I've MOVED . . . Get THE SCOOP!

Blogger.com has been GREAT as a learning experience for a "Newbie Blogger" but it's time to MOVE ON! Just click the graphic above to be taken to our NEW "TypePad" platform. I'm currently migrating MANY of the more popular topics from Apprasal News For Real Estate Professionals over to Appraisal Scoop. Our new platform allows me to catagorize blog posts so that visitors can quickly find groups of posts that are of interest to them. Also, one of the BIG reasons for the change was to allow me to invited other Guest Authors to collaborate with me on the Appraisal Scoop. I'm in the "Alpha Testing" process right now, with only one guest blogger. Once that shakeout process is complete, I'll be inviting other Guest Authors from around the country to add their thoughts and perspectives on the real estate appraisal profession and industry.

Hopefully we'll get lenders, software developer, clients, and residential and commercial appraiser to contribute?

COME JOIN US!!! . . .and THE SCOOP

Pros and Cons to Calculating Your Home's Value Online

More homeowners are turning to free or nominally priced online tools to follow the possible changes in the value of their properties. The Wall Street Journal staff put four Web sites (and a professional appraiser) to the test. WSJ hired Richard Hagar, an appraiser with American Home Appraisals of Mercer Island, Wash., to price the home. He calculated different numbers based on a "desktop" appraisal (using local real estate and other computerized data), a drive-by, and an extensive on-site appraisal. Link: RealEstateJournal Pros and Cons to Calculating Your Home's Value Online. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Technology

FDIC State Profiles Highlight Generally Positive Economic Picture Amid Signs of Housing Slowdown

Job market conditions remained generally positive in most of the U.S. through the first quarter of 2006, with some pockets of weakness along the Louisiana Gulf Coast and the auto-dependent upper Midwest. FDIC-insured institutions also continue to record strong earnings, supported by low credit losses and growth in both real estate and commercial lending. However, many states show signs of an emerging slowdown in housing market activity. These and other state-level economic and banking trends are summarized in the Summer 2006 edition of FDIC State Profiles released today.

"Most regions are seeing solid job growth and strong economic activity, which are helping to support loan demand," said FDIC Chief Economist Richard A. Brown. "We also see housing market activity slowing in a number of regions, as affordability continues to be a challenge. It appears that housing will probably not be a leading sector for the U.S. economy in the second half of the year."

Home sales activity appears to be slowing across many areas of the country, and inventories of unsold homes are increasing. FDIC regional analysts note that affordability continues to be a challenge for homebuyers, particularly in the Middle Atlantic and Western states. Recent data show that rates of home price appreciation have recently decelerated in many states, although prices have declined outright in only a few metropolitan areas. Meanwhile, rising energy costs continue to pressure consumer finances, particularly among lower-income households. The banking industry reported a fifth consecutive year of record earnings in 2005, and this strong financial performance has continued into 2006. However, rising short-term interest rates, a flattened yield curve, and growing dependence on non-core funding sources are pressuring net interest margins, particularly among mortgage lending specialists. FDIC analysts note that margin compression has been offset to some extent by strong loan growth, notably in the construction and development (C&D) segment of the commercial real estate (CRE) portfolio. Concentrations of C&D and CRE loans are rising, particularly among institutions in states in the Mid-Atlantic, Southeast, and West. Loan performance currently remains favorable across all loan categories, including farm-related credits held by agricultural banks. FDIC - 6, 2006 Media Contact:David Barr (202) 898-6992 dbarr@fdic.gov If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate

USPAP 2006 Revisions - Office of the Comptroller of the Currency - OCC 2006-27

The 2006 Revisions to Uniform Standards of Professional Appraisal Practice [USPAP] - June 22, 2006 - OCC 2006-27 Purpose : The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), and National Credit Union Administration (NCUA) (collectively, the agencies) are issuing this statement to notify regulated institutions that the Appraisal Standards Board (ASB) has issued the 2006 version of the Uniform Standards of Professional Appraisal Practice (USPAP) and the attached 2006 USPAP and Scope of Work document. The 2006 USPAP, effective on July 1, 2006, replaces the 2005 USPAP and incorporates extensive revisions to appraisal standards. A regulated institution must ensure that appraisals supporting federally related transactions adhere to USPAP as well as the other minimum appraisal standards contained in the agencies’ appraisal regulations. Therefore, regulated institutions should be familiar with the 2006 USPAP and consider the ramifications of the revisions to their appraisal practices. Revisions to USPAP : The 2006 USPAP incorporates certain prominent revisions. These revisions include a new Scope of Work Rule and the deletion of the Departure Rule and associated terminology, such as "binding" and "specific" requirements and "complete" and "limited" appraisals. The Scope of Work Rule clarifies the standards for the type and extent of research and analysis performed by the appraiser in an appraisal assignment. In adopting the 2006 revisions, the ASB has indicated that the appraisal process has not changed and that the concepts in the Scope of Work Rule are not new to USPAP. However, there is greater emphasis on the appraiser’s process of problem identification and development of an appropriate scope of work. 1 The 2006 USPAP and other ASB documents are available on the Appraisal Foundation Web site at : Appraisal Foundation 2 Under the agencies’ appraisal regulations, a federally related transaction includes any real estate-related financial transaction that an agency or any regulated institution engages in or contracts for and that requires the services of an appraiser. Refer to OCC: 12 CFR 34, C; FRB: 12 CFR 225.61-67; FDIC: 12 CFR 323; OTS: 12 CFR 564; and NCUA: 12 CFR 722. Page 1 of 2 OCC 2006-27 Attachment Page 2 of 2 Consistent with the 2006 USPAP, an appraiser must determine an appropriate scope of work that should be performed to produce "credible assignment results." According to the USPAP Advisory Opinion 29, credible assignment results depend on the scope of work meeting or exceeding both

1. the expectations of parties who are regularly intended users for similar assignments; and
2. what an appraiser’s peers’ actions would be in performing the same or a similar assignment.

