1004mc And Comps

[DWiley]

So why would the MC NOT consider the entire mix of property?

Answer: Because the appraisal is for a specific property.

I have some real life analysis of a well known neighborhood in Nashville. It includes analysis of all property types in the neigborhood, and it shows a very clear stratification. At the time, prices of newly constructed homes (10% of the market) were falling significantly. Existing, updated homes (50% of market, most 40+ years old) had prices that were falling, but only slightly. Existing non-updated homes had stable to slightly increasing prices.

If one were appraising a new home in the neighborhood, but had only analyzed the area as a whole and not looked specifically at the homes most competivive with the subject, the the fact that new home prices were falling dramatically would be missed.

 

[timd354]

It is a screwed up form that is a poor substitute for a real analysis, unless the subject is in a cookie cutter subdivision with a lot of market activity.

That screwed up form is the direct result of most appraisers previously including exactly zero real analysis of the market. Additionally, that form does not prevent an appraiser from providing whatever additional/supplemental analysis is required to produce a credible report.

 

[djd09]

That screwed up form is the direct result of most appraisers previously including exactly zero real analysis of the market. Additionally, that form does not prevent an appraiser from providing whatever additional/supplemental analysis is required to produce a credible report.

More blame the bad appraiser rhetoric. And the way to fix it is to provide a misleading form to be fill out.

 

[timd354]

More blame the bad appraiser rhetoric. And the way to fix it is to provide a misleading form to be fill out.

Appraisers as a group deserve 100% of the blame for causing the GSEs to create the 1004MC...so just deal with it.

The 1004MC definitely has flaws, but it is up to the appraiser to provide whatever additional/supplemental data is needed to provide a credible and not misleading appraisal report. If an appraiser fails to do that, then that is his or her own fault.

 

[djd09]

Appraisers as a group deserve 100% of the blame for causing the GSEs to create the 1004MC...so just deal with it.

The 1004MC definitely has flaws, but it is up to the appraiser to provide whatever additional/supplemental data is needed to provide a credible and not misleading appraisal report. If an appraiser fails to do that, then that is his or her own fault.

The GSE's are 1000% to blame for the market. Go look up affordable housing.

 

[Joe Flacco]

I have to agree that the problem is appraisers.

 

[Peter LeQuire]

You sign it, you own it. Check. Appraisers who produce bad appraisals are a problem. Check.

That said, from the investment bankers, to the GSEs, to the direct lenders and the loan brokers, (leaving the unpunished criminal collusion between appraisers and originators at all levels out of the discussion) - all of them, gave little notice to much else than value conclusions, the reporting of property conditions and appraisals conforming with GSE underwriting guidelines. If it fit the GSE underwriting criteria and program requirements, it was a "good" appraisal. Heck, there is validity to the "legends" about appraisal factories in which the only person with a license was cranking out scores of appraisals each week: everybody knew it, nobody cared, since with the FHA insurance, the VA guarantee, the federal guaranty of the MBS's - tranched and untranched - there was little concern with such subtleties as "analyzing and reporting" market trends. It was only after the wheels came off and the offal that underpinned all that good time money became evident that anybody cared about anything but volume. The GSEs were complicit in packaging chicken poop as chicken soup.

I don't think the MC is necessarily screwed up: I simply think that the way it's been incorporated into the neighborhood trends is circuitous, and the instructions for its use less than clear.

Yep, appraisers need to do better work. Check. But please spare us the zeal of the newly converted when those who for decades bought substandard work (while originating substandard loans) suddenly discover that the product they ordered isn't acceptable product.

 

[Joe Flacco]

I think the 1004MC form needs to be revised to show eight three month periods. So data for the last two years each measured period broken down into three month periods instead of three month, three month, six months. This way year over year comparisons can be made. It would be much more useful this way.

I asked about this before but never got a answer. Does anybody know the reasoning behind the prior 7-12 month period being combined?

 

[timd354]

I think the 1004MC form needs to be revised to show eight three month periods. So data for the last two years each measured period broken down into three month periods instead of three month, three month, six months. This way year over year comparisons can be made. It would be much more useful this way.

I asked about this before but never got a answer. Does anybody know the reasoning behind the prior 7-12 month period being combined?

Yes, I was told by people at Fannie that it was designed that way due physical formatting issues with the paper/pdf form (for scanning or whatever other purposes they had - this was pre-UAD/UCDP) that there was only room for 3 columns, not 4 columns (1 for each of the past 4 quarters). Sounds pretty silly to be sure, but that is what I was told be those you were there at the time.

 

[Joe Flacco]

Silly indeed. I'm sure there will be a improved revised format for the MC form coming out at some point in the future.