Newz: Protect Against Being Sued, DOJ Sues Rocket Mortgage, Solidifi AMC and Appraiser, Scary Places

October 25, 2024

What’s in This Newsletter (In Order, Scroll Down)

• Dealing with Unhappy Buyers as an Appraiser (LIA ad)
• Protect Against Any Grounds for Suing an Appraiser with Defensible Reports
• A Billionaire Built a Cliffside Version of Versailles. Now It’s Asking $108 Million
• DOJ Sues Rocket Mortgage, Solidifi AMC and appraiser – Bias

• Halloween: Paranormal/Haunted places where I live and How to find what is near you. You may be surprised!
• Very funny Halloween appraiser cartoon
• Ghosts Are Scary, but 95% of Americans Are More Afraid of Home Repairs (2024 Data)
• How to Avoid Unexpectedly Buying a Haunted House—Because It Could Happen to You
• 32 of the most haunted places in America
• White House Ghost Stories
• Mortgage applications decreased 6.7 percent from one week earlier
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Protect Against Any Grounds for Suing an Appraiser with Defensible Reports

Excerpts: … appraisers can be sued for several reasons, including negligence, errors and oversight, failure to notice underlying issues, or even fraud. While lawsuits against appraisers can be serious, they are rare when compared to the number of complaints to the state appraisal boards, which are much more commonplace and can also have serious consequences.

Therefore, the best defense for a real estate appraiser against a lawsuit or an appraisal board complaint is an accurate, defensible appraisal report.

Topics include:

1. Why is it important to create a highly defensible appraisal report? Mel Black: Real estate appraisers need to be prepared when the bright spotlight comes shining down on their work. They need to be prepared for issues that arise in a board complaint or civil lawsuit…

2. To ensure their report is defensible, what should real estate appraisers focus on at the beginning of an assignment? MB: There are a number of things to consider at the beginning of an assignment. As an appraiser, you want to look at assignment selection. You want to look at your competency to handle the assignment. You want to make sure you are able to define the problem and create an appropriate scope of work.

3. Once you’ve accepted the assignment, what are some things to focus on when developing the appraisal?

4. While you’re developing the appraisal, how do you find the best comparable sales information to include to ensure it’s highly defensible?

5. How can you prepare your workfile or appraisal report for a question about adjustments for the differences between the comparable and the subject property?

To read lots more about all 8 suggestions, Click Here

My comments: Information in the blog post is from Mel Black, a Certified Residential Appraiser, licensed real estate broker, and a practicing attorney who provides regular counsel on compliance matters and other industry-related law for appraisers and brokerage services, about creating defensible appraisal reports and why they are necessary in fighting legal battles or against appraisal board complaints.

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A Billionaire Built a Cliffside Version of Versailles. Now It’s Asking $108 Million

Excerpts: 10 bedrooms, 7 baths, 12,981 sq.ft., 0.8 acre lot

Perched above La Jolla Bay, billionaire Darwin Deason’s ornate mansion isn’t so much a California beach house as a cliff-side Palace of Versailles.

The Sandcastle, as it is locally known, has become a local curiosity with its carved stone columns, elaborate balconies and private elevated beach. Now coming on the market for $108 million, the roughly 13,000-square-foot home would shatter the San Diego County record if it fetches its asking price, according to listing agents Brett Dickinson and Ross Clark of Compass.

The Sandcastle’s interior evokes old-world Europe, the agents said, with mosaics, marble floors, antique statues and rooms clad in solid-gold detailing. An adjoining guesthouse was inspired by Versailles’s Le Petit Trianon, which was built for France’s Louis XV and was later presented to Marie Antoinette.

The roughly 0.8-acre compound has 10 bedrooms. In the main house, a grand living room has detailed coffered ceilings and a series of arched windows overlooking the bay. It leads to a large, wraparound terrace. A dining room, which accommodates at least 16 people, has gold-leaf detailing, antique cabinets and a lavish crystal chandelier. The guesthouse has a nautically themed bar that is reminiscent of the one on Deason’s yacht, he said: The room features hand-painted sea imagery and a pair of 18th-century mermaid statues.

The property also has a pool, a fitness center and a wood-paneled office off the primary suite. Most of the furnishings, including the rugs, drapes and furniture, were custom made for the house, the agents said.

Also on the property, Deason built a small private, elevated beach for lounge chairs. Not a fan of the coarse California sand, the billionaire spent about $40,000 to import the Georgia sand found at Augusta National Golf Club, he said.

To read more, Click Here

To see more information and 50 photos on Zillow, Click Here

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DOJ Sues Rocket Mortgage, Solidifi AMC and Appraiser - Bias

Excerpts: 

The Department of Justice (DOJ) filed a lawsuit against Rocket Mortgage, appraiser Maksym Mykhailyna, Maverick Appraisal Group, and Solidifi U.S. Inc., October 21, 2024, alleging racial discrimination in a January 2021 Colorado incident where a Black homeowner's home was undervalued based on her race.