Further, the appraisal report must contain sufficient disclosure to allow intended users to understand the scope of work performed. Since the 2006 USPAP reporting options remain unchanged, appraisers may continue to label appraisal reports as self-contained, summary, or restricted use.

Compliance with Appraisal Regulations : While an appraiser is responsible for establishing the scope of work under the 2006 USPAP, regulated institutions are responsible for complying with the agencies’ appraisal regulations. Besides conforming to USPAP, the agencies’ appraisal regulations require that appraisals supporting federally related transactions must:

• Be written and contain sufficient information and analysis to support the regulated institution’s decision to engage in the transaction.
• Analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non-market lease terms, and tract developments with unsold units.
• Be based upon the definition of market value in the regulation.
• Be performed by a state licensed or certified appraiser in accordance with the regulatory requirements.

From the appraiser’s perspective, these regulatory appraisal requirements are "supplemental standards" to USPAP. If an appraiser knowingly fails to comply with supplemental standards, the appraiser is in violation of the USPAP Ethics Rule.

When ordering appraisals, a regulated institution should convey to an appraiser that these supplemental standards remain applicable. The agencies also continue to encourage regulated institutions to use an engagement letter in ordering an appraisal to facilitate communications with the appraiser and to document the expectations of each party to the appraisal assignment.

To determine an appraisal’s acceptability, a regulated institution should review the report to assess the adequacy of the appraiser’s scope of work given the intended use of the appraisal. In accepting an appraisal report, the regulated institution must determine that the appraisal report contains sufficient information and analysis to support the credit decision.

Regulated institutions are reminded to consider an appraiser’s competency for a given appraisal assignment. Further, regulated institutions should not allow lower cost or reduced delivery time to compromise the determination of an appropriate scope of work for appraisals supporting federally related transactions.

Attachment: 2006 USPAP and Scope of Work If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , Regulation , Scope of Work

How do appraisers establish value when there are no comparable sales?

Unusual properties pose valuation challenges. So how DO appraisers establish value when there are no comparable sales? Full article from Inman News -By Dian Hymer Inman News It's relatively easy to establish the market value of a property located in a neighborhood where the houses are created in the mirror image of one another. Figuring out the valuation of an unusual property is another story. Appraisers determine market value [opinions] by comparing the property in question with [at least] three similar properties in the neighborhood that have sold and closed within the last six months. In recent years, there has been plenty of sales activity, so finding comparable sales in most neighborhoods hasn't been a problem. However, in certain low turnover markets finding comparables can be challenging. Even more taxing is finding comparables for a truly unique property. Recently, a one-of-a-kind listing came on the market in the desirable Crocker Highlands neighborhood in Oakland, Calif. What made this property unique was its impressive architecture and size. It was a 4,500-square-foot home in a neighborhood where a 3,500-square-foot house is considered big. The lot size was big and the yard included a swimming pool -- also uncommon for the neighborhood. The special nature of this listing attracted a lot of attention from multiple buyers who wanted to make offers. The trick was figuring out what it was worth. There was not a single house in the neighborhood that could be called comparable to this one. HOUSE HUNTING TIP: Appraisers who are faced with this predicament look to other neighborhoods that could be considered somewhat comparable in order to help determine [their] market value [opinion]. In the above example, expanding the geographic boundary to neighboring Upper Rockridge and Berkeley yielded valuable insights into the probable market price for the property. The winning buyer in this particular situation paid all cash. The purchase was not financed with a mortgage, so the property wasn't put through the scrutiny of a lender's appraiser. However, if the buyer had included an appraisal contingency as a condition of the purchase contract, an appraiser would have used the same approach. Last year, a unique property was sold in the Rockridge area where most homes are on postage stamp lots. This special property had one level acre of land with a tennis court and a recently restored Mediterranean-style home built in the 1920's. There was literally nothing like it in the neighborhood. This time, the buyer needed a mortgage to finance the purchase. The appraiser for the buyer's lender appropriately considered the property an estate. He looked to Piedmont for comparable sales -- a nearby affluent community with many estate properties. Piedmont's claim to fame is a fabulous school district. Oakland's schools, while improving, aren't considered on par. Appraisers make adjustments to account for the value-added benefits that one comparable property might have over another to derive a justifiable market value [opinion] for the subject property. Even if a listing isn't unique, there are times when there's little comparable sales data, especially when sales activity drops. Although this hasn't been a big concern during the last few years of robust home sale activity, it has been a problem in the past. In this case, appraisers look for similar listings that sold longer ago than the generally accepted six-month cut off date. Valuation adjustments are made for market changes during the intervening period. We've been in a market of rapidly increasing home prices for several years. During this time, buyers have often waived their right to have the property appraised. Going forward, it might be wise to rethink this strategy. THE CLOSING: Depending on how an appraisal contingency is written, you may be able to withdraw from the contract without penalty if the property appraises for less than the price you've agreed to pay. Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser

