Waivers, huh?

[J Grant]

I find myself quoting my tagline

"Nobody wants an appraisal, they just want to know what the value is." (Steven Santora, ca. 2009)

Nobody wants an appraisal, but the collateral soundness and condition need other things besides the value. Tax payer backed and all that. Or f *8 teh gax payer, only the little people pay taxes ( Leona Helmse;y_)

 

[CGinMN]

Are those LTV charts based on the stated asset value provided by the borrowers?

Yes but the stated value also needs to be less than the enterprise’s AVM

 

[George Hatch]

Nobody wants an appraisal, but the collateral soundness and condition need other things besides the value. Tax payer backed and all that. Or f *8 teh gax payer, only the little people pay taxes ( Leona Helmse;y_)

You're expending a lot of bandwidth about the risk profiles and economic volatility of 70% and 80% LTVs. That is, when your not fretting about appraisers going broke.

 

[CGinMN]

A lot of what appraisers do is provide information about the subject to help the lender determine collateral eligibility, so is lost with waivers. Lenders don’t care because they get reps and warrant relief on eligibility, but that is for sure a GSE/investor risk that isn’t mitigated by waivers.

 

[George Hatch]

Sure, more risk when compared to the "always" for using the 1004s.

The operative question for a user is "how much more risk"? Enough to offset the borrowers 20% equity position plus some? Sufficient in the percentages of occurrence to lead to an obviously avoidable net loss for the portfolio? I have no idea what numbers it would take to get to that negative position for them but my guess is that their previous experience with appraisals has informed their opinion as to how common these collateral eligibility problems are. And after all, they are still ordering a lot of appraisals in the 0-80% LTVs, so it was never all of them to begin with.

 

[Mike Ault]

Sure, more risk when compared to the "always" for using the 1004s.

Imagine how much power three guys getting together in a GSE boardroom and tinkering with the collateral valuation model has over the US economy?

 

[George Hatch]

Imagine how much power three guys getting together in a GSE boardroom and tinkering with the collateral valuation model has over the US economy?

Good point. This might justify outside audits of their process by their regulators.

Maybe sic Michael Miller and Phil Crawford on them to keep them in line and then give Jeremy Baggott the comic book graphic novel rights. We can let Crawford wear the mask and Miller wear the cape. Depending on which looks better in the spandex tights. Joan Trice can take the Edna Mode part.

 

[CGinMN]

The GSE are regulated by FHFA and they compete against each other. If all the sudden one of them were to change their model to allow more appraisal waivers, I’m guessing it would get picked up right away. I think the risk is if FHFA and the politicians seek to increase waiver usage beyond what is safe and sound.

 

[George Hatch]

FHFA will do what the politicians tell them to do.

 

[CGinMN]

Ergo politicians are ultimately in control of waivers. Good enough reason to kill the program if you ask me.