Give me a break

[DWiley]

That 's all good, the lender/investor can call their use : "risk management"

But ( as you know ) it states on the appraisal : Purpose: an Opinion of market value ( as defined ) of the subject property ( as of x effective date )

It does not state on the appraisal : Purpose: "provide an opinion of risk management"

It also says that the intended use is for the lender to evaluate the property for a mortgage transaction. That is risk management. .

 

[DWiley]

I am merely pointing out that the cost of an appraisal is a bargain. If it was important to have an appraisal in 1993, then why isn't it important in 2021. It certainly cannot be a issue of the comparative costs. The present mortgage holder is borrowing money so cheap it is unbelievable for those of us who borrowed money for 40 years or so at rates far higher than what people now complain about being "too high". 5% is too high? I never had a mortgage that cheap. It almost makes me wish I had a mortgage...err, no it doesn't. But I am saying the cost of the appraisal is a nothing burger yet everyone seems to want to cut the price down to the price of a credit check.

OK. But the GSE have no dog in that hunt. As I have said before, the goal is to use the best tool for the job. Frankly, we use AVMs on those properties where the data shows that the AVM does a better job than the appraiser. You (and others too, to be fair) seem to be starting with the unsupported assumption that the appraisal is always the better tool. The data simply does not support that premise

Surely that should not come as a surprise to anyone who has read threads here over the years complaining about appraisal quality. Again, can’t have the cake and eat it too. Can’t yell “always need an appraisal” while at the same time complaining about there being so many “skippies”. Better enforcement might help that, but enforcement is the primary job of the regulators, not the GSEs.

Peace out. Gotta get back to the advanced stats course I am taking so I can understand Bert’s posts. (And before anyone jumps on that, it is a small attempt at humor). I actually have to go clear the snow and ice.

 

[Mike Ault]

Peace out. Gotta get back to the advanced stats course I am taking so I can understand Bert’s posts. (And before anyone jumps on that, it is a small attempt at humor). I actually have to go clear the snow and ice.

Thanks for allowing yourself to be subjected to that today! Your perspective is much appreciated on this board!

 

[J Grant]

It also says that the intended use is for the lender to evaluate the property for a mortgage transaction. That is risk management. .

It says intended use is for the lender to evaluate the property for "a mortgage transaction." ( single mortgage transaction)

Which is different than a broad, multi faceted "risk management", esp for performance of a loan over a period of years !

Still, How a lender or client ends up using an appraisal is beyond the appraisers control. What is in the appraiser's control is fulfilling the stated purpose ( opinion of MV ), and MV opinion and other information about the property serves to allow an informed decision on the front end...and that serves to substantiate the collateral - because it is the collateral that enables the favorable to borrower interest rates and loan terms.

without collateral and viable ways to support what that collateral consists of and its worth, it would be a signature loan, compare the rates and short term balloon payments and limited loan amounts...

 

[KindKing]

In my area I've met up with the other appraisers multiple times to discuss the market. It's a small rural area so there's only a handful of us. All of them are over 50, I'm the only one below that age.
They all classify pretty much everything in 'good condition' as C3, unless it needs obvious repairs (trashed carpet, obvious damage, end of life roof, etc.)

Based on the video, and my own understanding of the Cs & Qs, they're overclassifying a lot of C4s as C3s. The issue is that I got a letter or email every week telling me that my ratings are significantly different than my peers and I need to reconsider everything. I could only explain in so many reports that I don't have access to my peers reports to compare to, but that I'm using best practices.

At this point I'm relying on the 'best practices of peers in the area' and am going with what all the well established appraisers have been doing, because it's caused me a lot of problems to be following my own interpretation.

As much argument as we have on the Cs and Qs, it's obvious that there is no right answer because nothing fits within the perfect definition. You just have to be consistent with your ratings within the market and follow the best practices of your peers.

 

[DWiley]

It says intended use is for the lender to evaluate the property for "a mortgage transaction." ( single mortgage transaction)

Which is different than a broad, multi faceted "risk management", esp for performance of a loan over a period of years !

Still, How a lender or client ends up using an appraisal is beyond the appraisers control. What is in the appraiser's control is fulfilling the stated purpose ( opinion of MV ), and MV opinion and other information about the property serves to allow an informed decision on the front end...and that serves to substantiate the collateral - because it is the collateral that enables the favorable to borrower interest rates and loan terms.

without collateral and viable ways to support what that collateral consists of and its worth, it would be a signature loan, compare the rates and short term balloon payments and limited loan amounts...

You do understand that a “mortgage transaction” means more than just closing a loan, right? All the risk tools employed, be they for collateral, credit or capacity are used to evaluate the potential performance of the loan for the life of the loan. Surely as an experienced appraiser you cannot honestly believe that all the information collected is just to insure a valid closing - that is just silly. I just don’t understand how an appraiser with your experience wants to debate whether or not appraisal reports for lenders are risk management tools.

 

[Joe Flacco]

AVMs have a lot of problems but there are situations where it is probably fine. The parties involved like lenders and investors just need to be aware that the 60% LTV loan they are making is potentially 80% LTV loan based on an error in the AVM value.

 

[Mejappz]

Who has said that? I sincerely hope that you are not attributing that position to me. For our test and learns we have training requirements, and getting the training to an acceptable level has proven to be a meaningful hurdle

Joan has finally seen the light. She's getting red-pilled.

“Now Fannie and Freddie have decided that they don’t care if Uber drivers are entering your home and inspecting it,” Trice cautioned. “How do they know that person is not a convicted felon if there’s absolutely no due diligence on this group?”

Federal regulators want to overhaul home appraisals --- here's how that could hurt both buyers and sellers

A federal financial regulator has sought input on how to modify the appraisal process for loans backed by Fannie Mae and Freddie Mac.

www.marketwatch.com

 

[DWiley]

Joan has finally seen the light. She's getting red-pilled.

“Now Fannie and Freddie have decided that they don’t care if Uber drivers are entering your home and inspecting it,” Trice cautioned. “How do they know that person is not a convicted felon if there’s absolutely no due diligence on this group?”

Federal regulators want to overhaul home appraisals --- here's how that could hurt both buyers and sellers

A federal financial regulator has sought input on how to modify the appraisal process for loans backed by Fannie Mae and Freddie Mac.

www.marketwatch.com

Repeating a falsehood does not make it true.

 

[Mejappz]

Repeating a falsehood does not make it true.

Are you calling Joan a liar?