ILLINOIS - May Home Sales

May home sales remain strong in Illinois. According to IAR's latest release, total home sales (single-family and condos) were down just 2.2 percent to 17,442 homes sold, compared to the previous record for the month of 17,840 homes sold in May 2005. The median home price in May was $206,000, up 3.1 percent from a year ago. “Residential housing markets are doing very well in Illinois as the market transitions to a more normal pace of buying and selling,” said IAR President Stan Sieron, CRS, GRI. Read the IAR release. Nationwide, NAR also reports a minor decline in May sales. See the NAR report. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Bloomington , McLean , Illinois , Realtor

LOCAL - Bloomington - Downtown Hotel

Need for downtown hotel resurfaces (Pantagraph) By M.K. Guetersloh mkguetersloh@pantagraph.com BLOOMINGTON - As the U.S. Cellular Coliseum gets ready for 6,000 Jehovah's Witnesses, city and tourism officials alike know the Coliseum is limited at being a true convention destination without a nearby hotel. Discussions for bringing a hotel to downtown as a tool for revitalization started in the late 1990s, well before plans for the Coliseum were drawn. In recent years, those discussions were pushed aside as the city focused on building and opening the Coliseum. With the Coliseum's first convention just days away, those discussions are resurfacing. Because the Coliseum lacks a nearby hotel, Bloomington-Normal Area Convention and Visitors Bureau Director Crystal Howard said they can market the city-owned building as a convention venue to limited groups. For now those are religious and sports groups. "They don't necessarily need a headquarters hotel and the Coliseum fits their needs for exhibit and meeting space," Howard said. "If we are going to position ourselves as a meeting destination, a hotel near the Coliseum with additional meeting space will give us the versatility to market ourselves to associations." Those planning conventions and officers of association boards need a place close by to stay, too, Howard said. Ideally, she said the hotel would need 200 or more rooms and additional meeting space. Without a developer to step forward, however, the hotel remains just an idea. City Manager Tom Hamilton said he is willing to look at any proposals and the council is still interested in seeing a hotel built. But Hamilton emphasized the hotel would be privately owned and operated. "The city may offer some enticements or incentives to help attract a hotel to downtown, but we would keep it as low as possible," Hamilton said. A timeline for further discussion by the City Council has not been set. The one and only proposal the city received on a downtown hotel came in August 2004 from Twin City developer Larry Hundman. That prompted the city to seek other proposals and about 30 developers nationwide received the specifications for a hotel. Of the 30, no proposals were submitted. Eventually, Hundman withdrew his proposal after the City Council approved a contract with Central Illinois Arena Management instead of Hundman's Bloomington-Normal Arena Management to operate the Coliseum. Real Estate , Bloomington , McLean , Illinois

LOCAL - Census - Bloomington Grows by 10,000

Bloomington grows by 10,000 (Pantagraph) By M.K. Guetersloh mkguetersloh@pantagraph.com BLOOMINGTON — About 10,000 people changed their address to one in Bloomington during the past five years.The U.S. Census Bureau announced Friday the city has added 10,167 more people since the 2000 Census. That brings the city’s population up to 74,975. In February, the census bureau conducted the special census for a cost of about $133,000 to the city. And Bloomington isn’t the only community growing. A special census conducted last year in Normal showed the town grew by 5,100 raising its population to 50,485. Bloomington Deputy City Manager Barb Adkins said the rate people are moving into the city speaks to the educational, employment and quality of life opportunities in the Twin Cities. "People want to move here," Adkins said.The increase in population is more than what city officials expected when they first planned for the special census. Initially, city officials believed the population grew by about 7,000. "We knew based on building permits our count was up even before the census was finished in 2000," Adkins said. "This just confirms it, but we didn’t realize we were growing quite this fast." The additional people will mean additional money in the city’s coffers.Certain types of state and federal money are given to communities based on population. That rate is about $111 per person and that could mean and addition $1.1 million a year for the city. However, Adkins said the actual amount for the city has not been calculated.The additional people also will mean additional demand on city services. Adkins said city departments frequently review whether there is enough staff to meet those needs.The city currently employs roughly 680 people. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Bloomington , McLean , Illinois , Realtor

LOCAL - Heyworth - Praire Meadows Subdivision Breaks Ground

Heyworth to break ground on new subdivision (Pantagraph) By Troy Semple heyworthstar@verizon.net HEYWORTH -- The developers of Prairie Meadows, a $75 million master-planned community on Heyworth’s southwest edge, officially will begin construction when organizers break ground at 6 p.m. Monday. Mark Shader, Prairie Meadows project manager for Missouri-based Bridge Real Estate LLC, and Mayor Steve Crum will preside over the ceremonies. The development is at the southeast corner of U.S. highways 51 and 136. Parking will be available at Heyworth Junior-Senior High School."We’re excited to begin the development of Prairie Meadows," said Shader. "A great deal of planning and collaboration with the Heyworth community has resulted in a project that is attracting strong interest and commitments from homebuyers, local homebuilders and commercial businesses. "Now we can deliver this unique product to the Bloomington-Normal marketplace. There is nothing else quite like it in this area in such an affordable price range." Prairie Meadows’ site design has large lots, lakes, green space, walking trails and common areas, said Shader, and will have single-family homes, maintenance-provided town homes and detached villas, and multi-family homes. The single-family houses will range from $160,000 to $250,000 and up, and the town homes and villas will start between $120,000 and $130,000.A neighborhood business village will contain highway commercial businesses, convenient food and retail services, and professional office locations. If you enjoyed this post, subscribe and get FREE updates! Appraisl , Real Estate , Appraiser , Bloomington , McLean , Marketing ,Illinois , Realtor

