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.

Friday, August 25, 2023

Important Alleged Discrimination Case Against Wells Fargo, Comment by Mary Cummins

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Peter Christensen just wrote an article about this very important legal case. Wells Fargo is being sued for racial discrimination for rejecting mortgages of some black, Latino applicants. The lawsuit is based on appraisals and credit. They cite Andre Perry's false and misleading paper as evidence. This looks like a shakedown lawsuit to get WF to cough up a few bucks "without admitting guilt." This is what the false narrative of the alleged racist appraiser and real estate industry has given us. The government promoting the false narrative for their political agenda has caused this frivolous lawsuit. We all know based on AEI's research that blacks, Latinos are more likely to be rejected for loans based on socioeconomic factors and appraisal value. Blacks, Latinos have less income, less wealth, lower credit scores which is why they buy less expensive homes in less expensive areas.

"In March 2022, Bloomberg News published an article entitled “Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom” (registration required). Bloomberg’s researchers had combed through the data for 8 million conventional loan refinance applications in 2020 reported by lenders under the Home Mortgage Disclosure Act. The researchers saw stark differences in Wells Fargo’s approval rates for White, Black and Hispanic refinance applicants. They found that Wells Fargo approved 72% of applications from White applicants but only 47% from Black applicants. In contrast, Rocket Mortgage approved 86% of White applicants and 79% of Black applicants. For Hispanic borrowers, Wells Fargo’s approval rate was 53% versus a 79% industry average for Hispanics. Some might jump to an explanation here like “Black and Hispanic borrowers may not have the same average financial means as Whites.” Bloomberg’s research, however, showed that Wells Fargo’s approval rate was lower for Blacks in high income brackets than for Whites in low brackets.

After publication of the article, a half-dozen class actions were filed swiftly against Wells Fargo by Black and Hispanic borrowers who had been denied loans. The Federal District Court in Northern California consolidated these cases earlier this year under the new title In re Wells Fargo Mortgage Discrimination Litigation, U.S. District Court, N.D. Cal., Case No. 3:22-cv-00990.

The primary legal claims in the consolidated case are brought under the federal Fair Housing Act and Equal Credit Opportunity Act. And, the alleged damages could be substantial – borrowers denied loan refinances in 2020-2021 may have lost out on saving tens of thousands of dollars on their mortgages by being unable to lock in historically low interest rates. The operative complaint in the case principally alleges a story about disparate treatment and impact in Wells Fargo’s mortgage determinations, including the bank’s use of flawed “centralized, universal, race-infected lending algorithms” or “digital redlining.” But part of the plaintiffs’ theory is also based on alleged bias in the appraisals relied on by the bank.

Here’s a key allegation pertaining to appraisals:

Wells Fargo knowingly incorporates, without adjustment, appraisals that have been shaped by years of race-based valuation standards or appraisals affected by race-based criteria. Homes in majority Black neighborhoods are worth an average of 23% less than homes in neighborhoods with “very few or no Black residents” and of similar home quality. (Citing Dr. Andre Perry’s research at Brookings “The Devaluation of Assets in Black Neighborhoods.”).

As a result, the plaintiffs allege that “Wells Fargo’s discrimination . . . has forced those who received below-market appraisals from Wells Fargo to abandon the process with Wells Fargo and turn elsewhere.”

"Plaintiffs Aaron Braxton, Paul Martin, Gia Gray, Bryan Brown, Elretha Perkins, Christopher Williams, Ifeoma Ebo and Terah Kuykendall-Montoya, individually and as representatives of a nationwide class of similarly situated applicants for original purchase mortgage, refinance and other home mortgage loans (collectively, “Plaintiffs” or the “Class”),

Go to the below link for the rest of this important article and lawsuit.

https://www.valuationlegal.com/2023/08/the-most-significant-appraisal-discrimination-case-doesnt-name-an-appraiser-as-a-defendant/

Copy of lawsuit from same site.

https://www.valuationlegal.com/wp-content/uploads/2023/08/In-re-Wells-Fargo-Discrimination-Amended-and-Consolidated-Complaint-Fair-Housing-ECOA-3-24-23.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

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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

Wednesday, August 23, 2023

Appraisal Institute Presentation on Historical Homes at Wrigley Mansion, Pasadena, California by Mary Cummins

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Southern California Chapter of the Appraisal Institute gave a presentation by Charles Baker on Historical Homes. It took place at Wrigley Mansion in Pasadena, California. This is the Tournament of Roses Headquarters at 391 S Orange Grove, Pasadena, CA. Beautiful home and gardens. While I don't agree with everything AI does they do offer great classes and education. Linda Whittlesey President of the SoCal Chapter organized the event and did a fantastic job.

