FHA WANTS YOUR INPUT, AI ON AI RETURNS, AND NEW MARKET SIGNALS TO WATCH

The following information was released by the Appraisal Institute:

In this issue:

FHA is seeking appraiser input on Minimum Property Requirements, an important opportunity to help shape future policy.

AI on AI: Season 2 launches this summer with practical strategies for using artificial intelligence in appraisal work.

New research shows CRE loan extensions are rising as lenders tighten terms, increasing demand for updated collateral analysis.

Trending Topics Thursdays returns with a free webinar on reserve studies and what appraisers need to know about HOA and condo associations.

Insights

CRE Loan Extensions Surge as Banks Tighten Terms, Fed Study Finds

Federal Reserve economist David Glancy's paper "Pretend or Amend? On Evergreening in CRE" examines whether banks have been responsibly restructuring commercial real estate (CRE) loans or simply delaying recognition of losses through "extend-and-pretend" practices. Using supervisory data from large U.S. banks covering 20162025, the paper analyzes how lenders handled maturing CRE loans during the recent period of higher interest rates, declining office values, and banking-sector stress.

The paper is especially relevant to appraisers because loan extensions, workouts, and restructurings almost always require updated collateral analysis, whether through full appraisals, evaluations, market studies, or portfolio surveillance.

A key finding is that extensions became extremely common during the 20232025 stress period, with banks extending roughly half of maturing CRE loans. However, the study concludes that this behavior was not primarily "extend-and-pretend." Instead, banks generally tightened underwriting standards for extensions rather than easing them.

According to the paper, lenders increasingly required principal paydowns, higher loan spreads, additional recourse or guarantees, and stronger cash-flow performance before granting extensions. These tighter requirements were especially pronounced for riskier loans, including office properties, nonrecourse loans, and loans with weak debt yields.

The research finds that low-income or highly stressed properties were actually less likely to receive extensions after 2022, contrary to the idea that banks were broadly hiding losses. Extended loans also performed relatively well after restructuring, with payoff rates generally comparable to or better than other maturing CRE loans once broader market stress was considered.

For appraisers, the paper highlights the growing importance of valuation work tied to:

loan extensions and workouts,

debt-yield and NOI analysis,

office property risk assessment,

lease rollover and cash-flow forecasting,

portfolio monitoring,

and ongoing collateral surveillance.

The paper also suggests that demand may increasingly shift toward updates and monitoring assignments rather than traditional transaction-driven appraisals alone.

Overall, the study portrays today's CRE market less as a sudden foreclosure crisis and more as a prolonged restructuring cycle requiring continuous collateral reassessment and risk analysis.

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AI Blog

The cost approach is often treated as a requirement to complete rather than an analytical tool to master. But for many complex assignments, it can be one of the most defensible paths to a credible value conclusion.

A new AI blog explores why site valuation and the cost approach remain essential skills for general appraisers, and how the General Appraiser Site Valuation and Cost Approach course helps build stronger analysis, depreciation support, and reconciliation skills.

The next session begins June 15. Read the blog andregister today.

Read the Blog

Trending Topics Thursdays:

Sign up for our next free webinar

Reserve Studies for HOA and Condominium Associations - What Appraisers Need to Know

June 18, 2026 at 11:00 AM CDT

Reserve studies are increasingly shaping how community associations plan, fund, and disclose long-term capital needs, and this has real implications for valuation, risk, and marketability. In this one-hour, appraiser-focused webinar, a reserve-study practitioner and an HOA general manager (end user) discuss how reserve studies are developed and used, what boards and managers look for when hiring reserve professionals, and practical ways appraisers can interpret and evaluate reserve-related information when working on condo and HOA-governed properties. The program also highlights emerging legislative requirements affecting association reserves and introduces how appraisers can leverage core cost approach competencies to expand into reserve-study work.

