Housing on Fire

It’s always disconcerting when an office building behind yours catches on fire.

Then you remember when the building next door recently collapsed and tragically a construction worker died.

Then you recall the building across the street burning down and collapsing at your prior office (I took this photo from my office window).

And you think aloud, I STILL LOVE NEW YORK!

Also, a shoutout to my Columbia MRED Students! Remember that pie is better than cake no matter how convenient the housing analogy is.

But I digress…

Market Report Gauntlet Q2-2018 Week 2: NYC Metro Area

Just a quick reminder that any of our market reports that are published during the week are linked at the bottom of these Housing Notes in a section called “Recently Published Elliman Market Reports” so you’ll get them shortly after they are published.

I’ve been the author of an expanding market report series for Douglas Elliman Real Estate since 1994. We are in the middle of the quarterly gauntlet of 4 weeks and 30+ reports that are being published. The theme in the NYC metro area seems to be falling sales, rising inventory and flat to modest gains in price trends.

Firstly (literally), the number one read story on the Bloomberg Terminals yesterday by early morning and remaining there all day (350k± subscribers) was housing market story featuring the 2Q18 Elliman Report on Westchester.

and a chart…

within their coverage of the Elliman Report for Manhattan, Brooklyn & Queens June 2018 rentals that was published yesterday.

Refer to the links at the bottom of the page to see the other reports that I independently authored for Douglas Elliman published yesterday.

Charts for This Week’s Market Reports

We update a large library of charts on the regions we report on. Here was some of my favorites for this week’s report releases:

Bloomberg Markets Interview: July 10, 2018, Manhattan Housing Market

I enjoyed my sit down with Vonnie Quinn and Shery Ahn on Bloomberg Markets this week. The discussion focused on the release of the Elliman Report: Q2-2018 Manhattan Sales that I have authored since 1994 and the Bloomberg story that covered it.

We Are So Down On The 1909 Toilet, Literally

The Modern Bathroom of 1909. Except for the shower, it looks like half of the bathrooms I’ve seen during my appraisal inspections. I’ve also seen a lot of bathrooms in pre-WWII Manhattan co-op apartments that were made minimalist modern and didn’t translate much value to potential buyers. The trick to maximizing the value it seems is to have modern amenities with a pre-war aesthetic when in a pre-war building. Otherwise, it’s like joining someone for lunch at a steak joint and they only order a salad – its disorientating.

Sharing More Visualizations Done By Len Kiefer Because I Can’t Help It

I just can’t help myself. Len tweets:

I use this chart often, but it still surprises me.
From 1968 to 2007 there were only two years when the U.S. completed fewer #housing units than it did 2017.

And we wonder why there is an affordability crisis in the U.S. housing market. Production has not recovered since the financial crisis.

Revisiting Angelo Mozilo and His Doomed Mortgage Machine

“Spray on tan” was never an option.

During the housing bubble, I remember thinking about how BofA had avoided the systemic insanity of lending that overtook most mortgage lenders including banks like Washington Mutual…and then they bought Countrywide and all hell broke loose. From the appraisal perspective, I observed them incorporate the Countrywide’s Landsafe Appraisal Management Company into the mix and all of a sudden, they took half of the appraisal fee and applied military-like rules such as 48-hour turn times and 19-year-olds chewing gum who followed long checklists without regard for local market knowledge. Quality appraisers fled. And then banks I loved working with like US Trust were gobbled up and they were forced to use Landsafe too. In 2015 Corelogic bought Countrywide as part of their acquisition binge. Bank of America and US Trust continues to use Corelogic’s AMC and have been reaching out to us intermittently for years to get our firm to work for them. However, CoreLogic, as a big machine, and near monopoly, can’t stop being a stereotypical AMC. That’s bad news for consumers and taxpayers.

Here is a good CNN/Money take on Angelo Mozilo and the damage he caused in the nation’s rush to enable more homeownership. His legacy of his Landsafe AMC still lives today within CoreLogic.

Appraiserville

This week is full to the brim…

When Untrained Inspectors of Hybrid Appraisals Rule The World

I did a screenshot of a photo from a private appraisal group that blew my mind. Now imagine an unregulated, non-standardized, untrained inspector (home inspectors aren’t being used for hybrids) for a hybrid appraisal assignment (being paid $12 to rush through a home) actually catching this scam like a trained experienced appraiser did. LIA (Liability Insurance Administrators) has said that the appraiser is still responsible for house conditions even if they use a disclaimer. I heard this directly from LIA when they presented at TAF a few months ago. I wonder what other things would be missed by an unregulated, untrained inspector that is in a new industry that is non-standardized?

Calling On All Tennessee Appraisers To Take a Tristar Bank Selfie

My wife and I were visiting good friends in Nashville and I thought it would be a good idea to visit the bank that misrepresented to the public that there were not enough appraisers in the area so they applied for an exemption to the Appraisal Subcommittee (ASC) for a one-year waiver. After all, they are local residents and as bank employees, can apply values to collateral they lend on and there is no conflict of interest to be concerned about (especially since the taxpayer will pick up the tab when all goes wrong). Right?

It would be cool to have appraisers submit their selfies in front of Tristar ATMs, branches, and offices to me and I’ll publish it here. I just submitted a request to the Tennesse Coalition through a friend but haven’t heard back yet.

