Fannie, appraisers move to the back of the bus.

[Sadie]

How does that stink for the buyers? All the buyers I'm aware of have opted for the waiver when offered...

It stinks for them when a "life event" happens and they want/need to tap into the equity of their home or they need to sell. As we found out less than 20 years ago, lots of people at one time can have life events.

 

[George Hatch]

...The lead instructor for this new program is Professor Chantal Grayson, a long-time real estate broker and author. Grayson draws from her vast experiences to bring real world knowledge to the in-person and online classroom. She is also an accomplished entertainment entrepreneur who co-founded the award-winning internet radio station GH3 Radio....

Using a broker and academic to provide the instruction is a huge problem, IMO. Even if they have taken appraisal courses they will still retain a pro-market bias. In my experience with appraisers who previously worked in sales and brokerage that bias is almost impossible to replace with a D3P perspective of value that the appraisers are trained in. If they were good at selling houses then switching to appraisal is going to be a difficult transition WRT impartiality. Actually less so if they weren't any good at sales.

Not to mention the point that in an "experience" setting wherein the appraiser's professional standards are constantly being challenged that facet bears constant reinforcement throughout any course of appraisal instruction. Especially so in a practicum or PAREA course but also Appraisal 101 and other QE courses. Our professional standards themselves are an elaboration on some of the fundamental concepts and principles which are critical to the role of the appraiser - which is inherently different than the role of the RE broker or loan originator.

TBH I believe every appraisal instructor should be conversant with whatever appraisal standards will apply during the appraisers day-to-day. . Enough so to be capable of bringing the issues to bear in every topic in the course syllabus, as necessary. Not only the mechanics but also the underlying ideas in support of the mechanics. Ideally that will include the appraisal policies at the GSEs and whatever typical requirements prevail among the local lenders these appraisers will be submitting reports to.

 

[alebrewer]

It stinks for them when a "life event" happens and they want/need to tap into the equity of their home or they need to sell. As we found out less than 20 years ago, lots of people at one time can have life events.

Sounds like that's the 'life event' that stinks, not the fact that they got out of paying for an appraisal...

 

[George Hatch]

It stinks for them when a "life event" happens and they want/need to tap into the equity of their home or they need to sell. As we found out less than 20 years ago, lots of people at one time can have life events.

Then they should get their own appraisal prior to making their offer and coming to terms with their seller.

 

[Sadie]

Sounds like that's the 'life event' that stinks, not the fact that they got out of paying for an appraisal...

The average person thinks that they can't get a loan if the collateral doesn't support the LTV. They would not think that a lender would be so stupid to lend that large amount of money without ensuring the collateral supports it. That is the whole point of underwriting, making as sure as can be that the borrower can make the payments, the title is marketable and that if it all goes south, the collateral (house) can be sold to recoup the loan. There is always some genius who is trying to short cut the process. First it was on the borrower portion of the UW equation. Now its the collateral. Will the next iteration be the title?

 

[DWiley]

? Appraisers have the difficult properties now, the very low down payment deals and bad credit buyers and oddball properties so the WAIVERS with more down and performing properties might "outperform" - though outsiders should see their studies

It would not be fair/appropriate/meaningful to compare the waiver population to the general population. That is why the comparison is to other similar loans. If you look at page 5 of what was posted, you will see that the comparison was limited to similar loans. It shows the median credit scores, DTI, LTV, etc. for the comparison populations.

 

[alebrewer]

The average person thinks that they can't get a loan if the collateral doesn't support the LTV. They would not think that a lender would be so stupid to lend that large amount of money without ensuring the collateral supports it. That is the whole point of underwriting, making as sure as can be that the borrower can make the payments, the title is marketable and that if it all goes south, the collateral (house) can be sold to recoup the loan. There is always some genius who is trying to short cut the process. First it was on the borrower portion of the UW equation. Now its the collateral. Will the next iteration be the title?

Sounds like some are already toying with eliminating the title portion...

 

[DWiley]

Well, kind of...

I tend to employ reservation when the study proffered was/is performed by the entity hawking the results. Remember the part in USPAP that requires appraisers to be objective and unbiased? Not an appraisal, I understand - but the perception of bias is hard to dismantle when the GSE's are analyzing their own data...

I am not trying to "hawk" anything here. I was just responding to a statement about the availability of such analysis.

 

[J Grant]

It would not be fair/appropriate/meaningful to compare the waiver population to the general population. That is why the comparison is to other similar loans. If you look at page 5 of what was posted, you will see that the comparison was limited to similar loans. It shows the median credit scores, DTI, LTV, etc. for the comparison populations.

Are the properties themselves also part of the comparison? The metrics for the borrowers are important for the comparison, but so are the property types. More appraisal assignments seem to be for oddball properties, though some regular properties are still in the mix, the percentage of difficult properties has risen.

 

[DWiley]

The average person thinks that they can't get a loan if the collateral doesn't support the LTV. They would not think that a lender would be so stupid to lend that large amount of money without ensuring the collateral supports it. That is the whole point of underwriting, making as sure as can be that the borrower can make the payments, the title is marketable and that if it all goes south, the collateral (house) can be sold to recoup the loan. There is always some genius who is trying to short cut the process. First it was on the borrower portion of the UW equation. Now its the collateral. Will the next iteration be the title?

In the case of a appraisal waiver, the collateral value and condition are still evaluated. That is why the Freddie program is called ACE (Automated Collateral Evaluation).