More AMC and PDC Bull

[George Hatch]

It is negligent in light of fulfilling their mission of public trust to develop products that do not value properties or market value ( the Fannie statement about value acceptance).

Why is it negligent?

Let me elaborate a little on the reasoning behind that rhetorical. If the GSEs are not aiming for market value then what type of value are they aiming at? It appears to me that they might be operating on some form of mortgage value - what the property is worth to a lender in terms of their underwriting. That's a different concept than what the property is worth to the buyers and sellers in the market. They might not be articulating it that way but then again "value" can be defined from the perspective of multiple parties, not just the market participants.

You have previously advocated for some form of stabilized value, distinct from how the market participants can be seen to be acting. I have previously acknowledged that some form of mortgage value might be more meaningful than MV to the lenders, but that they are using MV in part because they are required to do so. Bert previously commented to the same effect based on what he's seen of the German lending programs.

My point being that if a lender is using some form of mortgage value in their decision making that might arguably be appropriate for their role. Their role is to make loans, not to stabilize the pricing trends that result from buyers and sellers acting in their own interests. For a lender (who by definition is not a market participant) some form of mortgage value might be meaningful to their decision making. Perhaps as a supplemental to MV in an appraisal report or as an alternative when they're using their "data driven" analytics in their waiver programs.

You might do us both a favor and think the idea through before reacting to it. Because I can anticipate in advance how some people might respond and I already know what the obvious logical responses will be to those arguments.

 

[J Grant]

Why is it negligent?

Let me elaborate a little on the reasoning behind that rhetorical. If the GSEs are not aiming for market value then what type of value are they aiming at? It appears to me that they might be operating on some form of mortgage value - what the property is worth to a lender in terms of their underwriting. That's a different concept than what the property is worth to the buyers and sellers in the market. They might not be articulating it that way but then again "value" can be defined from the perspective of multiple parties, not just the market participants.

You have previously advocated for some form of stabilized value, distinct from how the market participants can be seen to be acting. I have previously acknowledged that some form of mortgage value might be more meaningful than MV to the lenders, but that they are using MV in part because they are required to do so. Bert previously commented to the same effect based on what he's seen of the German lending programs.

My point being that if a lender is using some form of mortgage value in their decision making that might arguably be appropriate for their role. Their role is to make loans, not to stabilize the pricing trends that result from buyers and sellers acting in their own interests. For a lender (who by definition is not a market participant) some form of mortgage value might be meaningful to their decision making. Perhaps as a supplemental to MV in an appraisal report or as an alternative when they're using their "data driven" analytics in their waiver programs.

You might do us both a favor and think the idea through before reacting to it. Because I can anticipate in advance how some people might respond and I already know what the obvious logical responses will be to those arguments.

I have NEVER advocated for some form of stabilized value! What in the world gave you that idea? Show me a link to a post I have ever made saying anything of the kind (hint: it does not exist ).

Fannie discloses that the "value" used in a waiver/value acceptance may not be the property's market value. They do not define what kind of value it is

Since there is no definition of value used, and the lender estimates what they need to make a loan LTV% work, or it is the sale price in a purchase, why is it called a value, when Fannie states that no valuation was performed? Imo, calling it a numerical $ amount would be more appropriate.

 

[George Hatch]

Oh, so you don't recall that running gunbattle we had over the use of REO resales back when those sales were driving the pricing trend? Or how it's our responsibility to protect the equity positions of people holding properties, or its our responsibility to inhibit the runaway price creep in an increasing market trend?

That's unfortunate, because I remember.

 

[J Grant]

Why is it negligent?

Let me elaborate a little on the reasoning behind that rhetorical. If the GSEs are not aiming for market value then what type of value are they aiming at? It appears to me that they might be operating on some form of mortgage value - what the property is worth to a lender in terms of their underwriting. That's a different concept than what the property is worth to the buyers and sellers in the market. They might not be articulating it that way but then again "value" can be defined from the perspective of multiple parties, not just the market participants.

You have previously advocated for some form of stabilized value, distinct from how the market participants can be seen to be acting. I have previously acknowledged that some form of mortgage value might be more meaningful than MV to the lenders, but that they are using MV in part because they are required to do so. Bert previously commented to the same effect based on what he's seen of the German lending programs.

