Freddie Mac vs Appraiser Bias

[George Hatch]

So, 1989. Yeah I was typing them then for those folks that were instrumental in making sure how hard it was for me to get into the profession. Tried to get a Transitional License, they would not attest to my assistance (i pulled comps, sketched, everything but the fun inspection stuff, when i did finally get admitted as a trainee (at another company), I had to do the full 2 years, 1500 hours to go by myself. Meanwhile, some of the same folks that just had to make 75 on a much easier test are now pulling the ladder up behind them once again with their Fatcat positions of power.

I think you need to take a little more ownership of your situation and stop blaming everyone else for your difficulties.

You didn't need a license to complete and submit appraisals to lenders prior to 1991. You didn't even need to have taken any coursework or work under anyone's supervision. You just needed to know how to do the work well enough to put 3 samples together and start applying to lenders to get on their panel. Then you could market your work to the MBs. It was *easier* to get on approval panels while working for fee shops but I knew several appraisers who took the Appraisal 101 courses and immediately set out on their own. I doubt these lenders ever even made phone calls to verify references, they mostly just looked at the work to see if you could do it. After that they'd keep an eye on your work until they figured out they could trust you.

As far as I know, the ONLY time anyone ever checked up on my qualifications or my references prior to licensing was when I went to work on staff with the commercial bank, and it was one of their own employees (an administrative asst) who was referring me based on what she knew of my work from another shop. None of the fee shops I worked for checked up on my coursework or contacted the first appraiser I worked for. They all knew each other, though; so maybe they swapped phone calls.

If you were working in a fee shop then you had plenty of access to appraisal reports that were being submitted to and accepted by the lenders. There's your template. Work samples didn't have to be "live" assignments, either. Not for the lenders.

As I recall, appraisers didn't need experience OR education to get a transitional license back then; in my state they just needed to pass the test. Which not everyone could. That was the whole point of transitional licensing - to allow incumbents to continue working solo while they completed their QE and / or accumulated the documented experience hours. I knew lots of appraisers who had one but not the other at the outset of licensing and I knew even more appraisers who got their stuff together in the years prior to licensing coming online. If you didn't even have your 2 whole weeks of QE or pass the test by the time licensing came online then that's your own fault. You literally had years of advance notice to get yourself together.

Most appraisers I know had to struggle to get in, just like you. Just like me and I'm sure just like everyone else on this forum who wasn't born into an appraiser-family. We're all where we are in this business based on what we were willing and able of taking - and holding - for ourselves. That includes you.

 

[Tiffany Gibbons]

Some people learn by asking questions. But since you know it all. Talking about arrogant.


So when was the legislation approved and put into law. I doubt it was in 1989. You should really quit trying to play the victim. It is not becoming

Yes, I dare to be arrogant enough to know the trajectory of my own life. I didn't mean the law was passed then, but the experience I was asking them to consider was in 1988-1990, prior to my application in 1991. I don't care what you think is "becoming" either. Ick.

 

[George Hatch]

And BTW, before you start in on the muh-privilege thing I worked for other people for 7 years - worth every hour of it, too - before I went out on my own so I really have no sympathy for your timeline. And neither should anyone else.

 

[Dublin ohio]

Yes, I dare to be arrogant enough to know the trajectory of my own life. I didn't mean the law was passed then, but the experience I was asking them to consider was in 1988-1990, prior to my application in 1991. I don't care what you think is "becoming" either. Ick.

Don't mistake me for someone who cares what you think. If you enjoy playing the victim. That is fine with me. I won't begrudge you anything that makes you feel warm and fuzzy. But I have to say that someone playing the victim. When they got their CR a couple of years after licensing was enacted. In what they describe as a sexist all old white male dominated profession that was he ll bent on holding you down at all costs. Is at least a little disingenuous

 

[RCA]

Danny Wiley, senior director, property valuation for Freddie Mac, brought up the use of inspection technology to help eliminate bias.

“The data tells us we actually get more accurate condition ratings with a third party inspection,” said Wiley. “I don’t think people see that as potentially something to help with the bias but the data clearly shows that that is a contributor to improving our results and getting less bias in those condition ratings.”

“We came to the conclusion that the percentage of undervaluation in each one of those markets didn’t vary according to the race or the demographics of that area,” said Hogan. “Now, obviously, that would make sense because AVM doesn’t know the race, it’s pretty much blind to those things.”

https://www.nationalmortgagenews.com/news/fhfa-to-make-fannie-freddie-appraisal-data-public



I’d really like Danny to reveal the data he referenced revealing real life examples of appraiser bias versus non-bias with a third party. I’m a little confused with DW these days.

