Waivers, huh?

[J Grant]

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.

That is the past history.

 

[andrew81]

I do not know how many appraisal request I have not received due to waivers. I do know of one cancelled appraisal due to a waiver.

I was very familiar with the property, it is located in my town and had performed prior appraisal services. I was asked to perform a secondary market appraisal for a purchase transaction. The purchase price was higher than my opinion of value. I did not inform anyone of my opinion of value and before I submitted the report was told to cancel it due to an appraisal waiver. I did not ask any questions and sent the lender an invoice for $250. Which they paid without hassle.

 

[Mejappz]

The purchase price was higher than my opinion of value.

Right, that’s the Fannie juice in action. They have inflated prices all over the Country and created a bubble. It’s just a matter of time before it pops.

 

[Alsie35]

Can someone explain to me why the article states that "40%" of recent valuations have used waivers, but the chart posted on p1 seems to show about 14%? Am I missing something here?

It appears to me, IF I am reading this correctly, that waivers are indeed a problem for fee appraisers - BUT - "only around the margins" RIGHT NOW.

Right now the appraisers' REAL problem is high interest rates that have depressed the market - in most, but *thank the Lord* NOT all areas.

 

[andrew81]

Can someone explain to me why the article states that "40%" of recent valuations have used waivers, but the chart posted on p1 seems to show about 14%? Am I missing something here?

It appears to me, IF I am reading this correctly, that waivers are indeed a problem for fee appraisers - BUT - "only around the margins" RIGHT NOW.

Right now the appraisers' REAL problem is high interest rates that have depressed the market - in most, but *thank the Lord* NOT all areas.

edit//

I was incorrect

 

[Overimprovement]

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

The same amount of power as the 3 heads of the credit bureaus. One little tweak and all of a sudden demand (via financing capability) can greatly increase or decrease. I have often pondered the mostly unrecognized power these 3 individuals have. Oh to be a fly on the wall for some of those board meetings in secret places...

 

[J Grant]

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.

I have spaned zero about risk profiles of 70-80% LTV. Since it is our livelihood and profession at stake, appraisers on a bulletin board "fretting" about appraisers going broke is appropriate.

Fannie and Freddie chose to use waivers, knowing it would have that effect on appraisers. The waiver program also is de, Part of the $ that used to go to appraisers go now to AMC's who are approved to do the onsite inspection ( data collection ) for the waivers that need an inspection. That was Fannie/Freddie's choice, too.

According to you, we are somehow not supposed to react since you gaslight it by calling it "fretting". It should at least be called out for what it is; if we are going to have our livelihood stolen, realize it was by deliberate choice, not the fault of technology - what is high tech about a mortgage lender writing the value they need to make the deal in a waiver? Nothing. What is high tech about an in house AVM to see if the mortgate' lenders' value choice fits in the range the AVM develops? Nothing.

Allowing mortgage lenders to pick the value ( or the SC price be the value ) as is done with Waivers is a value risk regardless of how much ff screams about low risk on a higher equity position property. Because again, I ask the question that you have not addressed - if these waiver loans are such a low risk, then why isn't the lender, Fannie, or Freddie? Being responsible for the valuation? Because they did shift the risk for these valuations onto the taxpayer ( the lender is responsible for the value/appraisal when they use an appraisal

Lower risk is not the same as low risk, and a Waiver shifts 100% of the risk onto the taxpayer. No wonder the lendres love them. They get to pick the value of the property (which the HVCC forbids in an appraisal ) - the mortgage lender picks the property value as long as it fits in the Fannie or Freddie AVM range -who outside the system sees the AVM? Nobody, correct?

I mean, the waiver program was genius - by eliminating the appraisal, they do not have to answer to any of the regulations safeguarding valuations that is present in an appraisal.

 

[DWiley]

Post 2 shows that in November 2023 FNMA used waivers 40.7% of the time for purchases in CTLV of 76-80%, and FHLMC 36.5%.

You are not reading the chart correctly. It shows shares, not totals. That is not 40.7% or all loans, it is 40.7% of the loans with waivers.
You can check that what I am saying is accurate by simple adding the percentages in that chart. You will find that waiver and appraisal will both add up to 100%

 

[J Grant]

Lenders face an existential problem. There are only so many people at any given time that are going to buy a property or take out a loan on a property they own due to the high expense of either. In a low interest rate cycle, more people jump in to buy or refinance. In a slow cycle it drops down in volume.

The lenders perhaps assumed that hybrids or waivers would increase their bottom line but they don't. Maybe waivers let a percentage of loans go forward, or closings happen faster, but the volume does not significantly increase. Mortgages are not consumer products like sneakers, which come out with a new design or offer half-price off to jack up the volume. There is literally nothing the lenders can do since they can not force the feds to lower rates.

In the 2006-2008 boom, lenders came out with all kinds of exotic and predatory loans to stimulate demand. They would repeat it tomorrow if they were allowed to. There has been some credit loosening and loosening of property standards to see more loans happen but it has not increased volume in any substantial way. It just is not the kind of industry that allows it, if the rules and regs are in place to prevent the higher risk - those rules are always under pressure to be pushed back or weakened. They accomplished it on the valuation end, but as we see with the sluggish volume, it has not helped much. All that efficiency and speed for nothing, for very little return -

 

[Mark K]

Anyone that thinks the % of waivers will decrease in the coming years is fooling themselves.

Waivers are being used frequently, especially the low LTV loans. Soon they'll point at the low rate of default on those and they'll start moving the goalposts and will be granting waivers on the higher LTV loans. What they won't acknowledge is the fact that low LTV borrowers have always had very low default rates; having skin in the game works wonders.

They'll grant waivers to marginally qualified borrowers for mortgages with high LTV based on AVM's. What can possibly go wrong?

Anything to keep the real estate and mortgage train on the tracks. If it derails, the US economy crashes, again.