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Mary Cummins

Friday, August 11, 2023

AEI Report Shows Andre Perry's Paper is Fraudulent. Same Difference in Home Values in White Areas.

This is from an email from Jeremy Bagott, MAI. AEI used Andre's Perry own dataset and methodology to study race and home values. February 2023 the report was updated. Andre Perry previously stated the main difference in home values between white and black is race alone. Perry blamed that on home valuations. AEI's research has proven the main difference is caused almost entirely by socioeconomic factors and not race. I've been yelling this from the mountain tops since Perry's paper first came out but AEI has nailed it down with facts and independent research. People who make more money have more money and buy more expensive homes in more expensive areas, period.

Maybe lower income white people should be yelling about home value differences compared to higher income white and black people. Maybe they should be demanding money, free homes, cheap loans, debt relief like Andre Perry and his following have been doing. "Rich white people have stolen $46,000 from every poorer white person's home value in the US!" Maybe all poor people need their own type of reparations for being trapped by low wages and poverty for generations. It won't solve the problem because the income gap is the main cause for everyone but the story will probably sell online media ads. We need to reduce the income/wealth gap among everyone. AEI stated this in their summary but the government will not listen to facts for some reason on this issue.

https://mailchi.mp/0b513ed845f9/report-finding-of-bias-in-home-valuations-fails-by-own-measure-8037698

"REPORT: FINDING OF BIAS IN HOME VALUATIONS FAILS BY OWN MEASURE

VENTURA, Calif. (August 11, 2023) – In an updated refutation of the findings of Brookings Institution researcher Andre Perry, Edward Pinto and Tobias Peter of the AEI Housing Center demonstrated just how broken the Brookings research was.

Perry’s 2018 research, titled “The Devaluation of Assets in Black Neighborhoods,” pinned the nation’s racial wealth gap on 80,000 state-licensed real property appraisers.

Unfortunately, these now-discredited findings have been levered by housing-industry lobbyists, partisan policymakers, agitators and grievance groups to malign the nation’s 80,000 real property appraisers and hollow out America’s mortgage underwriting safeguards.

A dataset provided to Pinto and Peter earlier in the year by Perry allowed the AEI Housing Center to fully refute the latter’s conclusions.

While their original refutation was still largely correct, Pinto and Peter have now updated their key findings and takeaways using the new dataset. To the surprise of no one, their redacted study found that what Perry et al. had characterized as race-based differences in home valuations were almost entirely due to socio-economic status, not racial bias by real estate appraisers.

Using the dataset and Perry’s own methodology, Pinto and Peter created a simple case study of so-called “entirely white” tracts (tracts demographers rate as 97.5% white or greater). In those tracts, racial animus, by definition, is ruled out as a factor. The duo then compared high and low socio-economic status in these so-called all-white neighborhoods and found differences as large as – or even larger than – the ones Perry et al. incorrectly attributed to racial bias.

But much damage has been done by Perry’s now-discredited findings. Perry’s 2018 report took the nation’s real property appraisers from the table and onto the menu. The flawed findings have most recently served as a pretext to justify the current administration’s whole-of-government effort to insert race into every corner of the mortgage underwriting process, including collateral valuation.

Pinto and Peter determined:

• That while lower socio-economic status may leave blacks at a large income (and wealth) disadvantage relative to most whites, this is not due to any statistically relevant bias in home appraisals

• The primary remedy would be policies that work to address the income and wealth gap, not those that scapegoat appraisers.

• The focus should be on increasing financial security, creating generational wealth, and shrinking the socio-economic gap through sustainable home ownership. This is largely a buying power issue, not a valuation one. To do otherwise risks repeating the mistakes of the past."

