1004mc argument with reviewer

[residentialguy]

This is where our argument is, exactly. I keep telling this review that my competitive neighborhood is the same as my neighborhood and is still within my boundaries therefore should be on the 1004mc and the reviewer keeps stating that a competitive neighborhood should NOT be on the 1004mc. He keeps stating that the neighborhood area is the tract or subdivision and that's what should be included in the 1004mc.

Oooppsie....here's where the reviewer got-cha. Competitive neighborhoods are not the same and should NOT be included. If you had stuck to your guns and said that "this is the one and only neighborhood", you'd been fine. At this point, I now agree with the reviewer.

Since you've already indicated that the other neighborhoods are competitive, I would do as the reviewer asks and not include the competitive neighborhoods. This means you will also have to revise your boundaries as well.

 

[hastalavista]

Oooppsie....

:laugh:

I missed that in the follow-up post; although I cautioned the OP in post #6

The significant question is this: You may have to go 4-miles out to get comparables for your appraisal, but is that really where a buyer is going to purchase his/her substitute home for the subject?
It is possible that your 1004MC will have zero data; and, because there are no sales in the neighborhood/competitive market. You have to go to a competing market and get the sales. But you should never expand your 1004MC just to populate the data. The fact that the 1004MC has little (or no) data is the strongest argument one can make for (a) going as far away as necessary to find something similar, or (b) going back more than 12-months within the competitive market to find something similar.

 

[Van Gogh]

Q17. Are the trends that are reported on the Market Conditions Addendum to the Appraisal Report (Form 1004MC) the same trends that are to be reported in the One-Unit Housing Trends section of the appraisal report (Form 1004)?

Yes. The conclusions regarding trends that are obtained from the Form 1004MC must be the same trends reported in the Neighborhood trends section of the Form 1004. The information reported on both forms must be consistent to provide the lender with a clear and accurate understanding of the market trends and conditions present in the subject neighborhood, based on properties that are considered competitive with the subject being appraised.

Maybe I missed something in that September posting. I thought that the original neighborhood trends (page 1) reflected the overall neighborhood and not just comparable sales used in the report(it makes more sense that the report shows a macro to micro approach). Page 2 was the comparable properties and the comparable listings which made up the 1004mc. Based on this question and answer then the neighborhood on page 1 and page 2 are the same and both are reflected on the 1004mc. I have been instructed for many years that the 1004mc was only page 2, by AI, Maryland Instructors, Lenders and Reviewers. Man this thing sucks never use it anyways. 90% of the time the information has too little data to provide a meaningful analysis. How is it after 7 years or so this form is so misunderstood by those who use it. :new_Eyecrazy:

 

[residentialguy]

Maybe I missed something in that September posting. I thought that the original neighborhood trends (page 1) reflected the overall neighborhood and not just comparable sales used in the report(it makes more sense that the report shows a macro to micro approach). Page 2 was the comparable properties and the comparable listings which made up the 1004mc. Based on this question and answer then the neighborhood on page 1 and page 2 are the same and both are reflected on the 1004mc. I have been instructed for many years that the 1004mc was only page 2, by AI, Maryland Instructors, Lenders and Reviewers. Man this thing sucks never use it anyways. 90% of the time the information has too little data to provide a meaningful analysis. How is it after 7 years or so this form is so misunderstood by those who use it. :new_Eyecrazy:

You didn't miss anything. FNMA is trying to back peddle over their poorly written 1004MC debacle. The lastest from the behind doors discussions is that the grid on the 1004MC is strictly for comparable within the subject's true neighborhood. As everyone knows, rarely would you have enough comparable sales reliably indicate a market trend. So now, that additional analysis of broader data that page one would indicate should match the over trends on the 1004MC...but not the grid that's connected to it, giving the misleading impression that the trends are the results of comparable grid. Typical fashion of Fannie. We really need to pressure Fannie on this, not just accept it as Ok.

Make it VERY BOLD AND CLEAR that the overall trends reflected on the 1004MC are from the 1-unit housing indicators of page one and not of the comparable sales grid on the MC form. At this point, I'm putting that warning on the 1004MC and then all other comments to the extended comments pages where I show the analyses that supported page one & overall trends.

 

[Amy Perkins]

Here is my big problem with this. I live in an area of expensive luxury homes. At the hilt of each prime area, there tends to be a very expensive mansion. While there are larger markets with many of these homes all grouped together and a smaller version along the way, there tends to be just a handful. In order to capture this market layer of extraordinary, we have to use perhaps one or two custom homes in the normal areas and then also in the high-end areas. However, if you want to communicate that the greater area has a large market of these custom homes, you have to sort out the small stuff that has nothing to do with this market. If there are only 30 homes in the subdivision with ocean views on a knoll and they are in this class you have to expand the area, like any buyer would and search for your dream home. Here is the problem, since none have sold in the past year, you have no comparable sales. So what does this mean, we are off the hook for the 1004MC? No, the only reason they are doing this is to automate the appraisal review process. THERE IS NO WAY TO GIVE OUT MARKET DATA FOR ODD BALL PROPERTIES THAT REQUIRE YOU TO EXPAND THE SEARCH AREA IN THE FIRST PLACE. Here all the normal stuff is 700k- 1 million. Once you get into the expensive construction it can be 10 million for a 10,000 square foot mansion. So now I might have a $3,000,000 dollar property among a bunch of 700K-5 Million or whatever sells in that mix. It's not over built as we have plenty over that, but it does not describe the market and the fact that the property has some buffering from the less expensive ones. I am so sick of getting boxed in, because I just want to do my job with the freedom to give my opinion. The purpose of giving my opinion is so that I don't get influenced, but now they want to influence how I communicate my results. This could lead to misleading assignment results. For these properties I include two 1004MCs so that they can see what the market is doing. I guess I will have to enter the misleading numbers for the demographics and then deny everything in them as being important value factors in the addendum. I hope they read the darn report!

