1004mc Soon Not To Be Required By Fannie Mae

[timd354]

So if Appraisers per FAnnie have been filling out 1004MCs since 2012 with what Fannie considers to be worthless / useless, non informative data how worthless / useless will the current trends be that CU models spit out. Will it not be regurgitating the same garbage that was put into it? The machine cannot know what it doesn’t know.

Unless the Fannie has some secret AI it’s all GIGO

No.

Fannie does not need any of the data in the 1004 MC. They have tens of millions of appraisals that have the contract price of the subject property and the sale price s for at least 3 comps. They also have a portfolio of tens of millions of loans, many of which are purchases and they know the contract prices from those loan files. Finally, they have bought access to MLS data all over the place and also have public records data. One of the reasons that they are probably getting rid of the 1004 MC (aside from the issue of appraisers not providing a good analysis) is that they simply do not need the information that is in the 1004 MC as they already have all of the sale price data that they need in 99.9% of locations

 

[timd354]

and we had to include instruction on the difference between an average vs a median because a lot of appraisers didn't know the difference.

That statement right there tells you all you need to know about how poor the level of appraisal training and education was....hopefully it has gotten better

 

[jay trotta]

No.

Fannie does not need any of the data in the 1004 MC. They have tens of millions of appraisals that have the contract price of the subject property and the sale price s for at least 3 comps. They also have a portfolio of tens of millions of loans, many of which are purchases and they know the contract prices from those loan files. Finally, they have bought access to MLS data all over the place and also have public records data. One of the reasons that they are probably getting rid of the 1004 MC (aside from the issue of appraisers not providing a good analysis) is that they simply do not need the information that is in the 1004 MC as they already have all of the sale price data that they need in 99.9% of locations

True, and they also do not need all those Interior photo's (Federal Paper Reduction Act) comes to mind; the science end is where it should be, with the science guys, and the art should remain with the appraiser (un influenced); ahhh but that carrot of Cash does pose a lot of short sided to become; Ben Dover that infamous sock grabbing rascal of limited temptation.

 

[Evincere]

No.

Fannie does not need any of the data in the 1004 MC. They have tens of millions of appraisals that have the contract price of the subject property and the sale price s for at least 3 comps. They also have a portfolio of tens of millions of loans, many of which are purchases and they know the contract prices from those loan files. Finally, they have bought access to MLS data all over the place and also have public records data. One of the reasons that they are probably getting rid of the 1004 MC (aside from the issue of appraisers not providing a good analysis) is that they simply do not need the information that is in the 1004 MC as they already have all of the sale price data that they need in 99.9% of locations

OK. Prior to the 1004MC they were working on a program but until recently had no way to aggregate the data you mention from the tens of millions of appraisals they had in their possession?

 

[Carnivore]

Since residential wise we rarely need comps past 3 or 4 months, it's hard for me to justify a conditions adjustment over such a short time without the likelihood I am only seeing random price fluctuation. That's like saying the stock market rose 1% because of some arcane index was in higher territory or gas prices jumped because Venezuela is in bad shape. Too many other variables at play.

I don't necessarily disagree with you, but I rarely complete cookie cutter assignments and i don't care what AMC's or Lenders demand for comparable when it comes to 3 month, distance and other demands. Frankly it is am unacceptable assignment condition when they use the words' "must" , "Will" for comparable. I do understand why they place the requirements in an engagement letter. If you report deviates from those then you must Explain! Right there is where it all falls apart. Appraisers do not explain enough or worse they start jamming sale into the report that are not actually comparable just to avoid spending the time it takes to explain using a distant or older comparable

 

[Evincere]

No secret. Fannie has data from all the comparable sales and data from subject properties from appraisals that have been submitted. No reason for Fannie to use 1004mc data for CU. They have more than enough data to develop trends and more sophisticated systems than those available to the typical residential appraiser.

Thoughts from another Appraisers forum.


“I think this is good news overall, since we all know it’s often a waste of time and doesn't produce credible results, BUT, I do wonder what the motive is. My sense is that national companies, hybrids, and collateral underwriter, cannot produce this form without MLS access, therefore they have been lobbied in some way to remove it, in order to open the door for products/companies that cannot produce it on a local level.”

 

[Evincere]

That statement right there tells you all you need to know about how poor the level of appraisal training and education was....hopefully it has gotten better

No.

They have tens of millions of appraisals that have the contract price of the subject property and the sale price s for at least 3 comps.

AQM Update
When persistent deficiencies are identified within an appraiser’s body of work, the Appraiser Quality Monitoring (AQM) team sends training letters detailing the issues along with a list of associated appraisals. Feedback and responses are not only welcomed, but are encouraged.

After a six-month period, if the appraiser’s body of work has not improved, a follow-up training letter is sent to that appraiser.

In 2017, a total of 965 initial training letters were sent and only 45 follow-up training letters were sent.

That’s a 95 percent improvement in appraisal quality!
The collaboration and feedback between our AQM team and appraisers in the field is critical to the improvement of appraisal quality and the overall health of the housing industry.

https://www.fanniemae.com/content/news/current-appraiser-newsletter.pdf

 

[ucbruin]

"...instruction on the difference between an average vs a median"

Had appraisers only known the difference between the two....
Would have prevented the last meltdown!!!!

 

[ucbruin]

I see incompetent appraisal reports from both AMC ordered and direct ordered appraisals....it is the job of both a direct engagement lender and an AMC to engage a competent appraiser and from what I have observed, I cannot say that AMC's do a better or worse job of that then direct engagement lenders because the overall quality of the end product is on the whole ndistinguishable. Believe it or not, not everything wrong in the appraisal profession is due to AMC's and that is coming from someone who never did appraisals for AMC's because I observed what a pain in the rear they are to work from watching friends and colleagues deal with them.

"I see incompetent appraisal reports from both AMC ordered and direct ordered appraisals...."

I'm not arguing this comment....
I'm ignorant as to the inner workings of any PMI company...
Just curious though....
What percentage of mortgages does your company reject based on "incompetent" appraisals???
And what happens to the rejected mortgages????

 

[Meandering]

"...instruction on the difference between an average vs a median"

Had appraisers only known the difference between the two....
Would have prevented the last meltdown!!!!

And there were fights on the forum, that using the median, as opposed to the average, of a small data set, over so short an analysis time frame, would smooth the numbers into stable, for every market movement that was not drastic. And of course, mandating that page one market conditions match the 1004MC gave them exactly what they wanted for market conditions. Everything was stable, the government is in charge.