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  #1  
Old 03-09-2009, 10:32 PM
George Hatch's Avatar
George Hatch George Hatch is offline
 
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Default Brief Q&A on the 1004mc with Fannie

From an email I got today from Ross Acheson:

Quote:
We have asked Mr. Robert Murphy, who is in charge of the new 1004MC for FNMA, for some answers. Here they are:

1. How much data is enough for creating statistics?

That will vary with each assignment. You can expand your search area to include more data if that data is representative of your subject’s area. Otherwise either state that there is not enough data or use what you have.

----------------------

2. Should we use CDOM (Cumulative DOM) or DOM? And for listing price…should it be the original or current price?

Be consistent. Use DOM with current listing price or CDOM with original list price. Note: We believe that DOM with current listing price is preferable.
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3. When will the FNMA webinar be available on your web-site?

Probably by 3/16/2009

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4. Why is the List/Price ratio upside down?

We are correcting that in a new version that will be available on our web-site by 3/10/2009.

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5. What if there is range pricing (eg. $400,000 - $450,000)?

Use the lower end of the range.
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  #2  
Old 03-09-2009, 10:50 PM
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timd354 timd354 is offline
 
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Default

Quote:
Originally Posted by George Hatch View Post
From an email I got today from Ross Acheson:
We have asked Mr. Robert Murphy, who is in charge of the new 1004MC for FNMA, for some answers. Here they are:

1. How much data is enough for creating statistics?

That will vary with each assignment. You can expand your search area to include more data if that data is representative of your subject’s area. Otherwise either state that there is not enough data or use what you have.
I guess the appraiser should use what he has even if too small to be statistically significant since we all know that the underwriters are not going to accept a statement that there is not enough data to use. Thank you Fannie for the nice non-answer that is of absolutely no help to anyone.
----------------------

2. Should we use CDOM (Cumulative DOM) or DOM? And for listing price…should it be the original or current price?

Be consistent. Use DOM with current listing price or CDOM with original list price. Note: We believe that DOM with current listing price is preferable.
It is a shame that many MLS systems make it virtually impossible to track DOM based on the current listing price. Additionally, in some markets, many of the real estate brokers change the listing price to equal the contract price once a contract is ratified, which would make the DOM for many of these properties zero using Fannie's expressed preference...of course, like many other things, Fannie did not think things completely through before they made this statement.
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3. When will the FNMA webinar be available on your web-site?

Probably by 3/16/2009
If the webinar is of the same quality as the 1004MC form, it will be of no help to anyone.
-----------------------

4. Why is the List/Price ratio upside down?

We are correcting that in a new version that will be available on our web-site by 3/10/2009.
Nice job proof reading the form before you initially released it.
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5. What if there is range pricing (eg. $400,000 - $450,000)?

Use the lower end of the range.
On what basis should the appraiser pick the lower end of the range? Why is this any better than picking the middle or the upper end of the range? Would not a hard rule requiring the appraiser to always pick the low end of the range (no matter the circumstances) lead to misleading analysis?
Once again, Fannie demonstrates total cluelessness.

It is apparently much easier to draft and require the use of a form that is useless in most cases and will be misleading in many cases than to require lenders to use competent appraisers who write good reports which contain a properly done market analysis.
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Last edited by timd354 : 03-10-2009 at 02:59 AM.
  #3  
Old 03-10-2009, 01:30 AM
Jon Putnam Jon Putnam is offline
 
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Thumbs up That's better!

The blue-type clears things up a lot.
  #4  
Old 03-10-2009, 10:06 AM
Randolph Kinney Randolph Kinney is offline
 
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Default

Quote:
2. Should we use CDOM (Cumulative DOM) or DOM? And for listing price…should it be the original or current price?

Be consistent. Use DOM with current listing price or CDOM with original list price. Note: We believe that DOM with current listing price is preferable.
I don't remember, which does your spreadsheet use, CDOM / Orig LP or DOM / Current LP?
  #5  
Old 03-10-2009, 10:32 AM
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Terrel L. Shields Terrel L. Shields is online now
 
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Quote:
we all know that the underwriters are not going to accept a statement that there is not enough data to use
Too true...true blue or not
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  #6  
Old 03-10-2009, 10:35 AM
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George Hatch George Hatch is offline
 
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I set my worksheet up with DOM / Most recent LP; actually, the low side of the LP, so as to avoid problems with range listings.

I know that causes problems with respect to REO listings that are set low to encourage multiple bids, but I figure appraisers are smart enough to note it in their reports if that market segment has those types of sales.
  #7  
Old 03-10-2009, 10:36 AM
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George Hatch George Hatch is offline
 
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As for whether an underwriter accepts a "too few comparables" argument I suppose that depends on how well an appraiser describes their appraisal problem on Pg1.
  #8  
Old 03-10-2009, 10:55 AM
Randolph Kinney Randolph Kinney is offline
 
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Quote:
Originally Posted by George Hatch View Post
As for whether an underwriter accepts a "too few comparables" argument I suppose that depends on how well an appraiser describes their appraisal problem on Pg1.
Too few comparables also suggests that there may not be a market for the subject or the SCA is not valid because of market inactivity.
  #9  
Old 03-10-2009, 11:01 AM
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George Hatch George Hatch is offline
 
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Too few comparables for a statistical analysis to be meaningful is a little different than too few comparables for an appraiser to develop an opinion of MV.
  #10  
Old 03-10-2009, 11:27 AM
Randolph Kinney Randolph Kinney is offline
 
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Quote:
Originally Posted by George Hatch View Post
Too few comparables for a statistical analysis to be meaningful is a little different than too few comparables for an appraiser to develop an opinion of MV.
My bold.

That would depend on the confidence interval you define as meaningful.

AVMs are programmed to compute a value based upon a data set and time interval. How meaningful is that?
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