The Federal Reserve and the Treasury announced steps Sunday to shore up mortgage giants Fannie Mae and Freddie Mac, whose shares have plunged as losses from their mortgage holdings threatened their financial survival. (BusinessWeek - click here)
"The steps are also intended to send a signal to nervous investors worldwide that the government is prepared to take all necessary steps to prevent the credit market troubles that started last year from engulfing financial markets and further weakening the economy and housing markets."
SUMMARY - Since its inception The Department of Housing and Urban Development (HUD) has established minimumproperty standards. While these standards have varied over time the recent changes have been some of the most dramatic in decades. By eliminating many of the "nuisance" repairs and mandatory inspections HUD hopes to make it easier to buy or sell a home with FHA financing. The most recent changes are highlighted bold on this checklist.
SUMMARY - Since its inception The Department of Housing and Urban Development (HUD) has established minimumproperty standards. While these standards have varied over time the recent changes have been some of the most dramatic in decades. By eliminating many of the "nuisance" repairs and mandatory inspections HUD hopes to make it easier to buy or sell a home with FHA financing.
The most recent changes are highlighted bold on this checklist.
POOR CONDITION -
CONDOMINIUMS -
STRUCTURAL DEFECTS -Large settlement cracks, sagging floors or roofs, and significant deteriorated wood are conditions that require professional repair. Grading must be adequate to drain away from house.
STRUCTURAL DEFECTS -
TERMITES -
LEAD PAINT -
HEATING -
ROOFS -
WINDOWS/DOORS -
ELECTRIC/UTILITIES/MECHANICAL SYSTEMS -
CRAWL SPACE & ATTIC -
Access to both the attic and the crawl space is required. Both must have adequate ventilation. Crawl spaces must have sufficient clearance for inspection and maintenance.
PLUMBING -
Minor plumbing leaks and defects are acceptable. Major plumbing problems will require inspection and repair. Water heaters must have a pressure relief valve.
SAFETY CONCERNS -
Smoke detectors are not required but if they are present they must work properly. HUD no longer requires repair of the safety device that automatically stops an obstructed electric garage door opener. Trip hazards such as uneven walkways or sidewalks will not require repair. Missing handrails on stairways are acceptable.
HUD DOES NOT REQUIRE
HUD does not require the following:
For more information -Click here.
“Illinois defied the national trend for the third time in the last six months by adding 4,000 jobs in May, registering a 0.35 percent growth in jobs in the last 12 months,” said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois, in his June 2008 Illinois Housing Price Forecast (pdf).
"U.S. consumers seem to be cutting consumption of gasoline and also being more careful in shopping for necessities; the longer-term impact of the tax rebates is unclear. The employment declines in the U.S. [in May] generated further concern that the economy was in recession; the Reuters/University of Michigan preliminary index of consumer sentiment fell to 56.7 in June, a reading unseen since 1980, from 59.8 in May."
John Simpson, MAI has authored 4 books with the Appraisal Institute and 12 Appraisal Journal articles, but that’s just a part of his monologue. He helps run an appraisal firm, and has been an active day-to-day commercial appraisal for almost 2 decades.
John Simpson, MAI has done an excellent job of identifying many of the key rules of successfully appealing property in his recent 7-part series - Simpson's Keys to Successful Tax Appeals - on his Appraisal Matters blog.
As a commercial appraiser for a township assessment office in Illinois, I can attest to the validity of his remarks! Although his series of articles focus on commercial property appeals . . .the same rules will apply to residential income properties and even single-family homes.
Here's a brief summary of his series:
Keys to Successful Tax Appeals - Part 1 - With the current well-publicized real estate problems, tax appeals have become more viable for commercial property owners. The bottom line is a lower property value, yet real estate tax assessments have not been reduced accordingly.
Keys to Successful Tax Appeals - Part 2 - Key 1 – Know the Rules Before You Play - Although this may seem cliché, not knowing the jurisdiction’s tax assessment and appeals rules can derail a tax appeal well before it even has a chance to be heard.
Keys to Successful Tax Appeals - Part 3 - Key 2 - Avoid “Protective” Appeals - In the last few years, it has become more common for clients to file protective tax appeals on all owned properties. This is a practice that can severely backfire
Keys to Successful Tax Appeals - Part 4 - Key 3 – Know Your Market and Submarkets - Although you may not be an expert, you can call upon experts to learn about your market. Brokers have their fingers on the pulse of the market and they are often more than happy to provide you with truly comparable properties for comparison . .
Keys to Successful Tax Appeals - Part 5 - Key 4 – Always get the Assessor’s worksheet - The Assessor’s worksheet is a document that shows how the Assessor arrived at the market value a property. Many times, the addresses of the comparable sales are included and sometimes operating expense comparables and capitalization rate comparables are shown.
Keys to Successful Tax Appeals - Part 6 - Key 5 – Know the Opposition - Some jurisdictions use Assessors at the state level, some at the county level, some at the local level, and others hire independent appraisers to defend property values. Your strategy will vary among these four types of Assessors
Keys to Successful Tax Appeals - Part 7 -. Key 6 – Use the Right Tool for the Right Job - Based on the type of opposition you will face above, you need to make sure you have the right professionals on your team. Although property owners can appear in front of local boards, almost all commercial tax appeals have attorneys or tax appeal consultants represent the owners. Corporations are required to be represented by an attorney in court. Their time is expensive, so use them wisely.
