Give me a break

[J Grant]

When we compare, we only compare within the same credit box. in every case, loans with waivers performed better than loans with the same risk profile (LTV, FICO, etc) the AVM does better. That is because, as I said before, we only use the AVM when we know it does better

How can an AVM "do better", when in a waiver, either the loan officer estimate of value or the purchase price is the value ? The AVM provides a range then, correct ? You have all the insider details and we just know pieces of it regarding waivers.

How can the profiles of property and borrower credit be the same in comparison, since there must be a reason that some of them qualify for a waiver while others rejected for waiver and get an appraisal?

In any event, tying in appraisal to the performance of a loan is an unfair measure of an appraisal, since neither loan performance or borrower credit worthiness is the subject of the appraisal. If users set out to use an appraisal for a purpose appraiser did not have as assignment, it is unfair for them to then turn around and disparage an appraisal for a function it was not designed for.

Also, how can the agencies track the performance of waivers over such a short period of time, they have only been in mainstream use for origination appraisals/purchases since 2016-2017? It is often years out till a default may happen - also, rising prices covers flaws in evaluations - they all look good/perform well as long as prices are rising - when prices stagnate or decline, not so much..

 

[DWiley]

Loan performance is irrelevant to the valuation process unless you are of the opinion that people will default because they got inflated valuation numbers.

Really!?! If that is the case, then why evaluate the collateral at all ? LOL. Loan performance is certainly tied to LTV, and guess where the V comes from

 

[J Grant]

Please read what I said again. I am not comparing waivers to appraisals on “shakier deals”. The comparison is between loans with the same credit characteristics. And no one is claiming causation. But loan performance is the ultimate measure of risk analysis

And how much better do the loans "perform"? A sliver of a percent ?
Also, how can the loans have the same credit worthiness if some qualify for waivers and others need an appraisal ? There must be some differential in the property then or down payment - other wise, why do some get the waiver and some the appraisal ?

Even if loan performance is ultimate measure of risk analysis, an appraisal (or valuation) takes place on the front end of the loan and concerns itself with the property.

 

[DWiley]

How can an AVM "do better", when in a waiver, either the loan officer estimate of value or the purchase price is the value ? The AVM provides a range then, correct ? You have all the insider details and we just know pieces of it regarding waivers.

How can the profiles of property and borrower credit be the same in comparison, since there must be a reason that some of them qualify for a waiver while others rejected for waiver and get an appraisal?


Also, how can the agencies track the performance of waivers over such a short period of time, they have only been in mainstream use for origination appraisals/purchases since 2016-2017? It is often years out till a default may happen - also, rising prices covers flaws in evaluations - they all look good/perform well as long as prices are rising - when prices stagnate or decline, not so much..

The waiver option is just that - an option. Some who are offered a waiver do not accept that option, even their their risk profile (credit score, LTV, etc) are the same as others who do accept the waiver option. Those are the two groups that we compare.

Waivers have existed much longer than that. We have data on Waivers back before the big crash.

 

[J Grant]

Really!?! If that is the case, then why evaluate the collateral at all ? LOL. Loan performance is certainly tied to LTV, and guess where the V comes from

The V for value is the appraisal or evaluation of the PROPERTY. And yes it matters how credible or accurate it is.

However, to link the risk analysis /loan performance tied to the LTV is an unfair way to measure the actual valuation ..

Example : House A and B are identical properties, and sell at the same day to two different borrowers. Each property is valued at 150k. On property A) borrower puts 5% down. On property B) borrower puts 30% down. Probable odds is the deal with 30% down will perform better. So how is that better performance of 30% LTV property A attributed to the valuation, or that the property B with 5% down might perform worse attributable to it's valuation? Each property was valued at 150k,

(I am aware that an over valuation can increase a risk of loan default, but that is not topic of discussion and over , or under valuation can occur in all kinds of valuation )

 

[DTB]

Really!?! If that is the case, then why evaluate the collateral at all ? LOL. Loan performance is certainly tied to LTV, and guess where the V comes from

Why evaluate the collateral at all you ask. To determine your risk at the onset of course.

The V is good for the effective date. Unless you have 1st payment defaults, that V is far different from when the default occurs and even more different by time you get the property back.

That's why using V for anything other than risk management at the onset is foolish.

 

[J Grant]

The waiver option is just that - an option. Some who are offered a waiver do not accept that option, even their their risk profile (credit score, LTV, etc) are the same as others who do accept the waiver option. Those are the two groups that we compare.

Waivers have existed much longer than that. We have data on Waivers back before the big crash.

I said waivers in mainstream use to replace origination/purchase appraisals - idk what other uses waivers had pre crash. But we have experienced that the post HVCC climate for appraisers is only marginally improved and while it eliminated direct mtg broker order/loan officer order (which I agree with ) the solution became so flawed and so corrupted it replaced one set of problems with a new set of problems .

 

[DTB]

Loan performance is certainly tied to LTV, and guess where the V comes from

Of course it is if we are comparing 98% LTV to 40% LTV loans. I doubt that you have data proving your point up and down the LTV scale of 70-90% that waivers or whatever non human thing you are using is superior. Particularly because that data base is full of data supplied by the fallible human appraisers.

 

[Artemis Fowl]

The V for value is the appraisal or evaluation of the PROPERTY. And yes it matters how credible or accurate it is.

However, to link the risk analysis /loan performance tied to the LTV is an unfair way to measure the actual valuation ..

Example : House A and B are identical properties, and sell at the same day to two different borrowers. Each property is valued at 150k. On property A) borrower puts 5% down. On property B) borrower puts 30% down. Probable odds is the deal with 30% down will perform better. So how is that better performance of 30% LTV property A attributed to the valuation, or that the property B with 5% down might perform worse attributable to it's valuation? Each property was valued at 150k,

(I am aware that an over valuation can increase a risk of loan default, but that is not topic of discussion and over , or under valuation can occur in all kinds of valuation )

As I read it: LTV...they are using the analyses to determine which valuation product ("V") carries an acceptable level of credibility given the "L" component.

 

[DTB]

Some who are offered a waiver do not accept that option

Why?

I suspect, don't know, that the offer of a waiver was tied to a lower estimate of property value. Owner then takes a chance that the human appraiser will come up with a "better" number.

Why else would a property owner wish to be "inconvenienced and delayed" by have a traditional appraisal completed? And likely at a higher cost to them.

I must be missing something in this process and really wish to understand it better.