LOCAL - McLean Co. Wind Farm Questioned By Residents

Residents question Benson wind farm (Pantagraph) By Cheryl Wolfecwolfe@mtco.com BENSON — A proposed 80-turbine wind farm near Benson has generated concerns among some local residents about the value of the project.A group of about 150 people attended a meeting of the finance and development committee of the Woodford County Board this week in the Roanoke-Benson Junior High gym. Representatives of Navitas Energy, the Minneapolis-based company developing the project, answered questions posed by residents. Chief among their concerns were the effects on health, property values, and what would happen if the wind farm is eventually abandoned. "We’re serious about building this project," Navitas engineer Paul Eberth said. "It’s a big project. It has a big impact on the area." Eberth said the company has already leased land, acquired necessary utility easements and purchased land for a substation near Benson. Eberth said no studies have been done that show ill effects to the health of people living near the turbines. While economic benefit issues will be addressed further at meetings of the county zoning board, Eberth said the turbines will generate additional real estate taxes for local governing bodies. Energy generated will be purchase by Commonwealth Edison, but most likely will be sold to the Chicago area. Eberth said Navitas is putting financial safeguards in place in case the wind farm ever needs to be disassembled. "We are in this for the long haul," Eberth said. "If we have to take the project down someday, we would work with the county and have a financial guarantee in place that can be accessed for that purpose." Moore said the Benson project has not been affected by federal stopgaps citing interference of wind turbines with certain types of radar. Navitas will now begin the permitting process, which will need to be approved through the zoning and full county boards. It hopes to have permits in place no later than November with construction slated to begin in April 2007. Navitas hopes to have the wind farm in operation by December 2007. The company also developed the Mendota Hills wind farm visible from Interstate 39 near Paw Paw.The Benson project is among several wind farms planned for the Central Illinois area, with others slated for Saybrook, Hudson, Delavan, northern Livingston County and Lee County. If you enjoyed this post, subscribe and get FREE updates! Real Estate , Bloomington , McLean

Calling All Appraisers! Take The 2006 National Appraiser Survey!

As a follow up to the RESPA News 2003 National Appraisal Survey, October Research, the publisher of Valuation Review, is again asking for feedback to quantify the key issues affecting the real estate appraisal industry. As a professional appraiser, your feedback will help improve awareness of the issues affecting the residential property valuation process. All responses will be combined and tabulated as overall survey results. RESPA News will also segment results based on geographic U.S. census regions, Northeast, Midwest, South and West. Your individual answers are confidential. Every survey participant will receive his/her choice of a free 30-day subscription to Valuation Review or RESPAnews.com. In addition, two lucky survey participants will each win an iPod shuffle from a random drawing of all survey participants! Click HERE to take the survey! If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , RESPA

FHA Finalizes “Anti-flipping Fraud” Rules - 6/8/2006

According to the article, FHA Finalizes “Anti-flipping Fraud” Rules by Kenneth R. Harney in today's Realty Times: The Federal Housing Administration issued long-awaited final regulations on property flips last Wednesday. The rules take effect nationwide July 7

Flipping involves resales of houses or other real estate shortly after acquisition, typically at a substantial price markup. Say you buy a rundown rowhouse at a bargain price, do cosmetic fixups, and then sell it a month later for twice what you paid for it.

Sounds like a high payoff short-term investment, right? It is. But the FHA found that too many property flips using its insured mortgage program involved outright fraud -- hyped appraisals, shell games where property flippers never actually took legal title to the house before selling it for huge profits, sometimes overnight. Often the end purchaser of the flipped property was not financially qualified, and used fraudulent income, employment and assets information to obtain the FHA loan. Then the buyer quickly defaulted, leaving FHA with insurance losses and a house that was worth nowhere near its appraisal valuation. The flipper, meanwhile, pocketed all the sales proceeds financed with the FHA mortgage. To rein in such practices, FHA proposed -- and last week adopted in final form -- new restrictions. Specifically, FHA will now require that:

• Only owners of record -- listed as such in the local court house real estate recordations -- may sell properties that will be financed using FHA insured loans. Any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing.
• For resales that occur between 91 and 180 days where the new sales price exceeds the previous sale price by 100 percent or more, FHA will require additional documentation of the property's true value before insuring the mortgage.
• The agency may also require additional evidence of the accuracy of appraisals whenever properties are re-sold at high price gains within 12 months.

The FHA 90-day no-flip time restrictions will be waived when the sellers of properties to be financed are:

• HUD itself, disposing of its REO (real estate owned) acquired property portfolio.
• Sales of properties that were acquired by the sellers through an inheritance.
• Fannie Mae, Freddie Mac or other federally-chartered financial institutions disposing of REO.
• Local or state housing agencies.
• Nonprofit organizations that have previous approvals to purchase HUD REO properties at a discount.
• Properties located in a presidentially-declared disaster area, provided FHA has issued a formal announcement of eligibility for a specific disaster area.

Real estate investors, particularly those who specialize in rehabilitations of rundown structures in central city areas, had complained to HUD about possible negative impacts on their business activities stemming from the new rules. But HUD decided that banning most 90-day or under flips, and by scrutinizing flips between 91 and 180 days of acquisition where the price markup exceeded 100 percent, FHA should be able to protect itself against the worst abuses.