Click the Appraisal Matters links below for the full articles:
According to a report from the Urban Land Institute "Global Demographics 2008: Shaping Real Estate's Future," three key trends will shape the real estate industry in the future:
Implications for real estate include growth in the retirement housing market, medical facilities, affordable senior housing and senior housing options. Also, there will be an "increased investment in urban infrastructure and increased need for both housing and retail services for a growing urban workforce."
“Both the U.S. and Illinois economies appear to be flirting with recession,” says economist Geoffrey Hewings, director of the University of Illinois Regional Economics Applications Laboratory (REAL) in REAL's May 2008 Report. “With the rapid increases in gasoline prices generating inflationary pressure that may temper any future interest rate adjustment downwards by the Federal Reserve. Over the last twelve months, the Illinois economy has matched the employment growth rate of the U.S. economy for the first time in over a decade.”
Forecasts for the next three months indicate declines in home sales at rates observed since the beginning of the year.
Month-to-month changes suggest that May and June will witness increases in sales but July will experience declines.
Median prices in Illinois and Chicago will move upwards in May and June but will still be below levels recorded in the same months in 2007 (about 6 percent in Illinois and 2-3 percent in Chicago); median prices will fall back in July to levels below those in June but above those in May.
Find more reports and Illinois market data at www.illinoisrealtor.org/MarketCenter.
That regulation would supersede an appraisal code of conduct negotiated by Mr. Cuomo, Fannie and Freddie earlier this year. The companies accepted Mr. Cuomo's terms to avoid the threat of a lawsuit over their alleged failure to ensure that appraisers are protected from pressure to inflate appraisals. Because Fannie and Freddie buy or guarantee the bulk of all U.S. mortgages, the code would become in essence a national standard.
The code would bar brokers or bank employees involved in making loans from choosing appraisers, and lenders couldn't make loans on the basis of appraisals from their employees or companies they control.
Sen. Charles Schumer, a New York Democrat, vowed to resist the amendment, calling it a "step backwards."
Download Talking_Points_on_the_Appraisal_Amendment.doc
Click here to read the "Talking Points" . . .
I was invited to speak at the 2008 a la mode conference in Atlanta, GA this past weekend on paperless office topics. They started the concept of inviting practicing appraisers, to share their ideas on "Real World" topics with other appraisers, at their conventions last year.
One of the best parts of going to a la mode conventions is getting a chance to listen to the Chairman and founder of a la mode, inc., David Biggers, address the attendees on his visions for where software is going, where the appraisal industry is going, and what they doing to help the residential appraiser. This year was no different.
The short video below was made at the 2008 a la mode Atlanta Conference. Dave Biggers spoke twice to attendees about his company's position on the proposed Home Valuation Code of Conduct and the role of Automated Valuation Model (AVM) companies.
The lead-in to the story is that Dave was having an email conversation with a business friend in the AMC business. A la mode's position is that borrowers should be given ALL of the valuation reports that were ordered, including appraisals, BPO's and AVMs. [Click here to read Dave's article, "HVCC: The Cure Is Worse Than The Disease", from the first edition of Appraisal Press.] In response to that suggestion, the AMC head said that can't do that because "it's too hard" to explain an AVM to a borrower. Dave Biggers says: "I don't remember there being a regulatory - Gee that's really hard - excuse?" They're basically saying to their borrowers; "You're so stupid you couldn't possibly grasp what we're gonna show you!" Click below for the clip . . .
The lead-in to the story is that Dave was having an email conversation with a business friend in the AMC business. A la mode's position is that borrowers should be given ALL of the valuation reports that were ordered, including appraisals, BPO's and AVMs.
[Click here to read Dave's article, "HVCC: The Cure Is Worse Than The Disease", from the first edition of Appraisal Press.]
In response to that suggestion, the AMC head said that can't do that because "it's too hard" to explain an AVM to a borrower.
Dave Biggers says: "I don't remember there being a regulatory - Gee that's really hard - excuse?" They're basically saying to their borrowers; "You're so stupid you couldn't possibly grasp what we're gonna show you!"
Click below for the clip . . .
One of the most interesting concepts that Dave discussed was actually NOT the HVCC . . .but that they were working on a plan to develop an Appraiser's AMC where a la mode would market our services directly to lenders.
As Dave explained, this would be targeted at that niche market of lenders and brokers that are large enough to need the automated online ordering services of an AMC but too small to require the services of one of the major AMCs.
The plan will be unveiled and explained in the next issue of Appraisal Press, but it definitely drew applause from the room full of appraisers in Atlanta!
A la mode would handle the marketing, technology, delivery, and servicing of the lender . . .and charge a small fee ($10-$15) to the appraiser. Notice that this is not a fee just for delivery.
Their plan actually drives "full fee" work to appraisers . . .and we would only pay for the service when an assignment is received.
a la mode is uniquely positioned in the industry with their XSites, Mercury Network, SureDocs, and many other innovations to tackle this task. I know that they have the technology infrastructure in-place to to bring this to life quickly and in compliance with where the HVCC and IVPI are headed. We'll be watching for the next http://www.AppraisalPress.com issue for details!
Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 24 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.
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