The Justice Department's complaint states that a homeowner applied for a refinance with Rocket Mortgage in January 2021. Rocket Mortgage hired Solidifi US Inc., which chose Mykhailyna from Maverick Appraisal Group to assess the property in a predominantly white Denver neighborhood. 

The complaint alleges Mykhailyna used sales from distant, majority-Black areas, ignoring closer sales, and undervalued the property by over $200,000 compared to an appraisal less than a year earlier, despite rising home values.

After the homeowner raised concerns of discrimination, Rocket Mortgage canceled the refinance. The homeowner filed a complaint with Department of Housing and Urban Development (HUD), which found that there was probable cause of Fair Housing Act violations and referred the case to the DOJ.

To read more and links, including to the DOJ notice, Click Here

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Threatened with a Lawsuit?

By Claudia Gaglione, Esq.

In the June, 2024 issue of Appraisal Today

Excerpts: At some point in your appraisal career, someone will probably accuse you of making an error in an appraisal report. Perhaps you will receive a nasty phone call from a property owner, or an attorney may send you a threatening letter. What should you do?

OPTION #1: Ignore the call or letter

Maybe they just reached out to you to see if you would respond and if you

don't respond maybe they will go away and leave you alone. It's possible, but

unlikely, especially if whoever is complaining hired an attorney...

OPTION #2: Handle the situation on your own

Maybe you think you didn't do anything wrong, but you don't want them

going to the State Board and you're afraid that if you report the threat to your

insurance, your premium will go up…so you think you might as well just take care of it yourself.

OPTION #3: Contact your E&O insurer for advice and guidance

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Halloween: Paranormal/Haunted places in my city and How to find what is near you. You may be surprised!

In my city of 78,000, there is a very well known haunted place: USS Hornet aircraft carrier built in 1943, decommissioned in 1970 and became the USS Hornet Museum in Alameda, California, in 1998. I have been there many times for parties, including New Year’s Eve. Staying overnight is the best for paranormal/ghost activities and is very popular for all ages. There are many other locations such as a school auditorium and a bar. Also rumors of a haunted "insane asylum", demolished a long time ago.

Many years ago, one of my nearby neighbors committed suicide on his back deck with a shotgun. It was outside, and no owners ever saw or heard anything paranormal. In California, deaths must be disclosed if in the house.

I used to be skeptical about haunted/paranormal, like many appraisers.

But, an appraiser I knew for many years saw a ghost in a haunted B&B he stayed in when traveling in Montana. He is about the last person you would think who saw an apparition of a woman. The owner and other visitors had seen her also.

Check out your location. You will probably see some strange places. Use haunted, paranormal, or ghosts. For example: Alameda CA Paranormal. I found lots of information for my city including an Alameda Paranormal Researchers group!

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TO SEE A VERY FUNNY HALLOWEEN APPRAISER CARTOON, CLICK HERE

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Ghosts Are Scary, but 95% of Americans Are More Afraid of Home Repairs (2024 Data)

Excerpts: About 1 in 7 Americans (14%) believe they’ve lived in a real haunted house, according to a new study from Real Estate Witch. Of those, 1 in 9 Americans (11%) knew the home was bewitched before they moved in and still chose to live there. 

Americans who have lived with ghosts, however, are haunted by remorse. About 27% regret buying a haunted home, and 54% would not purchase another house they knew was possessed.

Although a majority of Americans say they’ve never lived in a possessed property, 74% believe it’s possible for a house to be haunted — with 37% saying they’ve even experienced unexplainable events in their home.

Some of the topics: 

• More Than 2 in 3 Homeowners Would Not Willingly Disclose a Haunted House
• Nearly 90% of Haunted House Owners Didn’t Know Their Home Was Haunted Before Moving in
• 82% of Home Buyers Would Offer Below Market Value for a Haunted Home
• About 54% of Americans would dare to buy a haunted house, but 34% of those would do so only under certain conditions.
• 95% of Americans Believe Home Repairs Are Scarier Than Ghosts

To read more, Click Here

My comments: Lots of very interesting data and graphs. The best I have seen on this topic. Worth checking out.

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How to Avoid Unexpectedly Buying a Haunted House

Excerpts: 

Know your state’s disclosure laws

The rules on what sellers have to disclose to buyers vary by state—and sometimes even by city. Sometimes you’ll receive the full picture about a house’s history, but there’s also chance you could be left in the dark.

“A haunted house falls under the category of a stigmatized property,” says Bull. A stigmatized property is a home that may be displeasing to buyers for other reasons besides its physical condition.

Research the house

Good old-fashioned research can usually turn up information on a house.

“Always Google the address before you purchase a home. You might be surprised by what pops up,” says Bull.

Look at newspaper clippings and historical records to see if any deaths happened at that house that you should be aware of.