Investors with questions about the new regulations can call 1-800-CALL FHA for guidance. The rules are contained in HUD Mortgagee Letter 2006-14, issued June 8.

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Paperless Appraisal Office - A Small Firm's Approach - The Workfile

In the article "Paper Cuts – Do they HAVE to hurt?" I talked about the small business love affair with paper and two of the basic tools that I use to ease the pain of breaking up! In this article I want to gets hands-on! We'll see how I've combined an inexpensive sheet fed scanner and PDF creation software to develop a "less-paper" protocol for my small appraisal office. If you're like me, there's just no getting away from creating some paper in the course of developing a real estate appraisal. Maybe it's:

• Field Notes
• Property Sketches
• Phone messages / emails
• Data verification on MLS listing sheets
• Assessment / Recorder's Office printouts

Much of this will be incorporated into the actual appraisal report, but much of it may not! A year or two down the road, when asked about my "development process", if I don't keep some of that extraneous data, I may not be able to document all of the steps that I took in my Scope of Work.

So how do I efficiently handle that paper and store it in a Paperless Workfile?

To start, I developed a basic plan that my "one-man" office could work with on a day-to-day basis over the long term.

• The first step was to replace my individual fax machine, scanner, copier and card reader, with a single 4-in-1 one multi-function device that was network ready and had sheet-feed capability. I still have my "production" B&W laser printer and ink-jet color printer for the occasional printed appraisal, so my low-end Brother 420-CN unit gets very little use as a printer/copier.
• The next step was to install the PaperPort software that came with the 4-in-1 device, and upgrade it to the full version. The PaperPort standard or professional versions include an excellent PDF writer and editor. PaperPort is also integral to organizing paperless files.
• Finally, I made a few decisions on how I would implement the hardware and software technologies into my existing workflow. I had to decide if I would keep some paper? How would I do backups? At what point do I create a transitional or permanent workfile of individual appraisals? etc.

Here's How I Do It!

1. Eliminate paper at the source: For each new assignment, I create a folder on my Windows desktop to temporarily hold files that will be created in the process of developing the appraisal. By default, I print everything to PDF so that I resist the temptation to print to paper first. If I need a paper copy, I'll print it from the pdf. That simple step eliminates the need to later scan all that stuff. The pdf's are all saved to their respective temporary folder on the desktop. ALSO: emails, fax tif files, voicemail files, screen shots, maps, etc. are saved to that same folder.
2. Going from paper to pdf: As soon as my assignment is complete and delivered, I purge my existing paper workfile of all extraneous and duplicate documents that may have been printed throughout the assignment. For example: If a map is IN the appraisal, there's no need for me to also save it to a workfile. Most commonly the remaining paper will be field notes, sketches, and data confirmation sheets. My sheet-fed scanner is set to scan documents using PaperPort's PDF creator and save to the Appraisal folder in My Documents. Everything will be scanned to a single multi-page PDF
3. Bringing it all together: At this point I have data in two separate folders and we really only want to have it in one place. A simple solution would be to drag the "temporary" desktop folder into PaperPort and then add the scanned pdf to it. PaperPort will then allow you to add search criteria and keywords so that you can find it again. In my case, my appraisal software has the ability to add [drag and drop] workfile documents directly to the appraisal's digital workfile. I open up the appraisal's workfile and then the temporary folder. I do a [select all] and drag all of the previously created files right into my appraisal report file.
4. Backup! Backup! Backup!: We all know that we have to keep our appraisal files and workfile for a MINIMUM of five years! That means that we need to have some plan for storing those electronic files. Discussing all the various file backup solutions are beyond the scope of this article, but suffice it to say that only keeping them on your computer's hard drive is NOT the best plan. You should have redundant backups and you should have some means of storing files off-site in case of disaster or theft. In my case, I save files to CD, to a networked PC in my office, and to a software integrated service called The Vault. Because I added all of my workfiles into my appraisal report, each time I save a back-up of my appraisal, I'm also saving my workfile as well.
5. What to do with all that paper? But . . We're now PAPERLESS! Right? Well not yet. We've scanned the paper but now what? Do we just throw it out? Shred it? Save it? My plan is to save the remaining paper for one year or until my lateral file drawer is full. That drawer is for temporary file storage and fast retrieval of relatively current report workfiles [*note - I have NOT printed paper "True Copies" of appraisal reports for years]. I used to move those files into long-term storage boxes for the balance of the five-year retention period. Having implemented my 4-step program above, I feel confident that I can retrieve all files and workfiles electronically.

I feel that this is a simple protocol and requires a minimum amount of change in my normal "paper-based" workflow developed over the years. Each year I find that my reliance on paper is diminished due to advancing technology. The use of dual-monitors is one the the biggest paper-savers that I've incorporated lately. Electronic data collection devices and software have been improving year after year and with the advent of the UMPC, combined with new sketching applications, we may be rapidly approaching the ultimate paperless solution for appraisers!