I’m not confident the Tristar Bank saga and potential new requests from banks are over. Afterall, their twitter account is still locked. Why would a bank hide behind a locked Twitter account?

My Thoughts on the Tristar Bank “Appraiser Shortage” Misrepresentation and How Appraisers Fought Back

I was involved in the groundswell of opposition to the Tristar’s claim of a shortage and shared conversations and emails with appraisers in that area. My state coalition was among the many that wrote ASC to dispute the claims by Tristar that are easily refuted with a quick Google search. This is what I understand happened through conversations with my peers during this situation in late 2017 through spring 2018.

– Appraisers physically went to their headquarters and branches to apply.
– Appraisers called them to apply.
– Appraisers inundated their twitter account to call them out as misrepresenting a shortage and offered to apply (Tristar locked their Twitter account – when does a bank do that? – still locked)
– I was told stories of appraisers walking into branches, but don’t know what happened.

Statistically, it is easily proven that there are plenty of appraisers – as has been part of the public discourse. The onus should be on them, not appraisers, to be in sync with the public market to engage appraisers whether it is fee driven or a flawed bank culture. Why aren’t other Tennessee banks making such a claim now that Tristar’s claim was rejected? In appraiser parlance, other banks making the same claim would be a “comp” but that hasn’t happened. Why? Because they are misrepresenting the situation.

Here is a list of some of the past Housing Notes/Appraiservilles that will get you up to speed on the disingenuous claims by Tristar Bank:

– December 1, 2017 The Appraisal Waiver “Slippery Slope” Becomes A “Cliff”
– December 8, 2017 – More on Tristar Bank in TN (you know, the one that shouldn’t be in the mortgage business)
– December 15, 2017 – The Appraisal Industry Responds to the Tristar Bank Appraisal Waiver Letter
– December 22, 2017 – Appraiser-Waiver-ville
– February 16, 2018 – More on Tristar Bank’s Appraiser Shortage Lie to Waive Appraisals
– March 16, 2018 – The Appraisal Foundation Position on Tristar Bank Waiver Request to ASC

AppraiserFest 2018! November 1, 2 and 3! San Antonio!

Signup now!

Besides the appraiser-orientated content, the team is working hard to expand their list growing list of states that will provide CE credit for attendees.

2018 RAC Fall Conference, September 13, 14, Plano Texas

I am the outgoing president of RAC (Relocation Appraisers & Consultants), an organization of the best appraisers of complex residential properties in the country, bar none. Its been an especially satisfying two-year run. I’m especially excited about this year’s conference after last year’s success! CE credit and curated relevant content provided for today’s residential appraisers.

To signup or learn more about the conference, go here:

2018 RAC Conference: Time Keeps on Slipping into the Future

An Example of why CoreLogic’s Monopolistic Behavior is Concerning

Dave Towne shared this FTC link on CoreLogic’s acquisition of DataQuick and their efforts to stymie competitors like RealtyTrac from licensing data. Corelogic just settled with the FTC. CoreLogic has quietly become a near-monopoly in the data business. This includes providing software for many MLS systems as well as acquiring Countrywide, the poster child for all that is wrong with the AMC concept.

Polluting The Data Pool

Here is a wonky conversation by people much smarter than me. I cobbled it together and it is quite interesting – I gave no credit to the writers in the email I was cc’d in but I can if you wish:

Comment

Extensive mortgage lending regulations would have to change to enable trainees to do more than what is currently allowed, and for lenders to accept that involvement.

From what has been published so far, the forms change won’t happen until 2+ years from now.

The below is the primary reason why the ‘hybrid’, ‘bifurcated’, ‘alternative’ type reports cannot be (presently) used for FIRST MORTGAGES when the GSE is buying the loan.

They can be for secondary loan products………..which is why they came into existence and are being pushed to appraisers by multiple entities

The problem is the lenders don’t want to pay appraisers appropriately for their license, E&O coverage, and professional service. Smart appraisers have not taken the bait.

Response

The issue, which we discovered through the forum, is that these reports are being one as “Restricted Use” on [proprietary] software of the AMCs, that,

Coverts the appraisal to XML, which can then be directly uploaded to Fannie Mae, or dropped onto a 1004 for, because the per-printed form verbiage does not convert to XML from either a Fannie Form, or the AMC’s forms.

That’s the “high tech” we are supposed to be embracing.

So, the IAEG does not apply to not regulated bank lenders, such as Quicken Loans for example.

Do a bi-f appraisal for a non-regulated lender, on an AMC proprietary software, and surprise, Fannie can buy that loan from them if the appraisal shows up on a 1004 through the magic of technology.

If appraisers are going to do Restricted Use reports for lending, then they should be in PDF, because downloading and selling the data is not a “use” of a restricted report.

Revisiting Angelo Mozilo and His Doomed Mortgage Machine

If you came to Housing Notes only to read Appraiserville, consider scrolling up to read the story under this headline: “Revisiting Angelo Mozilo and His Doomed Mortgage Machine”

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

– They’ll close their checking account at Tristar Bank;
– You’ll think your toilet is more modern than it is;
– And I’ll keep writing market reports.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan Miller, CRP, CRE
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog
@jonathanmiller