Key takeaways include:

Reserve study fundamentals: scope, major components, and common terminology

How associations use reserve studies for budgeting, capital planning, and communicating funding needs

What an HOA/condo manager looks for when procuring reserve-study services and reviewing deliverables

Legislative and regulatory trends influencing reserve requirements and disclosures

Opportunity for appraisers: how reserve studies align with, and can leverage, core cost approach competencies, plus practical career pathway insights for adding reserve studies to your service offerings

Panelists:

Bernie Guthrie, General Manager, CMCA, AMS, LSM, PCAM, Lake of the Woods Association, Inc

Jon (Jay) Dawson, SRA, AI-RRS, RS, Edge Realty Advisors

Register Now

Advocacy Updates

FHA Seeks Appraiser Input on Minimum Property Requirements

The Federal Housing Administration (FHA) has issued a Request for Information (RFI) seeking public input on its Single-Family Minimum Property Requirements (MPRs), the property condition standards FHA appraisers use to evaluate a property's safety, security, soundness, and marketability. FHA is asking stakeholders to identify requirements that may be outdated, overly burdensome, difficult to apply consistently, or in need of modernization to better reflect today's housing stock and market conditions. The request follows FHA's recent efforts to streamline appraisal-related requirements and signals the agency's continued interest in reviewing long-standing property eligibility standards.

For appraisers, the RFI presents an opportunity to help shape future FHA policy. Because FHA appraisals require appraisers to assess both market value and compliance with MPRs, practitioners have firsthand experience with requirements that may benefit from clarification, modernization, or more consistent application. While the FHA is not proposing specific changes at this stage, feedback received through the RFI could ultimately influence appraisal workflows, property condition assessments, repair requirements, and other aspects of FHA appraisal practice. The Appraisal Institute is reviewing the RFI and evaluating its potential impact on appraisers and the FHA lending process.

GSE Purchase-Loan Waiver Use Expanded in March 2026

Purchase-loan appraisal waiver activity bears watching as the government-sponsored enterprises (GSEs) continue to expand collateral risk modernization efforts. New American Enterprise Institute (AEI) Housing Center data show that, after Fannie Mae broadened waiver eligibility in Q1 2025 to certain purchase loans with combined loan-to-value ratios of 80% to 90%, the share of those loans receiving waivers rose to about 9% by March 2026, up from 2% a year earlier.

Overall appraisal waiver use across the GSEs also increased in March. The combined share of loans using waivers reached 28%, with Freddie Mac rising to 32% and Fannie Mae to 25%.

AEI attributes the broader increase mainly to higher waiver use within existing loan categories and a modest shift toward refinance transactions, where waivers remain more common. No-cash-out refinances still show the highest concentration, with waiver use reaching about 52% at Freddie Mac and 48% at Fannie Mae in March.

Property data collection and hybrid-style programs remain a relatively small share of the market. In March 2026, Freddie Mac's ACE+PDR represented about 2% to 2.4% of originations, while Fannie Mae's Value Acceptance + Property Data ranged from about 2.7% to 6.3%, depending on loan purpose.

AEI also says waivers remain concentrated in lower-risk lending segments and that default rates on waiver loans generally stay below those requiring traditional appraisals, suggesting the GSEs continue to apply layered credit and collateral risk controls.

The Appraisal Institute continues to monitor the expansion of appraisal waivers, hybrid valuation products, and property data collection programs as policymakers and federal agencies assess appraisal modernization under the Administration's recent Executive Order on Promoting Access to Mortgage Credit.

Member Moves and Media

Calvaneso Launches The Valuation Strategist Newsletter

Joseph R. Calvaneso, MAI, recently launched The Valuation Strategist, a new newsletter offering insights on valuation trends, market dynamics, and strategic issues affecting real estate professionals and property owners.

Dominy Elected Mayor of Spring Valley Village

David R. Dominy, MAI, was recently elected Mayor of Spring Valley Village, Texas, after previously serving on the city council. He will begin a two-year term leading the Harris County community.

Real Estate Horizons

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Your Community

Applications Open for The Appraisal Foundation's Boards

Members interested in helping shape the future of the appraisal profession are encouraged to apply for service on The Appraisal Foundation's Appraiser Qualifications Board (AQB) and Appraisal Standards Board (ASB). This year, there are up to three seats available on the AQB and up to four seats on the ASB, with applications due July 24. Serving on one of these boards is an opportunity to contribute your expertise, bring fresh perspectives, and help guide the standards and qualifications that shape the profession.