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Pre-Inspected & Pre-Appraised : Value-Priced Property Program

According to the Inman News Blog, Prudential Palms Realty, based in Sarasota, Fla., has launched a "Value-Priced Property Program" that is an attempt to substantiate a list price "through appraisals and home inspections prepared before the listing is taken," the company announced today. The program is voluntary for sellers. "Pricing will be at or below the appraisal price," according to the announcement. Participating sellers agree to provide a home warranty with the home. "In return, these listings will benefit from Value-Priced Property rider signs, special agent tours, e-mail blasts and special promotions to real estate agents and prospective buyers."Scott Sosso, president of Prudential Palms Realty, said in a statement, “With certified appraisals and inspections in hand, both sellers and buyers will feel confident about the value of the home." If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser ,Blog , Marketing , Realtor , Home Inspection

Mortgage Fraud "Universal Truths" - Part 3 - Identity Fraud

In my recent blog post - Mortgage Fraud - "Universal Truths" - Part 1 - I listed Brad Geary's, “Universal Truths of Mortgage Fraud”. According to Mr. Geary "Virtually all mortgage fraud combines at least two of these "Universal Truths" of mortgage fraud. • Appraiser Fraud • SSN / Identity Fraud • Fraudulent Credit Reports / Letters of Explanation • Fraudulent Ernest Money & Closing Costs • Fraudulent Verification of Employment • Fraudulent Verification of Bank Statement (Deposits) • Fraudulent Verification of Landord In Mortgage Fraud "Universal Truths" - Part 2 I examined some of the issues with the first of these items - Appraiser Fraud. In this post we'll take a look at the next item - Identify Fraud. According to a recent NAR article on Identity Theft (click here) "Current estimates by the Federal Trade Commission indicate that there may be as many as 10 million victims of identity theft each year." "Studies estimate that victims of identity theft spend $5 billion to undo its harm, while businesses lose nearly $50 billion in revenue annually. The FTC has received thousands of real estate-related identity theft complaints."

"Many consumers first learn they are victims of identity theft when they are in the process of renting or buying a home, derailing their real estate dreams while they work to rebuild their good name and destroyed credit. Identity thieves may also rent or purchase a home fraudulently. Clearly, identity theft is an important issue impacting both home buyers and real estate professionals across the nation."

Appraiser identity theft usually develops under three main scenarios :

1. First, is the appraiser-trainee who decides to forge their mentor’s name and license number to reports without their mentor’s knowledge or permission.
2. Second, there are unlicensed appraisers (trainees) who go phishing for license numbers and state licenses of certified appraisers.
3. The third and most disturbing trend involves persons who never were licensed appraisers and prepare bogus reports.

Some steps that appraisers can take to prevent identity theft can be found here The National Association of Realtors is working with the FTC on a new nationwide campaign to educate consumers on how to minimize risk of identity theft and quickly fight back if they become a victim: AvoID Theft: Deter, Detect, Defend . Click here: http://tinyurl.com/eg9qt Deter Identity Theft : Consumers can deter identity thieves by safeguarding their personal information. Read more > Detect Identity Theft: Consumers can detect suspicious activity by routinely monitoring their financial accounts and billing statements. Many consumers learn that their identity has been stolen after the damage has been done. The faster consumers detect the theft, the more they can limit the damage. Read more > Defend Against Identity Theft: Consumers should defend against identity theft as soon as they suspect a problem. It’s important to act quickly to minimize the damage. Read more >

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Mortgage Fraud "Universal Truths" - Part 2 - Appraiser Fraud

In my recent blog post - Mortgage Fraud - "Universal Truths" - Part 1 - I listed Brad Geary's, Assistant Special Agent in Charge from HUD - Chicago, OIG Universal Truths of Mortgage Fraud listed below. According to Mr. Geary "Virtually all mortgage fraud combines at least two of these items."

• Appraiser Fraud
• SSN / Identity Fraud
• Credit Reports / Letters of Explanation
• Ernest Money & Closing Costs
• Verification of Employment
• Verification of Bank Statement (Deposits)
• Verification of LandordIn a recent blog post

Today's Realty Times article "Appraisals Part of All Fraud Loans" by Lew Sichelman takes the "Universal Truth" statement above a step further and says . . .:

"A faulty or even fake appraisal is said to be at the basis of every fraudulent mortgage transaction. But not every appraiser is at fault, or at least willingly so."

The article points out some of the ways an appraiser can "fudge a valuation":

• appraisers can ignore the best comparables,
• appraisers can use properties in better neighborhoods as comps
• appraisers can mis-describe a property.
• appraisers can fail to mention physical problems.

The article also points out that appraisers aren't the only ones who commit such flagrant fouls.

Loan brokers have been known to

• alter values by changing the values (adjustments) of each comparable
• delete noted physical issues or other undesirable influencesin the appraisal
• or even forging their own appraisal reports.

Make fraud cost, not pay - A Countrywide spoksman was quoted as suggesting the installation of "an independent hotline so appraisers can report pressure and keeping an internal "Do Not Use" list of suspected bad actors."

Emblematic of the scope of the mortgage fraud problem throughout the country is what's going on in Illinois, where three out of ten appraisals are found to be forged, according to Robert Gorman, an East Hazel Crest, Ill., appraiser. "That's a significant number," he told the meeting. "And that's only the ones we know of. Who knows what we don't know?"

