Gynell Stalford - Texas Cert. Appraiser *****FHA & FLAGSTAR APPROVED*****

The following are excerpts from the Mortgagee Letter 2009-09

SUBJECT: Adoption of Market Conditions Addendum (Fannie Mae Form 1004MC/Freddie Mac Form 71) and Appraisal Reporting Requirements for Properties located in Declining Markets

A declining market is considered to be any neighborhood, market area, or region that demonstrates a decline in prices or deterioration in other market conditions as evidenced by an oversupply of existing inventory or extended marketing times. A declining trend in the market will be identified by the conclusions of the 1004MC form. The appraiser must provide a summary comment and provide support for all conclusions relating to the trend of the current market.

Appraisal Reporting Requirements in Declining Markets

Appraisals of properties located in declining markets must include at least two comparable sales that closed within 90 days prior to the effective date of the appraisal.

In some markets compliance with this requirement may be difficult or not possible due to the lack of market data and, in these cases, a detailed explanation is required. The appraiser is expected to include at least two sales that are as similar as possible to the subject and which settled within 90 days of the effective date of the appraisal in order to show recent market activity.

In order to ensure that FHA receives an accurate and thorough appraisal analysis, the inclusion of comparable listings and/or pending sales is required in appraisals of properties that are located in declining markets. Specifically, the appraiser must:

• Include a minimum of two active listings or pending sales on the appraisal grid of the applicable appraisal reporting form in comparable 4-6 position or higher (in addition to the three settled sales).

• Insure that active listings and pending sales are market tested and have reasonable market exposure to avoid the use of over priced properties as comparables. Reasonable market exposure is reflected by typical marketing times for the neighborhood. The comparable listings should be truly comparable and the appraiser should bracket the listings using both dwelling size and sales price whenever possible.

• Adjust active listings to reflect list to sale price ratios for the market.

• Adjust pending sales to reflect the contract purchase price whenever possible or adjust pending sales to reflect list to sale price ratios.
• Include the original list price, any revised list prices, and total days on the market (DOM). Provide an explanation for DOM that do not approximate time frames reported in the Neighborhood section of the appraisal reporting form or that do not coincide with the DOM noted in the Market Conditions Addendum.

• Reconcile the adjusted values of active listings or pending sales with the adjusted values of the settled sales provided. If the adjusted values of the settled comparables are higher than the adjusted values of the active listings or pending sales, the appraiser must determine if a market condition adjustment is appropriate. The final value conclusion should not be based solely on the comparable listing or pending sales data.

• Include an absorption rate analysis, which is critical to developing and supporting market trend conclusions, as mandated by the Market Conditions Addendum. For example, assuming 36 sales during a six month period, the absorption rate is 6 sales per month (36/6).

GARLAND TEXAS HOME SALES STATISTICS

August 2006 - August 2007

Total Number of Sales - 2,953

Average Number of Days on the Market - 68

Average Sales Price $127,743

August 2007 - August 2008

Total Number of Sales - 2,433

Average Number of Days on the Market - 74

Average Sales Price - $118,742

August 2008 - August 2009

Total Number of Sales - 2,193

Average Number of Days on the Market - 73

Average Sales Price - $118,631

Sales in Plano, Texas has dropped approximately 25% from two years ago. The average sales price of a home in Garland today is $118,631. This is a 8% drop in sales price from two years ago.

This data represents the overall Garland market and may vary significantly between neighborhoods.

Data presented by Metroplex Appraisal Services 2009

PLANO TEXAS HOME SALES STATISTICS

August 2006 - August 2007

Total Number of Sales - 4,210

Average Number of Days on the Market - 52

Average Sales Price $256,789

August 2007 - August 2008

Total Number of Sales - 3,665

Average Number of Days on the Market - 61

Average Sales Price - $262,098

August 2008 - August 2009

Total Number of Sales - 3,137

Average Number of Days on the Market - 65

Average Sales Price - $253,987

Sales in Plano, Texas has dropped approximately 25% from two years ago. The average sales price of a home in Plano today is $253,987. This is a marginal 1% drop in sales price from two years ago.

This data represents the overall Plano market and may vary significantly between neighborhoods.

Data presented by Metroplex Appraisal Services 2009. Real Estate Appraisal Services for Collin County Texas

FRISCO TEXAS HOME SALES STATISTICS

August 2006 - August 2007

Total Number of Sales - 2843

Average Number of Days on the Market - 72

Average Sales Price - $298,093

August 2007 - August 2008

Total Number of Sales - 2767

Average Number of Days on the Market - 92

Average Sales Price - $303,792

August 2008 - August 2009

Total Number of Sales - 2340

Average Number of Days on the Market - 84

Average Sales Price - $291,510

Sales in this market have dropped approximately 16% from one year ago, 18% from two years ago. The average sales price of a home in Frisco today is $291,510. This is a marginal 4% drop in sales price from a year ago and less than a 3% drop in the average sales price from two years ago. Based on the above data, comparing the last three years, Frisco's real estate market is currently holding steady.

Dallas made the Forbes top 10 list of most affordable places to live in based on affordable housing, cost of living and employment. Houston, San Antonio and Austin were also included in the top 10.

Overall the Dallas market is considerably healthy in comparison to most other areas in the country. Dallas County reported a 8% drop in home prices with a 23% drop in home sales volume from one year ago. Collin County reported a 25% drop in sales volume and a 5% drop in home prices from the previous year. Tarrant County reported a 6% increase in price with a 10% increase in activity from one year ago. There is a 6.2 month supply of homes on the market which is fairly reasonable. Texas unemployment rate rose to 7.5% in June which is 2% below the national unemployment rate of 9.5%

Ofcourse, this is the overall view. There are pockets that vary from severely depressed to showing significant gains. It is best to consult a local real estate professional for an accurate assesment of a property.