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Mary Cummins

Real Cause of racial home value gap is the Income Gap by Mary Cummins Real Estate Appraiser

The ACLU wrote about the racial wealth gap. They noted the income gap, homeownership rate gap and mortgage gap. They didn't once blame any of this on real estate appraisers. Imagine that. #black #white #IncomeGap #wealthgap #homeownershiprate #race #money

https://www.aclu.org/news/racial-justice/visualizing-the-racial-wealth-gap

I just read an article on the income gap. It said there is almost no white, black income gap for poor and lower income individuals. There is a smaller income gap for the middle class. “What this shows is that 97 percent of the overall racial wealth gap is driven by households above the median of each racial group.” This would mean most of the income, wealth gap is coming from the top earners. It's a class gap. I would bet that most of the income, wealth gap is coming from the super rich who are mainly white. "The richest 10 percent of white households who own 75 percent of all white wealth. Indeed, over two-thirds of racial gap reflects the differences in assets held by the top ten percent of households in each group. Class, not race is the major driver of wealth inequality." https://www.aei.org/op-eds/the-racial-wealth-gap-myths-and-realities/ Most of the wealth gap is caused by difference in the top ten percent in each group! It's probably mainly caused by some very rich white people.

"White average wealth ($929,800), which is more influenced by very rich families and does not characterize the typical experience, is 6.7 times greater than Black average wealth ($138,100)." This means that most white people should be complaining about the income, wealth gap between low to mid income and upper class. That's where the biggest gap exists. 80% of the gap is coming from the top 10%. Instead of wasting time on the wealth gap between white, black we need to look at the wealth gap between everyone under the median compared to the top 10%. I bet most wealth in the country is concentrated in the top 1-3%. And I was correct, "Federal Reserve data indicates that as of Q4 2021, the top 1% of households in the United States held 32.3% of the country's wealth, while the bottom 50% held 2.6%."

I will try to see if I can figure out what the income, wealth gap would be if we omitted the super rich with net worths over $5,000000. Multi-millionaires and billionaires could be skewing the data. They are. "Federal Reserve data indicates that as of Q4 2021, the top 1% of households in the United States held 32.3% of the country's wealth, while the bottom 50% held 2.6%." https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/

The income gap is directly related to the homeownership rate. The current homeownership rate for Black and Hispanic homeowners now stand 29 and 23 percentage points lower than the 73% white homeownership rate. This again is all related to socioeconomic factors i.e. income.

There would probably still be a gap because of other socioeconomic factors such as married/single but it would probably be less.We really need to figure out the real problem so we can find a real solution. Blaming the income, wealth gap on appraisers, racism is just wasting time and money that could be better help working on issues that could change things.

I wrote about the the real cause of the home value gap earlier which is the income gap. I need to update it based on AEI's updated research and new article on income/wealth gap. Their recent research shows that whites and blacks who make more money have more money and buy more expensive homes in more expensive areas. There is almost no racial income, wealth gap under median income, wealth. Most of it comes from the top 1%. The wealth gap is mainly from stocks, investments of the top 1% who are mainly white. It's not from home values. All whites, blacks, Latinos...should be complaining about having less income, wealth and owning less valuable homes. It feels like people are trying to pit blacks against whites by spreading this false narrative supported by totally fraudulent paper by Andre Perry. Are super wealthy white people using Andre Perry to stoke the flames of a race war so people won't realize the real issue is the wealth gap between the top 1% and everyone else?

https://appraisersblogs.com/the-real-cause-of-the-home-value-gap-is-the-income-gap

It's so frustrating to see HUD get bamboozled by lenders and politicians into thinking the cause is appraisers and appraisals. No one else seems to think so including other government departments. The lenders have just been using the false narrative of the alleged racist appraiser to be able to use AVMs Automated Valuation Methods. AVMs make lenders more money. They can also get the value they want so they can close the deal. AVMs are bad for buyers, government, economy, stock market and investors.

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Mary Cummins

Thursday, August 3, 2023

AEI Response to PAVE Task Force AVM. Appraisers Are Not Racists and Don't Lowball Blacks, Latinos, comments by Mary Cummins

UPDATE 11/03/2023AEI proves once again that HUD, US Government lied about appraisers allegedly low-balling people of color. This is exactly what appraisers have been saying all along. "We find that seemingly large differences in the share of under-valuations–appraisals where the appraised value is below the contract price– received by people of color are almost entirely or entirely due to differences in geographies where people, regardless of race or ethnicity, reside. When comparing appraisals for people of color to those for non-Hispanic white people within the same census tract, we find that there are no or minimal differences.

