbc41fc36a&utm_source=ainewsletter_appraisal_now_20241213_a_b&utm_campaign=ainewsletter&utm_medium=email&fbclid=IwY2xjawHJbQtleHRuA2FlbQIxMAABHRhQEY41enGI_9PE2g1aIpBP89mxTLlgApt8kVLq_Amh_Gru75czg-oGFw_aem_RMT7BVcsvwnhpT-8Tkl0FA

Link to the flawed FHFA "study" "Underappraisal Disparities and Time Adjustments to Comparable Sales Prices in Mortgage Appraisals" by William M. Doerner, Scott Susin, November 2024. Working Paper 24-07

https://www.fhfa.gov/sites/default/files/2024-11/wp2407.pdf

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.

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

DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html

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

Tuesday, October 29, 2024

FHFA Allows Alternative Valuations with Higher LTV Ratios by Mary Cummins Real Estate Appraiser Los Angeles California

mary cummins, real estate appraiser, los angeles, california, real estate appraisal, fhfa, ltv, avm, appraisal, real estate,low income, poc, great recession, foreclosure

The Federal Housing Finance Agency FHFA has expanded the eligibility for alternative appraisal methods on purchase loans by increasing the allowable maximum loan-to-value (LTV) requirements. The maximum LTV ratios will increase from 80% to 90% for appraisal waivers and from 80% to 97% for inspection-based appraisal waivers.

“To be clear, the expanded eligibility of appraisal waivers does not constitute an expansion of a credit box, but rather it will allow more first-time home buyers, and particularly low- and moderate-income first-time homebuyers, to recognize the benefits associated with appraisal waivers,” Naa Awaa Tagoe, deputy director of the division of housing mission and goals at the FHFA, said on stage."

More purchase loans will not utilize a regular inspection appraisal by a licensed real estate appraiser. They will be using non-licensed non-appraiser property inspectors and AVMs Automated Valuation Methods similar to Zillow. This means lenders can use their AVMs, in house approval departments to get higher values so they can approve more loans so they can make more money. These loans will be riskier to new buyers, investors and the government. The housing industry players have been directly lobbying the government to do this for years now under the guise of helping lower income "save money" and fighting nonexistent "appraiser bias."

Never forget the Great Recession. Real estate prices were booming and fewer lower to mid-income, first time buyers could afford to buy a home. The people complained it was discrimination against lower income and POC. There is a correlation between lower income and POC. The correlation is based on socioeconomic factors and not race. There are also plenty of lower income non POC.

The government stepped in to "help" by lowering credit and loan requirements. More lower income first time buyers were then able to buy a home at the peak of the market for almost no money down. They had very little to no savings and were spending most of their income on home expenses. They were set up for failure by the government while lenders made lots of money. Lenders support relaxing requirements so more will qualify so they can make more money. Lenders lobby the government to reduce requirements while saying they just want to help poor people. This actually helps wealthy people at the expense of poor people just like payday loans.

The real estate bubble of course burst and those people ended up underwater. Low teaser rate loans adjusted, some had financial emergencies and they couldn't pay their sky high mortgage, insurance, property taxes and property maintenance. It was cheaper to rent than own. The real estate market collapsed and people lost their homes in foreclosure. They lost more than just the cost of the home due to associated costs and fees. The psychological effect on the families was devastating. Oddly enough the people and government blamed appraisers even though it was the fault of the government and the bubble bust real estate market driven by buyer demand. Appraisers just report the market. We don't set it.

Today we're in a similar though slightly different situation. We're in another real estate upswing caused by previous lower interest rates and severely restricted supply due to rate lock. Everyone wants to buy a home that will appreciate 50% like they have in the last few years. They are again complaining to the government that it's discrimination against lower income and POC because they can't afford to buy a home today.

People are blaming the government for the wealth gap which they say is mainly caused by the home ownership gap. The wealth gap is mainly caused by the income gap. Owning a home alone is not the cause of the wealth gap. You need to be able to first afford to buy and own a home by having higher income, more savings and good credit. Higher income, savings, good credit must come first otherwise you just saddle yourself with debt and higher monthly costs you can't afford. You'll lose your home if you have one financial emergency.

Government did the same thing with student loans. "If you get a college degree, you'll make more money. Here are loans so you can afford to go to college." You'll also end up with $100,000 high interest debt which make it impossible to pay bills, have children, start a business or save to own a home. The correlation between having a degree and higher income is related to first being able to afford to pay for and go to college. It's not the degree itself as many people have realized. Same with owning a home.

The government again responds by lowering loan requirements. Now you can put almost nothing down and get stuck with hefty mortgage payments, rising insurance costs, high property maintenance costs and rising property taxes at the top of the market. Property taxes, insurance increase as property value increases. Insurance costs are through the roof today due to natural disasters exacerbated by climate change. The appraisal waivers and use of value acceptance, AVMs make the loans even riskier for buyers and investors. It's even riskier today as we are at the peak of the market. Two to five years ago and it would have made a little sense. The government always reduces regulations at the peak of the market because of lack of affordability and politics.

AVMs will over value lower priced properties which are generally in inferior condition, inferior locations, smaller than average, have deferred maintenance, include buyer concessions for repairs/costs... These are the properties lower income people are buying because they can afford them because they cost less. The government is again setting these people up for failure. They always do this at the peak of the market.

I was screaming from the rooftops about this issue before the Great Recession. I'm now screaming from the mountain tops. Nothing will change. The government is hurting the people they claim they want to help.The election year campaign promises to get votes is making it worse. You know they will again blame real estate appraisers for a downswing even though we didn't appraise the properties that are most likely to be foreclosed. It's déjà vu all over again.

https://www.fhfa.gov/news/news-release/fhfa-announces-updates-to-enterprise-policies-on-appraisals-loan-repurchase-alternatives-and-pricing-notifications

November 1 Jeremy Bagott just wrote a good piece on this.

https://mailchi.mp/257006d81c5f/days-from-election-agencies-make-good-on-final-sop-to-housing-lobby-10896727

https://www.housingwire.com/articles/fhfa-to-allow-alternative-appraisal-methods-on-purchases-up-to-97-ltv/