For the complete Realty Times article : Published: June 7, 2006 - Click here. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser

Illinois Assoc. of REALTORS Sues IL Officials

IAR sues over funds taken from the Real Estate License Act to balance the state budget. On June 2, the Illinois Association of REALTORS filed a lawsuit in the Circuit Court, Seventh Judicial Circuit, Sangamon County, Ill., against six officials of the State of Illinois. The action challenges the constitutionality of the Fiscal Year 2007 Budget Implementation Act to the extent the Act authorizes removing moneys from the Real Estate License Administration Fund and transferring it into the General Revenue Fund. Read IAR legal counsel's talking points on the lawsuit. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Illinois , Realtor

Home Improvements to Avoid When Selling Your House - 7 Deadly Sins

According to the article "Home Improvements to Avoid When Selling Your House" by Amy Hoak From The Wall Street Journal Online - Click here for full article : "Homeowners hear a lot about improvements that might add value to houses. But less attention is paid to what to avoid." Steer clear of renovations that will cost you money at resale time. Avoid these seven deadly sins of remodeling if you want an edge over other home sellers in an iffy market. 1. Overexpanding : Trying to keep up with the Joneses is fine, but don't keep outdoing neighbors with additions unless you plan to stay put a long time. A home that becomes conspicuously larger -- and more expensive -- than those around it will risk becoming hard to sell, Mrs. Slaughter says. 2. Making your home into something it's not : Don't change the general architecture of the home, and make sure that renovations match. Changes that are obviously inconsistent with the home's style will limit the number of people interested in buying it, says Michael Nagel, vice chairman of the National Association of Home Builders' Remodelors Council. 3. Changing a room's function: Completely altering the purpose of a room is risky. Keep kitchens as kitchens, and bathrooms as bathrooms. They were built that way for a reason. "We all expect basic functionality," Mrs. Slaughter says. "If you start changing the basic items that you expect out of your home, you're really customizing it for yourself." 4. Doing it yourself -- when you shouldn't : Be extremely confident you're capable of taking on a project before trying to do it yourself. "I wouldn't try and fix my own car; why would someone want to fix their own house?" says Mr. Nagel, who often sees sloppy tile jobs done by amateurs. 5. Underbudgeting: Don't underestimate how much projects will cost. Expenses usually are added, not subtracted. Homeowners routinely go 20% to 30% over budget, Mrs. Slaughter says. "People not only underbudget from a monetary point, but they also underbudget time," she says. A prospective buyer walking through a home isn't going to see the glass as half full when a project is half done. 6. Making unneeded renovations: When remodeling for resale, don't waste time with renovations that won't pay off. Proceed first with projects that are going to have the highest rate of return, experts advise. In the last four annual editions, the National Association of Realtors/ Remodeling magazine study has identified four renovations that show the greatest return at resale: improvements to siding, windows, kitchens and bathrooms. 7. Neglecting maintenance: Proper maintenance and annual upkeep may be the most important improvements of all. Clean the gutters to protect the exterior from water damage. Trim shrubs. Check for termites. Keep track of annual checkups -- and use that as a selling point. Annual maintenance pays back handsomely when you sell. And before the house goes up for sale, experts recommend a fresh coat of paint. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Marketing

Undercover Operation Nets Two Arrests in Appraisal Scam - Applied Universal Mortgage Fraud Truths 101

In my recent blog post - Mortgage Fraud - "Universal Truths" - Part 1 - I listed Brad Geary's, Assistant Special Agent in Charge from HUD - Chicago, OIG Universal Truths of Mortgage Fraud listed below. According to Mr. Geary "Virtually all mortgage fraud combines at least two of these items."

• Appraiser Fraud
• SSN / Identity Fraud
• Credit Reports / Letters of Explanation
• Ernest Money & Closing Costs
• Verification of Employment
• Verification of Bank Statement (Deposits)
• Verification of Landord

In a recent blog post "Illinois Undercover Operation Nets Two Arrests in Appraisal Scam" (Article Source - Morgage Fraud Blog ) we get a case study in Applied Universal Mortgage Fraud Truths 101. Let's see how many of these we can find as THIS mortgage fraud scheme unfolds: The mortgage fraud scheme as described by Przybylek involved Przybylek making an offer to a homeowner to purchase the homeowner’s property at an inflated price. Once the homeowner agreed to sell, Przybylek would get an appraiser to value the property at an inflated price and then find a buyer who would agree to purchase at the appraised value. Przybylek would then keep the difference as profit. The buyer would make a couple payments and then disappear. The informant met with Przybylek to discuss the scheme and agreed to participate – all the while wearing a wire. Most of the subsequent conversations were also recorded. In July 2005, the Secret Service obtained the use of a piece of property (1054 N. Lorel Avenue, Chicago, Illinois) The property was in very poor condition and was valued at $105,000. It had last been sold in 2000 for $72,000 and HUD took the property after the owner defaulted on the mortgage.

"At the time the property was put to use in the sting operation, the front and back doors didn’t latch properly or lock, a few of the windows were broken, the kitchen was gutted, with missing or broker floor tiles, there were no appliances or fixtures, water and gas pipes were sticking out of the wall, one of the bathrooms did not have an installed sink, there was no electricity or water to the house, much of the wood floors were dated and in poor condition, the carpet was old and stained, the attic did not have internal walls or a ceiling and portions of the exterior siding were falling off. "

Przybylek told the agent that he would create a fraudulent construction invoice for work that was never done and would show the invoice to his appraiser friend. He estimated that the appraised value would be $180,000 to $200,000. Przybylek provided the agent with a partially completed sales contract reflecting a sales price of $257,800. Espe acted as the appraiser and met Przybylek and the agent at the house. Espe said he forgot his camera and would use the photo from the assessor’s office. According to the affidavit, Espe told the agent that his job was to “play with the paperwork,” Two mortgage applications were submitted to First NLC by Quotemearate.com, Houston, TX. The mortgage packages contained a verification of employment signed by Przybylek verifying the borrower’s employment with Professional Home Builders. Other information was also incorrect in the loan package. The package also contained an appraisal by E.R. Espe, Aaron Company, Wilmete Illinois, signed by Erwin R. Espe valuing the property at $257,800.

