Data Cancer found....

[Zoe]

Everybody with all the lobbyist money knows it. Ask Danny. Freddie sent him to witness before CFPB. There were some big lobbyist players on that hearing panel and witnesses. They all know Chopra spoke last at every hearing. Big players with FDIC, etc. Some were sweating on the witness stand.

GSEs were like we are working on it Sir Chopra. I don't know what CFPB will do. I have emailed Chopra a few times.

 

[CGinMN]

Hmm... not sure about the wisdom of focusing upon "racism" as an answer to everything. The poor, by definition, are always at a disadvantage.

Whether you like it or not this is what the fair housing act did. I understand if you don’t like the politics of it. But this is their game, so it behooves appraisers to play by their rules. Appraisers can take their bludgeon and beat them with it, or they can just continue taking the beating.

 

[Zoe]

Whether you like it or not this is what the fair housing act did. I understand if you don’t like the politics of it. But this is their game, so it behooves appraisers to play by their rules. Appraisers can take their bludgeon and beat them with it, or they can just continue taking the beating.

And Chopra with CFPB is the best one to go after if appraisers want change. He literally has power over all the major players when it comes to consumer finances. Think of how many big players there are. CFPB has power over all of them.

 

[Zoe]

I can only imagine how many emails CFPB gets a day to look at. They like the money on fines. They put me on their direct email list. I guess they read my emails.

 

[J Grant]

Ye

I think the data cancer does warrant study, on a large scale, not anecdotally. But I hate to break it to anyone that thinks the GSE policies aren't already responsible for exerting significant influence on market prices throughout the country. GSEs provide so much liquidity to the housing market that if they went away tomorrow interest rates would increase and prices would collapse due to reduced demand. LLPAs, loan limits, cost and access to credit, underwriting guidelines, affordability products, lending stability and liquidity during downturns (such as Covid), the 30 year mortgage (see Canada)…. All of this stuff impacts housing demand, and so what if any impact appraisal waivers have on housing prices is a drop in the bucket compared to these other factors. This is not an endorsement of the above, but it is the reality.

It's a false comparison.

I have long made the case that shutting the GSE's would be a disaster. Home values would plunge sharply because interest rates would go up and stay up and low down payments gone etc, if lenders had to keep their own paper.

But that is not the issue. The issue is we do have the GSEs, and this dramatic shift to letting a loan officer or contract price determine value on a large scale has never been done before. (with the AVM must Isay it every time? ) Imo it is influencing prices upward. That is not healthy for markets. The GSEs are supposed to serve the public trust, not just lender profit.

 

[CGinMN]

It is ok to opine which policies you think are acceptable and which are not. But if your only qualm is that it’s somehow creating a self reinforcing feedback loop that is positively impacting prices, then that criticism can be applied to all GSE and government housing policies, which are inflationary.

 

[TerryRohrer]

The only reason the GSEs remain in conservatorship is to increase social engineering and grifting opportunities for politicians. Steve Forbes' proposal 16 years ago remains a viable, and necessary, way forward that would not heavily impact existing housing markets and would avoid a likely collapse that now threatens to occur sooner, rather than later.

"Treasury Secretary Hank Paulson should finally do to these two corrupt, mismanaged monsters (Fonie and Fraudie) what he should have done months ago and unveil a plan to break them up into 12 new companies. They should be recapitalized, which will require an initial outlay of $300-plus billion. Current shareholders should be able to exchange their existing paper for shares in these new companies."

What Next?

Says drastic measures are needed to end the credit crisis.

www.forbes.com

 

[George Hatch]

I think the data cancer question is like the solar question. You want to be mindful of the possibility but if your comps aren't clearly showing a difference in pricing between the haves and have-nots then there might not be a difference in pricing. Arbitrarily blowing the possibility off isn't an acceptable solution and neither is arbitrarily applying an adjustment off the list. It's an opinion to be developed, not an assumption to be making.

My guess is that a waiver-induced spiff might show up in some datasets but not in others. The situation kind of reminds me of the foreclosure thingy - they don't always have an impact on the rest of the data but if you get a handful of real lowballs they can leave a mark. And if they add up to 30% of the market along with a different price they can create their own pricing tier and eventually run the market.

