BPO for PMI Removal???

[Mr Rex]

Denis, I was not including you in the Houdini set. Obviously, the offender at question has committed an institutional misdemeanor, not a felony, which is all too telling.:new_smile-l:

 

[hastalavista]

Denis, I was not including you in the Houdini set. Obviously, the offender at question has committed an institutional misdemeanor, not a felony, which is all too telling.:new_smile-l:

Oh, I know!:new_smile-l:
I can't even make it under the 2nd pass of the Limbo Bar!!!

 

[Fred]

They aren't appraisals because that's not what the client wants (as in USPAP appraisal)... The client just wants to know what the value is

That’s what an appraisal is – telling someone what the value is.

A while back, I had a private chat with another veteran forumite, wondering how did we get all the way to 5,000 posts. In thinking it over, I said perhaps I have only made five posts --- 1,000 times each. One of those five posts has to be confronting the idea that an appraisal is not an appraisal, if you just call it something else. Is the principle of substitution is just fodder for a question on a licensing exam? The market seems easily able to substitute AVM’s for BPO’s for “appraisals.” That was the exact definition of substitutes I received in economics class; that when the market selected one for a particular transaction, the demand for the other went to zero until the next consumer comes along.

I would also be interesting in hearing why it is that BPO’s are not – and here is yet another replacement term for appraisal - “USPAP appraisals?”

I suppose the development is the same as I or another appraiser would complete if it were our assignment, but I doubt it.

I take it you and the other “appraiser” do not include the person whose work you are looking at. Does that mean you would want to exceed the minimum scope necessary; perhaps doing everything necessary for a GSE mortgage purchase?

 

[Karl]

IF all appraisers would attend thier state board meetings, & pay attention to laws that affect thier profession. THEN maybe you'd see why anyone violating rules just don't care cause SOME boards & lawmakers are clueless.

 

[Terrel L. Shields]

The one's that I've seen are pretty accurate on the values, although they get to it a lot quicker and easier than I would.

Which begs the question. If a BPO is "pretty accurate" then why the $%*$ do we need to be doing an appraisal the way we are? If that can be said, then perhaps we have to question if an appraisal is 'pretty accurate' compared to a BPO....

Our reports may be better documented but I have an uncomfortable feeling that when we get into the price predicting business, BPO's give you a lot more bang for the buck. And that, in turn, makes me wonder if the tight constrainst placed upon us by fannie, USPAP, convention, etc. has left the industry struggling with the issue of melding "market value" the concept, with "market value" the definition....

 

[Couch Potato]

I'm probably begging for it, but if the loan is from an out-of-state lender and that lender accepts a BPO on their form to satisfy removal of PMI, who is North Carolina to say that's unacceptable? Who is NC going after if a Realtor simply does a BPO for what they believe is a listing or generic purpose?

If the broker truly believes the report is to gain a listing, it is perfectly acceptable under NC law for both out-of-state and in-state lenders to use such a report provided by a homeowner. If the report comes from the broker directly to the lender, I don't see how the case for listing purpose to the report could possibly be made. Unlike Florida, North Carolina law is very specific in it prohibition of such reports.

I had someone inquire of me whether to get a BPO or appraisal for PMI removal. The bank was going to charge them $350 for an appraisal or $150 for a BPO. As much as I would like the $350, being an honest sort, I told him to get the BPO. Just like the logic used with multiple lower priced listings in an appraisal, why would someone pay more when a cheaper substitute that has the same utility is available?

 

[JSmith43]

Future definition of an appraisal: A BPO that costs 3x as much and just doesn't cut to the chase.

 

[Offshore]

PMI removal is an insurance decision, not a mortgage one.

 

[TC]

I had my PMI removed via a BPO 6 years ago. Lender was from Florida, charged me 200 bucks, the agent got 100.

TC

 

[hastalavista]

That’s what an appraisal is – telling someone what the value is.

Steven-

While I cannot (and would not) argue with your quote above, as I see it, on this forum, when discussing valuations done by appraisers vs. something-other-than-an-appraiser, the distinction made between the two is usually "USPAP compliance".