The appraisal stated “House now has new electrical, plumbing was upgraded, significant amount of dry wall was replaced. Hardwood floors on first and second floors were refinished. Kitchen has new ceramic floor, a new front door to be installed immediately prior to move in or closing, new insulated windows on first and second floors, new carpeting in third floor bdrm and study, new carpeting in the family room.”

A few weeks after the appraisal, the agent inspected the house and although a few windows were placed in the front and back of the house and new siding was affixed to a portion of the back of the house, no other work had been done. The affidavit further states that the closing attorney indicated that the lien for the construction work would not be recorded but that a check would be issued from closing for the payment with the remaining proceeds to the seller. OK! How many of the "Universal Truths" do YOU think were involved!? If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , RESPA , FHA , Illinois , Realtor

Mortgage Fraud - "Universal Truths" - Part 1

I attended the Illinois Coalition of Appraisal Professionals (ICAP) sponsored 2006 Illinois Appraisers Update Seminar on 6/1/2006. Representatives from Fannie Mae, HUD, and the IL Appraisal Division of the Dept. of Professional Requlation spoke on a variety of topics including:

• Common Appraisal Errors
• Mortgage and Appraisal Fraud
• Appraisal Forgery
• Identity Theft

Brad Geary, Assistant Special Agent in Charge from HUD - Chicago, OIG - provided some insights from the perspective of a field agent. Mr. Geary, in his self-deprecating fashion, claims that he's only an expert in the "obvious"! He feels that most fraud becomes apparent once a pattern is recognized. To become aware, we have to understand the Universal Truths of Mortgage Fraud listed below:

• Appraiser Fraud
• SSN / Identity Fraud
• Credit Reports / Letters of Explanation
• Ernest Money & Closing Costs
• Verification of Employment
• Verification of Bank Statement (Deposits)
• Verification of Landord

According to Mr. Geary, virtually all mortgage fraud combines at least two of the items above.

An example of this is the case of Wanda Morgan Tyler, 60, of Duluth, Georgia. She was sentenced June 2006 by U.S. District Judge Thrash on charges of mail fraud, relating to a scheme to defraud the Dept. Veterans’ Affairs (“VA”). Tyler was sentenced to 33 months in prison to be followed by 3 years of supervised release, and found liable for approximately $900,000 in criminal restitution.

• In over a dozen cases, Tyler created and submitted to the VA false wage statements, bank records, and other financial documents in the names of the purchasers that she represented, often without the purchasers’ knowledge. She did this to mislead the VA as to the credit-worthiness of the purchasers, thereby ensuring that the transactions would be approved and that Tyler would receive substantial commissions.
• In some cases, Tyler submitted bids under false identities that she created.
• As part of her scheme, Tyler used several aliases and different companies, all to conceal from the VA that Tyler was behind the scheme.

The VA lost over $900,000 as a result. This includes over $180,000 that the VA paid to Tyler in commissions from these fraudulent transactions, as well as over $720,000 in foreclosure losses, as almost all of the purchasers or purported purchasers defaulted on their mortgages.

All of us know that the 3/2005 Fannie Mae appraisal forms (Eff. 11/2005) had significant changes in the amount of information that appraisers need to research and verify. Looking that the list above, it's clear to me that many of the items on the new forms are designed to address the list of "Mortgage Fraud Universal Truths" above.

In future blog posts, I'll provide some of the specific issues that effect appraisers. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , RESPA , FHA , Illinois

City planners are increasingly criticizing cul-de-sacs.

Homeowners Love Cul-de-Sacs, Planners Say They're Perils by By Amir Efrati From The Wall Street Journal Online One of the most popular features of suburbia is under attack. For many families, cul-de-sac living represents the epitome of suburban bliss: a traffic-free play zone for children, a ready roster of neighbors with extra gas for the lawnmower and a communal gathering space for sharing gin and tonics. But thanks to a growing chorus of critics, ranging from city planners and traffic engineers to snowplow drivers, hundreds of local governments from San Luis Obispo, Calif., to Charlotte, N.C., have passed zoning ordinances to limit cul-de-sacs or even ban them in the future. While homes on cul-de-sacs are still being built in large numbers and continue to fetch premiums from buyers who prefer them, the opposition has only been growing. The most common complaint: traffic. Because most of the roads in a neighborhood of cul-de-sacs are dead ends, some traffic experts say the only way to navigate around the neighborhood is to take peripheral roads that are already cluttered with traffic. And because most cul-de-sacs aren't connected by sidewalks, the only way for people who live there to run errands is to get in their cars and join the traffic. Land-use planners trace the origin of the American version of the cul-de-sac, which means "bottom of the bag" in French, to a development in Radburn, N.J., in 1929. Land planner Ed Tombari of the National Association of Home Builders says the design became popular during the housing boom after World War II, when many families turned away from the congested grids of central cities to live on quiet cul-de-sacs with lawns and winding roads more reminiscent of the countryside. To ensure privacy, developers limited the number of roads leading in. Click here for the full story. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Bloomington , McLean , Marketing , Regulation , Illinois , Realtor