Freddie Mac Oks Appraisal Alternative For Some Mortgages

[Non Sequitur]

Having a portfolio full of loans with Fannie 1004s attached didn't prevent losses in the last bust, and PIWs aren't going to be the cause of losses in the next bust.

 

[TRESinc]

Having a portfolio full of loans with Fannie 1004s attached didn't prevent losses in the last bust, and PIWs aren't going to be the cause of losses in the next bust.

true. my money, again, is on them blaming appraisers for it just like we appraised "too high" and caused the bubble then appraised "too low" and held back the recovery. the power we wield is amazing!

 

[J Grant]

Having a portfolio full of loans with Fannie 1004s attached didn't prevent losses in the last bust, and PIWs aren't going to be the cause of losses in the next bust.

Back then, mortgage brokers appraiser shopped, and a number of them did not use honest appraisers or threw any report with a "lower value" in the trash, and ordered another appraisal after a "comp check" by a number hitter said they could "bring the value in". Therefore a portion of the appraisals used were worthless from the start. Appraisals don't cause losses, but inflated value appraisals facilitate over lending on properties (which lead to higher default or short sale ) PIW eliminates one check on the collateral, or based on a computer mode estimate. Why Fannie/Freddie, just because a borrower is strong, wants to lend $ on properties nobody inspected or knows what present condition would be, is their craziness to own.

 

[timd354]

Appraisals don't cause losses, but inflated value appraisals facilitate over lending on properties (which lead to higher default or short sale ).

Don't you think that this sentence is self-contradictory? The first part of the sentence states that appraisals don't cause losses while the second part states that inflated appraisals lead to higher higher default or short sales (Which would obviously cause higher losses).

BTW, if appraisals have nothing do with losses, then what do lenders need them for?

 

[TRESinc]

Don't you think that this sentence is self-contradictory? The first part of the sentence states that appraisals don't cause losses while the second part states that inflated appraisals lead to higher losses (higher default rate, etc.)

it makes perfect sense to her

 

[J Grant]

Don't you think that this sentence is self-contradictory? The first part of the sentence states that appraisals don't cause losses while the second part states that inflated appraisals lead to higher losses (higher default rate, etc.)

Perhaps it is. However the sentence was meant to proactively address the ones who say,"the appraisers did not' cause the losses, lenders did". The reckless actions on lender side, the no money down, no income check , can be blamed as the drivng force, the engine, but the appraisers who deliberately over valued were the wheels. I've said repeatedly on this board that the lender is responsible for the lender bad actions, but the the appraiser is responsible fo the appraisers bad actions.

Not all appraisals done during the boom were lousy, many were regular- but lousy mtge brokers chose lousy appraisers. Not all mortgage brokers were lousy-- some were ethical, but they were outnumbered by the hustlers, back then .

 

[Evincere]

I am mobile and have all the technology to get an appraisal out asap. The problem is and has been the phone monkeys shopping for the lowest fees; trying to make the biggest profit off the appraiser;then yelling "shortage"

They will wipe out almost an entire industry over 10 days to create a better consumer experience? WTHel - is Lowman watching too many Bravo reality shows.

Some lenders will stop requiring traditional appraisals

WASHINGTON – Aug. 22, 2017 – Mortgage giant Freddie Mac has announced a new program that will allow some homebuyers to skip a traditional appraisal. The change would lower fees paid by buyers and speed up the closing process.

Freddie's Automated Collateral Evaluation (or ACE) will determine a property's collateral risk by culling data from multiple listing services, public records and historical home values. It will then assess whether a buyer needs a traditional appraisal or an automated one. Refinancing borrowers may also be eligible for the program.

If a mortgage holder qualifies for an automated appraisal, he could save up to $500 in fees and make it to settlement up to 10 days sooner, Freddie Mac says.

"By leveraging big data and advanced analytics, as well as 40-plus years of historical data, we're cutting costs and speeding up the closing process for borrowers," says David Lowman, Freddie Mac's executive vice president of single-family business. "At the same time, we're providing immediate collateral representation and warranty relief to lenders. This is just one example of how we are re imagining the mortgage process to create a better experience for consumers and lenders."

Lenders will assess whether a property is eligible for ACE by submitting data through Freddie's Loan Product Advisor. The program will factor in credit, capacity and collateral to assess the quality of the loan and determine whether the estimated value of the home provided by the lender is acceptable.

ACE will be available for home purchases beginning Sept. 1, and it has been available for qualified refinances since June 19, 2017.

Source: "Freddie Mac Extends Appraisal-Free Mortgage Program to Purchase Loans," HousingWire (Aug. 18, 2017) and Freddie Mac

 

[timd354]

They will wipe out almost an entire industry over 10 days to create a better consumer experience? WTHel - is Lowman watching too many Bravo reality shows.

Between Fannie and Freddie's PIW/appraisal waiver programs, no more than 10-15% of loans will not require an appraisal. I doubt that will wipe out an entire industry. Besides that, contrary to the belief of some appraisers, Fannie and Fredie do not exist for the purpose of providing a certain level of work to appraisers.

 

[hastalavista]

Between Fannie and Freddie's PIW/appraisal waiver programs, no more than 10-15% of loans will not require an appraisal. I doubt that will wipe out an entire industry. Besides that, contrary to the belief of some appraisers, Fannie and Fredie do not exist for the purpose of providing a certain level of work to appraisers.

I agree.

The legitimate concern is how far they will extend the program.

A wipe-out? I don't think so.
A slice of the appraisal-pie? Certainly.
10-15% doesn't overly concern me. 25%? That would be concerning (from an appraisal-business point of view. That they can manage the risk for 25% of their portfolio without appraisals is their concern... if it were to go that far).

Of course, if they were privatized then they may be forced to follow the IAG appraisal requirements.

 

[timd354]

Of course, if they were privatized then they may be forced to follow the IAG appraisal requirements.

Not unless the existing regs are re-written. The IAEG (and the way it is interpreted) has always exempted GSE transaction form the definition of federally related transactions that require an appraisal, going all the way back to original IAEG proulgated in 1992 (or was it 1994?), well before the GSE's were placed in conservatorship.