This analysis suggests that commonalities in people’s experiences in buying a home (e.g. first-time home buyer status) or local market conditions (e.g. the presence of a market frenzy or seller concessions) are far more important than differences in people’s race or ethnicity when it comes to determining who receives an under-valuation and who does not. This suggests that studies by FHFA, Brookings, or Freddie Mac with their singular focus on appraiser racial bias have misdiagnosed the issue." #AEI #americanenterpriseinstitute #marycummins #realestateappraiser #realestateappraisal #HUD https://www.aei.org/research-products/report/confirming-alternative-explanations-for-appraisal-under-valuations-new-evidence-from-appraisal-level-data/

ORIGINAL: American Enterprise Institute (AEI) made some important independently researched statements in their comment letter about the PAVE Task Force, AVMs and real estate appraisers. It shows with verified facts the flaws in the research cited by PAVE. The research cited by PAVE was poorly done by the Urban Institute, Andre Perry then twisted to meet the agenda of UI, Perry. I have no issues with promoting the interests of black people. I'm Latino and promote the interests of Latinos, Blacks, Asians, women, lower income, homeless... I do have a problem with people falsifying research to promote an agenda with racist lies which hurt innocent people. Below are a few important issues raised in AEI's comment letter to the PAVE Task Force.

1. AEI stated First Time Buyers (FTBs) tend to overpay for properties. There are also more seller concessions. This would explain appraisals being at market value which is lower than contract price. I see this all the time because I appraise in these areas. It's not the result of biased, racist appraisers.

Urban Institute, HUD, PAVE stated that "racist old white male" appraisers were intentionally low balling blacks and Latinos. Their "proof" was a difference in contract price and appraisal values in census tract areas with more Blacks, Latinos. I'd commented at the time it was probably because there is a correlation between race and income. Whites make more money than blacks, Latinos. People who make more money have more money and buy more expensive homes in more expensive areas. Areas which are predominantly black, Latino are lower income areas with many first time buyers.

"The presence of first-time homebuyers (FTBs) or the use of seller concessions could affect the sale price relative to the AVM. Our analysis in “Exploring Alternative Explanations for Appraisal UnderValuation” shows a significantly higher share of FTBs in tracts with lower levels of non-Hispanic White residents. This is significant because the literature shows that FTBs tend to overbid for a home by approximately $3,000, or about 1% of the contract price for the average home compared to repeat buyers and that they use a higher share of seller concessions, which can amount to 2.01-3% of the property price."

2. The letter noted that homes in lower priced areas that are more likely to be predominantly black, Latino are generally in lower rated condition which would be C4, C5 rating as opposed to C3 and above. I see this every day in my inspections of these areas. Again, it has to do with money. The more money you have, the more you will spend to properly maintain and upgrade your home.

"Even though the paper controls for home quality as measured by an exterior condition rating, we found in other work that exterior condition ratings can be quite different from interior condition ones. We also found that home interior quality can be a significant factor in the difference between an AVM and a home’s sale price and that for a small number of properties with extreme conditions that difference was significant."

3. The letter also again stated that AEI found no effect of race on appraisal value.

"We have pointed out serious flaws in numerous studies that purport to show widespread appraiser bias or systemic devaluations of neighborhoods." https://www.aei.org/research-products/report/exploring-alternative-explanations-for-appraisal-under-valuation/

They suggest "To better measure and document appraiser racial bias, we once again propose reviewing every appraiser for racial bias and deliberate inaccuracies based on a comprehensive review of their past refinance appraisals. To that end, we have demonstrated a working methodology in “A Blueprint for Mass Screening Appraisers for Racial Bias and Inaccuracy Based on an Atlanta, GA Study” that could be implemented today by either FHFA, Fannie Mae, or Freddie Mac.Ultimately, the goal of public policy should be to identify biased and inaccurate appraisers and to prosecute the former and to educate and retrain the latter."