To read more, Click Here

My comments: Also good tips if you ever have to appraise a haunted house or just curious. For appraisers haunted houses would have "stigma". The Appraisal Expert on  stigmatized property (including haunted) is is Randall Bell, Ph.D., MBA, MAI and economist. He is famous for murders, including Nicole Brown Simpson's Los Angeles condominium and the mansion where 39 Heaven's Gate members died of suicide

His text "Real Estate Damages" has three editions, published by the Appraisal Institute. They are on my bookshelf and I have read all editions. Buy his book if you are appraising a stigmatized property or want to know more. I know residential appraisers who used his book to help them appraise stigmatized properties.

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32 of the most haunted places in America

Excerpts: In the most haunted places in America, lingering spirits roam through the halls of hotels, abandoned asylums, Broadway theaters, and even a city zoo. If you want to get up close and personal with the paranormal, many of these sites offer guided tours through the spookiest of spaces—as well as overnight stays in the most haunted rooms in some of these hotels. (That's one way to capitalize on spirits stuck on our plane of existence, at least.)

• Here are a few: 
• Calcasieu Courthouse, Lake Charles, Louisiana
• Eastern State Penitentiary, Philadelphia, Pennsylvania
• Emily's Bridge, Stowe, Vermont
• House of the Seven Gables, Salem, Massachusetts
• Pittock Mansion, Portland, Oregon

To scroll down the page and read more, Click Here

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White House Ghost Stories

Source: White House Historical Association

No residence in the country has had a history quite like that of the White House. Completed in 1800, burned by the British in 1812 and summarily reconstructed, the building has witnessed numerous physical changes over the past two centuries.  

However, as one of the most famous haunted houses, it’s the human history attached to it that seems to be the most enduring.  For generations, reports of apparitions have come from those living and working in the building, including from sources such as presidents, their family members, and visiting rulers and dignitaries.

The most frequently seen and felt presence is that of President Abraham Lincoln. He has been seen sitting on his bed and tying up his shoes, lying in bed with a contemplative expression, as well as walking the halls. Abigail Adams has also been seen periodically.

As a home with a history dating back to 1800, the White House has its fair share of supernatural stories. 

1862-1863: Mary Lincoln, grieving over her son Willie's death in February, began to participate in spirit circles or at the White House and the presidential cottage at the Soldiers' Home. Spiritualism was wildly popular during the height of the Civil War as families sought comfort for the loss of loved ones.

Abraham Lincoln: Abraham Lincoln appears in the Lincoln Bedroom and Yellow Oval Room. First Lady Grace Coolidge, Prime Minister Winston Churchill, and Queen Wilhelmina of the Netherlands claimed to have seen Lincoln.

Thomas Jefferson: Thomas Jefferson plays his violin in the Yellow Oval Room.

William Henry Harrison: William Henry Harrison haunts the attic. He was the first president to die in the White House.

To read more about white house ghost stories, Click Here

To read more info about the White House, Click Here and go to the links at the top, including Halloween activities. Fascinating!

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here. 

Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. I am forecasting more appraisal business in early 2024, after the upcoming holiday season.

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here. 

Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. I am forecasting more appraisal business in early 2024, after the upcoming holiday season. Some people are waiting for lower rates, such as in the 5% range.

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Mortgage applications decreased 6.7 percent from one week earlier

WASHINGTON, D.C. (October 23, 2024) — Mortgage applications decreased 6.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 18, 2024. 

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 90 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 3 percent higher than the same week one year ago.

“Mortgage rates saw mixed results last week, but the 30-year fixed rate remained unchanged at 6.52 percent. Application activity decreased to its lowest level since July, as both purchase and refinance applications saw declines,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications continued to run stronger than last year’s pace for the fifth consecutive week. Even though rates have been on a recent upswing, they are over a full percentage point lower than a year ago, which has kept some homebuyers in the market. For-sale inventory has started to loosen, and home-price growth has eased in some markets, providing more options for buyers in combination with these lower rates.”

The refinance share of mortgage activity decreased to 45.7 percent of total applications from 46.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent of total applications.

The FHA share of total applications increased to 16.9 percent from 15.9 percent the week prior. The VA share of total applications decreased to 15.8 percent from 16.2 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) remained unchanged at 6.52 percent, with points decreasing to 0.64 from 0.65 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 6.73 percent from 6.76 percent, with points decreasing to 0.57 from 0.66 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.  

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.29 percent from 6.42 percent, with points decreasing to 0.86 from 0.95 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.98 percent from 5.94 percent, with points decreasing to 0.66 from 0.67 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 6.12 percent from 6.14 percent, with points increasing to 0.56 from 0.53 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. 

The survey covers U.S. closed-end residential mortgage applications originated through retail and consumer direct channels. The survey has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, thrifts, and credit unions. Base period and value for all indexes is March 16, 1990=100.