I would also be interesting in hearing why it is that BPO’s are not – and here is yet another replacement term for appraisal - “USPAP appraisals?”

That's a fair question; there are two reasons that I can see:
A. On the report I received, there is no SOW.
B. On the report I received, there is no signed certification.

I take it you and the other “appraiser” do not include the person whose work you are looking at. Does that mean you would want to exceed the minimum scope necessary; perhaps doing everything necessary for a GSE mortgage purchase?

No. I prefer to do only what is necessary- which is the minimum. Now, what I consider the minimum and you consider the minimum might differ, but I think we are ok if our minimums meet the client's minimum and our peer's minimum.:Eyecrazy: :new_smile-l:

Which begs the question. If a BPO is "pretty accurate" then why the $%*$ do we need to be doing an appraisal the way we are? If that can be said, then perhaps we have to question if an appraisal is 'pretty accurate' compared to a BPO....

Our reports may be better documented but I have an uncomfortable feeling that when we get into the price predicting business, BPO's give you a lot more bang for the buck. And that, in turn, makes me wonder if the tight constrainst placed upon us by fannie, USPAP, convention, etc. has left the industry struggling with the issue of melding "market value" the concept, with "market value" the definition....

(my bold)

Terrel, I've asked myself this question numerous times, and I've concluded that "we shouldn't have to". I spoke to a forumite yesterday who expressed the same frustration: Why are we trying to fit everything into a "1004" package?
I've said that I think our profession is beginning to develop into two categories: Form-fillers- Which I will call the Technician since "form-filler" sounds derogatory, and I don't mean it to be- & Analysts. Each serve an important purpose and provide a valuable service.
The Technician's role is to provide a basic valuation product when the risk or complications are minimal. The Technician makes her profit on volume.
The Analyst is needed for those assignments that exceed what a Technician can provide.
Both products are quality and meet the expectations of the client and and are sufficient for the purpose/intended use of the valuation.

Now, as to the time consuming methodology of the appraisal in residential mortgage appraising- specifically the Sales Comparison Approach, I throw in this additional thought for the day:
I've read where Steven and others have talked about a "ranking" system; no adjustments, just match/put 10-15 sales listing them from best to worst, and place the subject in this list where it seems to fit best.
I had the opportunity to meet with Alexander Gilbert, a forumite and very experienced on the lender side of residential mortgage lending, at one of the NorCal get togethers. Alexander told me of a study that BofA did a number of years ago. To summarize:
They compared a large sample of appraisals done by different appraisers on the same property at the same time. What they found was this: While the final value opinion was more or less consistent (among the sampling) and accurate (when tested against a sale price/the market), there was little rhyme or reason on how the appraisers arrived at the value. One may make a large location adjustment, another a "quality" adjustment, a third's GLA adjustment would be twice that of another, etc., etc.
Their conclusion was that the adjustment methodology was so inconsistent that it had little useful meaning. But, the appraisers were consistent on the valuation and the final result was credible and useful/meaningful for the lending decision. Next, a test was conducted where the appraisers would value a subject while making no adjustments but by "ranking" the subject in comparison to the comparables. The result? The valuations were as good as the typical "1004" with a lot less hassle and time wasted for many types of properties. I can't say for a fact, but my guess is the more complicated the property, the less reliable the ranking system would be (unless one needs a different type of value conclusion; say range vs. point).

Finally, I had an opportunity to test this myself: I was requested to provide a short-sale valuation analysis for a client on very short notice. I have a good working relationship with this client and they trust me to provide them with a credible result; they are not concerned about "form" but "substance".
Anyway, because of the time restraints and this particular market, I did not complete a SCA on a grid. I used a ranking system showing where I would place the subject among the sold comparables and then where I would place the subject among the current listings and pendings. No adjustments, just ranking. I concluded a value and submitted the report. My valuation was within 3% of the BPO used that had adjustments. For this specific assignment, adjustments were a waste of time because of the type of market and the type of house (tract development).

So, Steven, to answer your question about scope, yes, I can do what the BPO does, as good as what it does (so I think), and competitively with what it does, if I am allowed to develope the property SOW to follow (which, apparently, the BPO does not have to do!).