I fully support this. Please, fairly audit everyone's appraisals. I'd be the first to take racist appraisers out behind the woodshed. Take away their license, charge them with actual crimes and send them to prison. Stop blaming every appraiser for racism and bias. What really irks me is that these people are claiming racism and bias when they are doing exactly that to real estate appraisers. If you're against racism, bias, you should be against ALL racism or bias against everyone or else you're a hypocrite.

https://www.aei.org/research-products/report/a-response-to-the-recommendations-of-the-pave-working-group/

https://www.aei.org/wp-content/uploads/2023/08/A-Response-to-the-Recommendations-of-the-PAVE-Working-Group-FINAL-1.pdf?x91208

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Mary Cummins

Wednesday, August 2, 2023

Appraisers Can't Use Demographic Census Tract Data Yet Government Uses it to Attack Appraisers by David Towne

real estate appraisal,neighborhoods,david towne,real estate appraiser,mary cummins,real estate,appraisal,census tract,california,appraiser,los angeles,

Another great article by real estate appraisal expert Dave Towne cited below. He states what many have noted since the government started mentioning census tracts and appraisal values. Appraisers can't and don't use census tract report data in selecting comparables or valuing properties. We are not allowed to consider personal demographics. We can only consider properties in a market area similar to the subject property. Neighborhoods, market areas do not correlate with census tracts! Census tracts were made by the government to gather personal demographics of the inhabitants in specific tiny areas to compare changes over time. They are a more recent artificial constructs of government which have nothing to do with determining appraisal values.

The first census tracts in the US were made in 1906 in New York. In 1934 they were standardized and expanded to a few major cities. "The goal of the criteria has remained unchanged; that is, to assure comparability and data reliability through the standardization of the population thresholds for census tracts, as well as requiring that their boundaries follow specific types of geographic features that do not change frequently. The Census Bureau began publishing census tract data as part of its standard tabulations beginning with the 1940 Census."

For all we know the original tracts may have included some type of "redlining" based on race, nation of origin, primary language spoken, income levels... The "redlining" may have just been a correlation of less wealthy people living near the railroad tracks, polluted industrial areas and wealthier people living near the city center or a beautiful lake. Income, wealth correlate with race but race is not the cause.

The 1934 tracts have not changed but neighborhood boundaries, home values and real estate have definitely changed. Sometimes even the physical boundaries have changed with new freeways, aqueducts, dams, large government projects, dedicated parks, removal of train tracks... These areas also change as different areas go through the real estate cycles of growth, stabilization, decline and revitalization. Home values go up and down. Different people move in and out.

Appraisers use market areas sometimes called neighborhoods to selected comparables to value a subject property. WE DO NOT USE CENSUS TRACTS! The census tract number is auto-filled by a software program in the report. That's the only mention and use of census tracts. The government is the one who requested that data for their own loan use which is why it's in the form. Now they are misusing it to mischaracterize appraisers as alleged "racists" who "lowball" blacks and Latinos. Independent research by AEI has proven that race is not a factor in appraisal values. Whites make more money than Latinos and Blacks. If you make more money, you have more money and wealth. If you have more money, you will buy a more expensive home in a more expensive area. The main value of real estate is LOCATION, LOCATION, LOCATION.

When we search for comparables for a subject property some use a half mile radius from subject. Some go one mile. In rural areas they go a few miles. For a high density condo area you might just use 1/4 mile radius. Some appraisers use known neighborhood boundaries which could be two streets, railroad crossing, major boulevard, freeway or the ocean. It depends upon the subject property. If I were appraising a home in the N 600 block in the flats of Beverly Hills, I would search N 500-700 then probably go two blocks east and west of the subject for starters. If I needed to go wider, I'd only go east or west and not north or south. North is much more expensive because they are larger estates. South is much smaller tract homes on much smaller lots. I don't look at or search census tracts. I'd have to figure out how to do that if my MLS could even do that. In fact this census tract of Beverly Hills is the first one I've ever looked at in my life just now. There are ten census tract maps in the map below.