 

[residentialguy]

Here is my big problem with this. I live in an area of expensive luxury homes. At the hilt of each prime area, there tends to be a very expensive mansion. While there are larger markets with many of these homes all grouped together and a smaller version along the way, there tends to be just a handful. In order to capture this market layer of extraordinary, we have to use perhaps one or two custom homes in the normal areas and then also in the high-end areas. However, if you want to communicate that the greater area has a large market of these custom homes, you have to sort out the small stuff that has nothing to do with this market. If there are only 30 homes in the subdivision with ocean views on a knoll and they are in this class you have to expand the area, like any buyer would and search for your dream home. Here is the problem, since none have sold in the past year, you have no comparable sales. So what does this mean, we are off the hook for the 1004MC? No, the only reason they are doing this is to automate the appraisal review process. THERE IS NO WAY TO GIVE OUT MARKET DATA FOR ODD BALL PROPERTIES THAT REQUIRE YOU TO EXPAND THE SEARCH AREA IN THE FIRST PLACE. Here all the normal stuff is 700k- 1 million. Once you get into the expensive construction it can be 10 million for a 10,000 square foot mansion. So now I might have a $3,000,000 dollar property among a bunch of 700K-5 Million or whatever sells in that mix. It's not over built as we have plenty over that, but it does not describe the market and the fact that the property has some buffering from the less expensive ones. I am so sick of getting boxed in, because I just want to do my job with the freedom to give my opinion. The purpose of giving my opinion is so that I don't get influenced, but now they want to influence how I communicate my results. This could lead to misleading assignment results. For these properties I include two 1004MCs so that they can see what the market is doing. I guess I will have to enter the misleading numbers for the demographics and then deny everything in them as being important value factors in the addendum. I hope they read the darn report!

You always have to include at least 2 1004MC type analyses. You never have enough data with comparable sales in small area. A dozen sales is not nearly enough data to show market trends. The variances in sale prices are most likely physical variances in the properties themselves. I agree with you Amy... "I am so sick of getting boxed in, because I just want to do my job with the freedom to give my opinion. "...and show it in a way that's not misleading to anyone reading the report.

 

[Eli]

Make it VERY BOLD AND CLEAR that the overall trends reflected on the 1004MC are from the 1-unit housing indicators of page one and not of the comparable sales grid on the MC form.

Hey snarky, this statement is not real clear imho. :icon_lol:

 

[Dale Smalley]

Sounds like you have been cherry picking your mc data too much.

 

[Brisco58]

This debate is absolutely hilarious. Dozens of appraiser's can't agree on how to appropriately complete a form that was designed in order to provide for the reporting of consistent market trend data. If the data within the market conditions form was intended to mirror the data contained within the top of page two of the URAR concerning the number of sales and active listings then perhaps the same language should have been utilized on both forms. The market conditions addendum clearly indicates the number of active listings within the previous 90 days while the top of page two of the URAR requires all properties currently offered for sale with no mention of 90 days or use of the adjective active.

The only thing I can say for these Fannie forms is that they are consistently inconsistent.

 

[Mr Rex]

This debate is absolutely hilarious. Dozens of appraiser's can't agree on how to appropriately complete a form that was designed in order to provide for the reporting of consistent market trend data. If the data within the market conditions form was intended to mirror the data contained within the top of page two of the URAR concerning the number of sales and active listings then perhaps the same language should have been utilized on both forms. The market conditions addendum clearly indicates the number of active listings within the previous 90 days while the top of page two of the URAR requires all properties currently offered for sale with no mention of 90 days or use of the adjective active.

The only thing I can say for these Fannie forms is that they are consistently inconsistent.

You do realize that the MC prior 90 days listing is the number of listings on the last day of that period, No?

In Form 1004MC, in order to provide the most accurate depiction of the “Months of Housing
Supply” as of the effective date of the appraisal, the “Total # of Comparable Active Listings”
should be based on a specific point in time. For example, when completing the “Current – 3
Months” column for “Total # of Comparable Active Listings,” the number should reflect the
listings on the most recent date in the 3-month period (which is also the effective date of the
appraisal), and not the cumulative number of listings for the entire 3-month time period. Then,
when completing the “Months of Housing Supply,” the number for the “Total # of Comparable
Active Listings” is divided by the absorption rate, which provides an accurate depiction of the
existing housing stock as of the effective date of the appraisal. (Using a cumulative number of
listings during the “Current – 3 Month” time period may result in an artificially high number for
the “Months of Housing Supply.”)