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MINIMIZE RISKS BY IMPROVING APPRAISAL PROCESS: REPORT Appraisals may assign a home with one exact specific value, but in reality, a home's value tends to fall into a price range due to a number of different factors, according to a Home Value Forecast report released by Pro Teck Valuation Services and Collateral Analytics in mid- September. Depending reliable value for a home, the report suggested establishing a range of value and improving data to support market condition conclusions in order to better protect homeowners and investors. In unique on a neighborhood's uniformity or uniqueness, the report found a plus or minus range of 10 percent isn't unusual. For example, a home with an average value of $300,000 may fall between $270,000 and $330,000. Factors leading to the price range include inaccurate information, urgency to buy/sell, distress sales, seasonality, and thin markets. Considering the difficulty of determining one to markets with less variation, such as Toms River, New Jersey. Home Value Forecast analyzed a particular ZIP code in each city. For Toms River, ZIP code 08757 was selected for its homogeneity while, in La Jolla, the selected ZIP was 92037. Home Value Forecast found Toms River had a value range above or below 5 percent while La Jolla fell into a 10 to 15 percent plus or minus markets such as La Jolla, California, the report explained the value range actually widens compared range. To address the variances, Home Value Forecast argued for a value range in addition to an appraiser's point value. The Market Condition Addendum (form 1004MC), required by Fannie Mae and Freddie Mac on April 1, 2009, for 1-4-unit properties, is another way to improve appraisals, according to the report. The addendum brings greater transparency to conclusions appraisers make on market trends and conditions. According to the report, the form requires an analysis of inventory, trends in median sale price, list price, days on market (DOM), sale-to-list price ratio, and impact of foreclosures and REOs. "Developing the most accurate and supported market condition conclusions can be aided with analytical tools developed to assist the appraiser in analyzing a potentially large set of market data," added Tom O'Grady, CEO of Pro Teck Valuation Services. Grady explained appraisals based on incomplete data or faulty trend information can lead to a wrong conclusion, which can negatively impact a loan if an increasing market is misreported as stable or decreasing and vice versa. HOUSE PASSES FHA BILL TO PREVENT FINANCIAL DECLINE House lawmakers overcame election-year gridlock in mid-September to punt their version of a bill that would shore up the Federal Housing Administration and its embattled Mutual Mortgage Insurance Fund, which falls short of the capital required by law. The lower chamber passed the Federal Freddie-style bailout, and mortgage holders don't need any more market uncertainty driving down their home values," she added. FHA Acting Commissioner Carol Galante "We cannot afford another Fannie- and Housing Administration Fiscal Solvency Act by a sweeping vote of 402-7. If it becomes law, the bill would strengthen HUD's ability to do away with lenders that fail important lending criteria and allow the federal agency to avoid losses on defaulted loans underwritten by non-compliant lenders. The law would allow HUD to charge up to 2.05 percent in annual insurance premiums, establish an annual fee for lenders at 0.55 percent, and deepen repayment requirements for lenders that commit fraud or violate other FHA criteria. Rep. Judy Biggert (R-Illinois), who first lauded the bill in a separate statement, saying that the provisions "will allow FHA to continue its efforts to strengthen its enforcement capabilities in order to protect its insurance fund and American taxpayers." Analysts have long flagged the FHA for its annual mortgage insurance premiums by one-tenth of 1 percent for loans under $625,000, effective for lenders by April, and upped the annual premium by 0.35 percent for loans above that figure. Upfront premiums went up by 0.75 percent. KNOW THIS undercapitalized mortgage insurance fund in the wake of the financial crisis. Flattened home prices and loan defaults siphoned funds away from the agency, slashing capital on hand to 0.24 percent—far below the 2 percent capital buffer required by federal law. Joseph Gyourko, a real estate and finance introduced the bill, said in a statement that "FHA's declining financial position could cost taxpayers millions, and it threatens the stability of our housing market. 46 professor at the University of Pennsylvania, brought the issue to bear with research last fall that predicted the FHA would need some $50 billion to $100 billion in Treasury bailout funds—an unprecedented crisis for the nearly 80-year-old agency. Since then, the FHA took steps to replenish the fund. Earlier this year the agency increased Fannie Mae has raised the number of non- owner occupied properties it will finance for investors from 10 to 20.

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