Below is the census map which includes Beverly Hills, zoning map of Beverly Hills and zip code map. They're all different. I'm using this because I grew up here and know all the different market areas very well. Some of the areas in the census maps are commercial only and worth trillions of dollars. People don't live in those areas. They are stores, offices, medical centers in the golden triangle. Some of the areas in the census map are Beverly Hills and some are the city of Los Angeles. Beverly Hills property is easily worth twice Los Angeles property even if it's just across the street for many reasons yet they're in the same census tract.

There's a thick line running down the middle of two census tracts. That's Sunset Blvd. Properties north of Sunset are worth 2-3x as much as properties south of Sunset. I could go on and on. The purpose is to show you that census tracts have nothing to do with real estate appraisal values. Three homes in the same tract could easily be worth $300,000 (small studio condo in Los Angeles), $2,000,000 small tract house south of the long gone rail road tracts on Santa Monica Blvd or $50,000,000 home above Sunset. Census tracts don't correlate with value. They should only be used to talk about people.

I think the problem with census tracts and home values first started with fraud Andre Perry. He used Zillow Zestimate home values in different census tracts and compared them with the predominant race of people in the census tract area. His goal, agenda was to show that black owned homes are worth less than white owned home due to "old white racist male" appraisers intentionally low balling black people. No appraiser appraised any homes in his paper. He used only inaccurate Zillow values. He also just used the majority percentage of blacks in each area. He then cherry picked and twisted the results to fit his agenda. The results of his fraudulent study showed that whites make and have more money than blacks, latinos. Whites can afford to buy more expensive homes in more expensive areas. We've known about the income and wealth gap for years. It's caused by income and socioeconomic factors but not race or real estate appraisers. AEI research which disproves Andre Perry's fraudulent paper.

Census map of Beverly Hills. Ten maps which include Century City, Sherman Oaks and Los Angeles cities.

Map of the city of Beverly Hills broken up by zip codes just so you can see the outline of the city.

Below is Dave Towne's article. I asked his permission to share it. I'd link to it but he posts it in an appraisal group which is not public.

"Not to gloat, but I seem to be the only appraiser in the US who has observed and reported how people-oriented DEMOGRAPHIC CENSUS TRACT DATA reported by FHFA, the GSE’s and other entities is being used to tar and feather appraisers. I have written about this topic at least 2x in the past.

The latest is this 8/01/23 INSIGHTS newsletter, in the link, from FHFA ...... the ‘conservator’ of Fannie Mae and Freddie Mac:

Blog | Federal Housing Finance Agency New Measures in the UAD Aggregate Statistics: Opportunities to Explore Data on Comparable Properties and Structural, Lot, and Neighborhood Characteristics (fhfa.gov)

Here’s what’s in that (screen shots of the document):

Appraisers don’t appraise properties with CENSUS TRACTS as a paramount data point. Most of us don’t even know where the tract boundaries are.

The Census Tract Number on the appraisal form is only there so that the LENDER and their regulators can track loans made in Tracts.

Because the ‘researchers’ cannot get into the minds of appraisers to determine how comps are selected, all the ‘researchers’ can do is fall back on this DEMOGRAPHIC metric. That’s unfair to appraisers. “We” appraisers are not allowed to use or consider people-oriented DEMOGRAPHICS in reports.

But what’s conveniently overlooked in this metric is the econometric status and other factors that play into where people choose to live and how baseline property valuations are done, starting with the local jurisdiction Assessor. Those baseline factors started decades ago, long before most appraisers got into the business.

Buyers also don’t use Census Tracts as a determining factor on where to buy their home, unless magically the Tract corresponds with other geographic or personal factors the buyer considers important. Builders/developers in most cases don’t purposely put up new housing based on Census Tract demographic info.

What’s been happening since 2018 or before is the likes of Andre Perry and Elizabeth Corver-Glenn, Ph.D, etc., have incorrectly used Census Tract people-oriented DEMOGRAPHIC info to inform Congress and others that “We” appraisers are valuing properties all wrong and it must be stopped.

Because of this, Census Tracts are becoming the de facto element “We” must acknowledge and that other people think is proper.

In short, using only this people-oriented DEMOGRAPHIC based data item to judge appraisers is just plain wrong.