My point being that if a lender is using some form of mortgage value in their decision making that might arguably be appropriate for their role. Their role is to make loans, not to stabilize the pricing trends that result from buyers and sellers acting in their own interests. For a lender (who by definition is not a market participant) some form of mortgage value might be meaningful to their decision making. Perhaps as a supplemental to MV in an appraisal report or as an alternative when they're using their "data driven" analytics in their waiver programs.

You might do us both a favor and think the idea through before reacting to it. Because I can anticipate in advance how some people might respond and I already know what the obvious logical responses will be to those arguments.

Yes, they are likely using MV because they are required to accept in a waiver/value acceptance.

Sure, for a lender, a "mortgage value" is more useful to their profit purpose than a market value. However, once again, these loans are processed through the GSE's using American people taxpayer's backing- which implies a responsibility to MV to serve the individual buyer equity position as well as having some responsibility imo to markets in general

If they no longer care one whit about it, then they should drop the pretense about a public service mission.

They heavily scrutinize traditional appraisals, yet allow non-appraisers to PDC collect the subject property in a hybrid. And then they do not use market value in a waiver/value acceptance. An odd combo of contradicory forces at work.

 

[George Hatch]

I have NEVER advocated for some form of stabilized value! What in the world gave you that idea? Show me a link to a post I have ever made saying anything of the kind (hint: it does not exist ).

Fannie discloses that the "value" used in a waiver/value acceptance may not be the property's market value. They do not define what kind of value it is

Since there is no definition of value used, and the lender estimates what they need to make a loan LTV% work, or it is the sale price in a purchase, why is it called a value, when Fannie states that no valuation was performed? Imo, calling it a numerical $ amount would be more appropriate.

Just because they didn't articulate it that way in their marketing materials doesn't mean they aren't acting that way. Maybe so, maybe not. But they could do it that way if they wanted to. If they thought it worked for them.

Or, after making the comparisons over several years, they might have actually concluded that their "data driven analytics" are performing favorably when compared to what the appraisers are doing. Nobody wants to take that possibility seriously.

 

[George Hatch]

Yes, they are likely using MV because they are required to accept in a waiver/value acceptance.

Sure, for a lender, a "mortgage value" is more useful to their profit purpose than a market value. However, once again, these loans are processed through the GSE's using American people taxpayer's backing- which implies a responsibility to MV to serve the individual buyer equity position as well as having some responsibility imo to markets in general

If they no longer care one whit about it, then they should drop the pretense about a public service mission.

They heavily scrutinize traditional appraisals, yet allow non-appraisers to PDC collect the subject property in a hybrid. And then they do not use market value in a waiver/value acceptance. An odd combo of contradicory forces at work.

"which implies a responsibility to MV to serve the individual buyer equity position as well as having some responsibility imo to markets in general"

Implies, huh? Based on what you can see of their decision making do you think any of that demonstrates that ethos?

 

[J Grant]

Just because they didn't articulate it that way in their marketing materials doesn't mean they aren't acting that way. Maybe so, maybe not. But they could do it that way if they wanted to. If they thought it worked for them.

Or, after making the comparisons over several years, they might have actually concluded that their "data driven analytics" are performing favorably when compared to what the appraisers are doing. Nobody wants to take that possibility seriously.

They invent their own internal curate studies to conclude their "Data-driven analytics" are performing favorably ( on what metric?) compared to appraisals. Nobody can dispute it, can they>? We know it is not market value, and one property at a time, one owner or buyer at a time, they could be paying or borrowing way above or below MV, which can hurt families - but you don't care about that, and in your worldview, neither should the GSE's.

 

[djd09]

don't worry they got great credit...the number doesn't matter...that is what the mortgage brokers used to say

 

[George Hatch]

They invent their own internal curate studies to conclude their "Data-driven analytics" are performing favorably ( on what metric?) compared to appraisals. Nobody can dispute it, can they>? We know it is not market value, and one property at a time, one owner or buyer at a time, they could be paying or borrowing way above or below MV, which can hurt families - but you don't care about that, and in your worldview, neither should the GSE's.

"but you don't care about that, and in your worldview, neither should the GSE's"

You wound me, Madam.

I am not a sociopath.
But I am a professional appraiser and I always aspire to compartmentalize between what how I feel about families losing their home vs what I think is the role of an appraiser when performing an assignment.

 

[TC]

Kind of an oxymoron, no? They need the appraisal to make the loan but appraisers don't matter to them

Not really. If appraisers disappeared tomorrow, lenders wouldn't bat an eyelash.