Well, I do believe that you probably do get better condition ratings from pure inspectors in some respects. But detailed condition ratings can be worse than worthless - they can be misleading. Remember, that for the sales approach, you are comparing the subject to comparables. And you are really concerned with market reaction to condition and quality when it comes to estimating market value.

[ Now aside from estimating market value, the GSEs may prefer all the most detailed condition information they can get their hands on. .... but that kind of information can very well interfere in making good comparisons to comparables that have mostly nothing more than MLS photos and a streetside view of the exterior.]

One of the major problems with traditional appraisals is the treatment of specific features out of the context of the entire constellation of features. Buyers do not just give some certain value to every feature. They deal with tradeoffs between individual features and combinations of features. Any appraiser who runs around giving specific values to features in a consistent manner is probably going to be way off in his valuations. It is all relative to the neighborhood, market area, and market conditions and can only be derived through good statistics (averaging across many sales, etc.).

Where does the 3rd party inspector come into this? Well, take my advice, if the GSEs want such detailed condition information, they should create a separate report and get it directly from such inspectors, with a copy to the appraiser.

To reiterate, Condition/Quality needs to be relative to the market area. It should be based on the percentage of recent sales better or worse than the subject. There is no absolute standard that works across all market areas. And in fact, you should have the same person, team or software algorithm ranking the subject and the comps. I have it worked down to as near perfection as possible. No it is not exact, but it is good enough to get an estimated, in most cases, 98% accuracy on market value.

But, - I have to yawn -- because this sort of thing will continue for years.

Right now, IMO, the drivers are company owners interested in short-term profits by providing 3rd party inspection services for appraisals.

On the other hand, arguing in the opposite direction, perhaps the GSEs consider 3rd party inspections, despite their imperfections, better than many of the inspection reports of appraisals they see coming in. Mostly they really don't understand the appraisal process that well.

Back in the other direction, you can argue that an unlicensed inspector who has nothing to lose by stretching the truth is not as reliable as a licensed inspector (i.e. appraiser) who can get into a lot of trouble by doing the same.

But, ...., what is a 3rd party inspection exactly? They could be worthless or they could be quite detailed. And if they are quite detailed, they are out of synch with the SCA.

 

[Dale Floyd]

There was certainly more business than the available (or willing) appraisers could get out quickly in 20-21. Business hadn’t been that overwhelming in prior years. (That is shown in the very graph provided earlier.) Title opinions and closing agencies were also backed up in our areas during those times. The appraisal certainly was a delay in mortgages, but closings were still pushed off 2 months later or more everywhere after the appraisal was done. That wasn’t because the appraiser was slow.

That was specifically caused by a noticeable increase in demand that was unprecedented in Tennessee. Houses being constructed were delayed too, if you will recall. Every part of our economy was stressed during those months. It happens - Economics 101.

That wasn’t the case before, nor is it now. Today, appraisers aren’t needed as much because of opposite reasons.

I think the GSEs just want to point at things for reasons to change everything. It’s nearly a two year old argument at this point, but it keeps coming up. I don’t see where DW is talking much about any other part of his graph, other than those COVID months and I don’t blame him for that because it’s moot today and doesn’t give much support for the cause. Now they are using the bias argument as their need to change us. Soon it will be something else.

Politics is ugly, and it is unfortunately being used against us by some who once stood with us.

 

[DWiley]

Where does the 3rd party inspector come into this? Well, take my advice, if the GSEs want such detailed condition information, they should create a separate report and get it directly from such inspectors, with a copy to the appraiser.

That is exactly what the GSEs have been testing.

 

[djd09]

Guess we'll find out again soon with "waivers". Market value always goes up, amIright?

i wonder how many waivers east cleveland received

 

[CommonSense]

So we are perceived to be Bias. Which in IMO is Ridiculous. Why can't the 3rd party inspector be bias? Why can't there thinking be Bias? Just saying

 

[jay trotta]

So we are perceived to be Bias. Which in IMO is Ridiculous. Why can't the 3rd party inspector be bias? Why can't there thinking be Bias? Just saying

The question is, are their Photo's a True representation of the Subject? Were they Photoshopped? Was the subject property Stagged?

Why is, not "driving the neighborhood" today less important than it has been for the last 50 years??