Dave Towne, MNAA, AVAA, AGA "

About David Towne

Certified Residential RE Appraiser at Towne Appraisals

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003

https://www.linkedin.com/in/dave-towne-4a65226/
https://www.towneappraisals.com/

http://www.e-appraisersdirectory.com/Washington_Appraisers:Towne_Appraisals-48-2989-0-0-1864.html

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Mary Cummins

Sunday, July 30, 2023

Nazario Incorrectly Blames Their Home Affordability Issues in Los Angeles on Government by Mary Cummins

This family of four tries to blame the government for their inability, unwillingness to cheaply rent or buy a home in central Los Angeles on their low wages with little savings. There are a few issues here the biggest being their relatively low wages. The article states the two daughters graduated from college. Jennifer Nazario got a Masters in economics and Paula Zanario got one in public policy. Their Opinion op-ed piece shows they may not have been paying attention in class.

People making minimum wage can't afford to rent a one bedroom in LA same in SF and NY let alone buy a home. Median rent for one bedroom here is $2,100. You need two people with minimum wage jobs to afford that and they're still rent burdened. They should increase their wages before considering buying. They've now bought at the peak of the market with high interest rates and a super low down payment. Hope they didn't get an adjustable and never have an emergency or job loss.

One issue I've found with people living in rent control units is they never strive to increase their income because they don't need to. I can only imagine how low the rent is for that studio after having been there for 25 years. It's wayyyyyyy below market rent. They've been taking advantage of their landlord who has subsidized their rent for 25 years. Their landlord is probably also an immigrant Latino.

Legally they were not allowed to have four people in there. They could have been evicted easily but the landlord was nice to them and allowed them to stay. It's two people max allowed for a studio though sometimes they'll allow a very young underage child.

As I read the article the two kids weren't old enough to work until about 2022. They said they both went to college then grad school. They chose not to get full time jobs. Then they said they, I assume the two daughters, make over $136,650 a year combined. They did at least state they were happy they had low rent so they could save a lot of money for years. That's nice. It also means they are admitting they could have afforded a bigger better place if they wanted to. They are complaining about a situation they created for themselves.

The writers state they applied for the BofA program but didn't qualify because they made too much money. They also applied for the California Dream for All program which ran out of funds. Then they whined about the pay back part of one program if they accrue equity and sell. That's how the program works and is funded! We're really just taking their word for it. There could be more involved like credit scores, time at their jobs, other debt like car payments, credit card debt, bad debt, student loans...

They ended up buying a home outside of expensive downtown Los Angeles with 3% down. This was after they basically complained about rising rents, home prices and gentrification. They moved somewhere else and contributed to gentrification in that area. "Gentrification" has nothing to do with race but finances. Finances correlate with race in the US. Whites make more than Latinos and Blacks. It's actually just the revitalization cycle of real estate. People get pushed out of more expensive areas into less expensive areas. That's what happened with this family. They originally found a cheap place to live because it was in the recession phase before the recovery phase. They just did the same with their new place. They committed "gentrification."

Jennifer and Paula Nazario suggest government programs should provide free or cheap down payments for homes for poor people with low income jobs, bad credit, lots of debt and no savings. They clearly were not paying attention in class especially Jennifer with her Economics degree. If anyone can basically buy a home for free even though they can't easily make the mortgage, taxes, insurance, upkeep expenses, they will default and lose the home. That's why conventional loans don't allow you to borrow the down payment money. If you aren't making enough income to afford the down payment, you can't weather any emergency and won't be able to pay back the loan. Someone with no money in the deal won't care as much about losing the property. No bank would loan on a property without an equity cushion for fees, costs if they get stuck with it in foreclosure. There is a ton of years long research on this.

Someone should have dissuaded the Nazarios from writing this clueless op-ed piece. It makes them look really stupid. I wasn't going to say anything until I saw that Jennifer has a degree in Economics. I'm truly embarrassed for them because I'm Latino. Thankfully I have common sense and don't expect the government to pay for everything for me. You have to do some things for yourself in this world.

From the article: "Jennifer Nazario is a systems administrator at a network of college-preparatory schools and a first-generation college graduate with a master’s degree in economics. Paula Nazario is an assistant director at UCLA and the first person in her family to go to college. She has a master’s degree in public policy."

https://www.yahoo.com/news/family-four-shared-cramped-studio-100112963.html

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Mary Cummins

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

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