Freddie Mac vs Appraiser Bias

[NC Appraising]

"More examples" would help appraisers tremendously. Not just for the UAD issues, either. I've thought for many years that the GSEs should publish and post complete "demonstration reports" of what they consider to be the preferred level of SR1 development and SR2 report content for their usage. Literally, a GSE boilerplate that appraisers could copy/use/edit as appropriate for their assignments. Get everyone on the same page, so to speak.

I have always wondered why the GSEs wrote the guidelines so "grey"?

By accident or to increase there chance in winning the buy back against the lender?

 

[TerryRohrer]

I have always wondered why the GSEs wrote the guidelines so "grey"?

By accident or to increase there chance in winning the buy back against the lender?

Given that they have had several opportunities to tweak and improve and clarify the selling guide since 1968, I'm leaning away from the "By accident" notion!

 

[NC Appraising]

The AMC only orders what their Lender Clients ask them to order. The model is to get away from Licensed appraisers because there not Under USPAP. In the future Loan Production Appraisers will simply be data collectors and form fillers. More like a general contractor his laborers do the hands on dirty work.

Who are the powers to be that are pushing this? AMCs, lenders or the GSE's?

Did the GSEs come up with this and then contact lenders and AMCs?

Or

Did the lenders and AMCs come up with this and bought it to the GSEs? Clear capital is pushing these....

Facts:
1. AMCs will make more money and a few large AMCs will dominate the market.
2. Lenders want faster appraisals to trap the borrower. Faster appraisals is the lenders main concern.

The GSEs want market share and will adapt to make lenders happy.

So is it about quality and bias....or making money faster?

 

[George Hatch]

It's common for a Q4 structure to be upgraded with a Q3 kitchen/bath interior buildout.

 

[Sadie]

It seems to me that somehow an Inspector is not biased? Yet, Appraisers are biased(at least some) How is that possible?

FTR I have immense Respect for DW. He is often the voice of reason at this forum.

I do recall DW posing the Question: What if the Inspector was Highly Trained? That's a very legitimate question. I know in the military aviation we have very highly trained Aircraft Mechanics. It works well. BUT we also have Highly Trained Tech Inspectors. The Tech Inspectors signed off on the Aircraft Mechanic's work. When I was assigned to Bell Textron as a Test Pilot First, I also could sign off on mechanics work , but rarely did that. I relied on the TI signature. Reason I was limited is because I inspected that aircraft AFTER it was assembled. So I could only see so much. I trusted the TI's because they were involved all along the process.

So if Home Inspector/data collectors are on salary, I can see that as being very good data. If they are paid per Inspection , I can see that as prone to errors or omissions.

What if the inspector was an appraiser? Doesn't that negate the argument?

 

[Sadie]

After our conversation, there are literally thousands of appraisals being audited every month revealing appraiser inspections with inaccurate condition rating conclusions versus thousands of appraisals with third party inspectors that result in correct condition ratings.

He can be a little too general in his responses these days, but I think the ratings are still coming from the appraisers - but - they tend to do a better job in rating a dwelling's condition when somebody else provides the inspection information rather than doing the inspection personally.

Again - That's my take. DW may correct me.

This whole thing makes no sense. If the appraiser is the one assigning the condition rating, how is it that appraisers get it wrong? Is there more to condition than a check the box? And who decides if its right or wrong?

 

[glenn walker]

Who are the powers to be that are pushing this? AMCs, lenders or the GSE's?

Did the GSEs come up with this and then contact lenders and AMCs?

Or

Did the lenders and AMCs come up with this and bought it to the GSEs? Clear capital is pushing these....

Facts:
1. AMCs will make more money and a few large AMCs will dominate the market.
2. Lenders want faster appraisals to trap the borrower. Faster appraisals is the lenders main concern.

The GSEs want market share and will adapt to make lenders happy.

So is it about quality and bias....or making money faster?

Ultimately its all about speed and the velocity in which you can Re-Loan your money. Our average escrow 35 years ago was 45 days-30 days was real fast . Prior to Covid-19 we had funding down to as short as 15 days on clean loan packages. The ultimate goal is to get funding's down to 10 days or less. The only thing slowing down funding is physical appraisals, almost all of the other loan processes are now available to be like making loans on new cars. In my Opinion The Money Center Banks are driving the process not the GSE'S
and in order to get down to the target of 7 Day Closings-The Appraiser is the last thing acting as a road block.

 

[Sadie]

correct. So how is it possible that DW says appraisers make more "accurate" ratings when a third party inspects?
What percent out of the total does he believe this is true of ?

What is the basis for the certainty since he did not inspect the property, how can he know the appraiser was more "accurate" when someone else inspects?

If per his example an appraiser is either that incompetent or trying to push value to cite a 100 year old not updated in 40 years house as a C 3 , why would that change with the infor coming from a third party?


If it is not the egregious cases, but rather the grey area borderline judgement call, perhaps the in person feedback differs from the photos. I've had photos make properties look better and photos that made the property look worse,, wrt not fully able to transmit the actual condition and quality found at the site.

Could it be that for certain appraisers the fact that someone else saw the property and knows its condition the C rating is more accurate? Or could it be an education issue? More to the point, how was the condition of the subject viewed in relationship to the comparables? The ability to suss out superior, inferior or similar to comparables is just as, if not more important.

 

[Sadie]

2128 Talbert Ct, Charlotte, NC 28214 | Zillow

2128 Talbert Ct, Charlotte NC, is a Townhouse home that contains 1556 sq ft and was built in 2020.It contains 3 bedrooms and 2.5 bathrooms.This home last sold for $307,500 in June 2022. The Zestimate for this Townhouse is $297,900, which has increased by $3,300 in the last 30 days.The Rent...

www.zillow.com

Tract built townhome. Vinyl siding. Limited amount of upgrades.

Q5 Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. These dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades.


Screams starter tract home all day long?

Q5 and Q4 are a pretty fine line. From what I have read, a newer home because of the energy features, a Q 4 would be more appropriate
From FNMA:
What is a Q5 home?
Q4/Q5 or Average Quality Rating
The Q4 or Average Quality is the majority of homes you'll find. Then you go down to a Q5, which is some of the older homes that were built in the 1940's, 1950's, 1960's. They're basically just square or rectangular homes that are definitely livable but they're not upgraded really at all.

 

[Sadie]

I would somewhat agree with you if you said Q5 and Q4.

Q5 Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. These dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades.

Again, screams Q5 all day long. Where are you getting your rating from?? I know, your personal opinion. That is the purpose of the UAD...to cut out opinions and to stick to the facts....Uniform.

LOL
Q3 Dwellings with this quality rating are residences of higher quality built from individual or readily available designer plans in above-standard residential tract developments or on an individual property owner’s site. The design includes significant exterior ornamentation and interiors that are well finished. The workmanship exceeds acceptable standards and many materials and finishes throughout the dwelling have been upgraded from “stock” standards

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