The other assumption about these that seems to be popular is that they run high. Again, the arbitrary assumption that will turn out to be untrue at least some of the time. They can run low, too. So that's another situation where it's an opinion to be developed specific to this assignment, not an assumption to make on the arbitrary basis.

 

[J Grant]

I think the data cancer question is like the solar question. You want to be mindful of the possibility but if your comps aren't clearly showing a difference in pricing between the haves and have-nots then there might not be a difference in pricing. Arbitrarily blowing the possibility off isn't an acceptable solution and neither is arbitrarily applying an adjustment off the list. It's an opinion to be developed, not an assumption to be making.

My guess is that a waiver-induced spiff might show up in some datasets but not in others. The situation kind of reminds me of the foreclosure thingy - they don't always have an impact on the rest of the data but if you get a handful of real lowballs they can leave a mark. And if they add up to 30% of the market along with a different price they can create their own pricing tier and eventually run the market.

The other assumption about these that seems to be popular is that they run high. Again, the arbitrary assumption that will turn out to be untrue at least some of the time. They can run low, too. So that's another situation where it's an opinion to be developed specific to this assignment, not an assumption to make on the arbitrary basis.

I don't believe that any of us assert that Waivers will always run high.

However, a segment of them will, and unlike an appraisal, there is no report that can be forensically reviewed later to ferret out what went bad.

And since the WAIVER status is not revealed out front and is easily accessible for data comparisons, such as the way FHA, cash, etc, are disclosed, it is very difficult to make the comparisons. That means for anybody who wants to study the data, not just appraisers. As for appraisers, having to make multiple calls and emails to brokers just to find out if a WAIVER was used on any one of ten sales is not practical. Brokers and agents have little incentive to return these calls in a timely manner and they may not know if a waiver was granted since, again, there is no disclosure.


I suppose they want it that way. A waiver, after all, is part of conventional lending ( reported as conventional on MLS). I assume the loans granted with WAIVERs are mixed in with the other loans an investment buys, the way perhaps C and D paper was mixed with B and C paper in what they used to call toxic loans,

A segment of high /inflated sale prices influences the market because all that is needed is one high sale price every few months to form a high range of value in the next AVM or appraisal. And while an appraisal can set a poorly supported high value too, at least there is an appraisers name next t it and the lender had to do a buyback if the collateral value was flowed - that is not the case in a WAIVER where the bailout is 100% on the tax payer.

The other difference is once Fannie or freddie greenlights it from their AVM, the Waiver ALWAYS is the sale contract price - unlike an appraisal, which can come in ":low" sometimes.

 

[Zoe]

I don't believe that any of us assert that Waivers will always run high.

However, a segment of them will, and unlike an appraisal, there is no report that can be forensically reviewed later to ferret out what went bad.

And since the WAIVER status is not revealed out front and is easily accessible for data comparisons, such as the way FHA, cash, etc, are disclosed, it is very difficult to make the comparisons. That means for anybody who wants to study the data, not just appraisers. As for appraisers, having to make multiple calls and emails to brokers just to find out if a WAIVER was used on any one of ten sales is not practical. Brokers and agents have little incentive to return these calls in a timely manner and they may not know if a waiver was granted since, again, there is no disclosure.


I suppose they want it that way. A waiver, after all, is part of conventional lending ( reported as conventional on MLS). I assume the loans granted with WAIVERs are mixed in with the other loans an investment buys, the way perhaps C and D paper was mixed with B and C paper in what they used to call toxic loans,

A segment of high /inflated sale prices influences the market because all that is needed is one high sale price every few months to form a high range of value in the next AVM or appraisal. And while an appraisal can set a poorly supported high value too, at least there is an appraisers name next t it and the lender had to do a buyback if the collateral value was flowed - that is not the case in a WAIVER where the bailout is 100% on the tax payer.

The other difference is once Fannie or freddie greenlights it from their AVM, the Waiver ALWAYS is the sale contract price - unlike an appraisal, which can come in ":low" sometimes.

I will remind you NAR don't like waivers.

Relax baby. Have a Merry Christmas!

NAR is just one small drop in a bucket that don't like waivers.