3.6 Crunch Time

[George Hatch]

It’s not too difficult to pick out outliers in the MLS. Used to be Cash sales were the higher ones. When I see something way out of place and it says conventional I wonder if it was a waiver. That’s why many of us have felt waivers should be indicated in the MLS.

But I’m just someone who does residential appraisal/GSE work every day, so I’m not nearly an expert at it like some of the people on our board are.

Do you consider yourself competent at what you do? Because that's all the "expert" it takes to develop an informed opinion in this particular tangent.

Like you, I'd prefer to see disclosure of a waiver. That might clue us into analyzing the reasonableness of that transaction. Hypothetically, if it came to pass that most waiver @ 95% LTVs were actually within reason that could wind up being instructive, too.

How far off (high, not low) do you think a waiver-financed transaction would have to be before posing an undue risk to the lender's decision?

 

[J Grant]

I think "deliberately made to harm appraisers" attributes to them a motivation that literally might not exist. Just because appraisers got hurt doesn't mean those actions were motivated by a desire to hurt them.

Come on. Introducing a policy that eliminates roughly 30% of appraisals (waivers ) or a policy that floods the field with non-appraisers to do data collection- the folks making these decisions had no idea how harmful it would be to appraisers?

Their overall goal, I assume, was not a desire to hurt appraisers-but they knew that was going to be the result and did it anyway.

I believe I wrote wrt actions that are harmful to appraisers or appraisals by a deliberate decision to do X (waivers, substitute PDR collector, etc.). I did not write that it stemmed from a desire to deliberately hurt appraisers. Appraisers, of course, can hurt themselves or each other as well. But that is usually at an individual level vs a mass-scale level.

 

[George Hatch]

I already stipulated to the point that they know they're hurting appraisers but don't care. (#108 in this thread)

 

[djd09]

How the hell would I know?

I have a very small sample size of deals that I know we’re done with waivers. But I will tell you every single one of them the agent or buyer was relieved because they thought for certain they would have to bring money to the table. My neighbors an agent, he always laughs and tells me when a deal has gotten a waiver. He can’t believe it.

Appraisers are supposed to balance out agents and loan officers and all the other biased parties in a real estate deal. They’ve removed that for most of the last five years on a significant percentage of deals. Nothing’s a problem until it is a problem.

I don’t think you need a full appraisal on every deal. I don’t know what LTV number that is, but let’s say 70%? But I think it’s insane That waivers would be used at 80 to 90% plus. I’m sure the loan production staff loves it. That generally hasn’t been ideal for risk management though. It’s not bad policy to have one unbiased opinion in the file.

there is no one here that can name a property that has been waived...and without transparency the public trust will die in darkness

 

[djd09]

It’s not too difficult to pick out outliers in the MLS. Used to be Cash sales were the higher ones. When I see something way out of place and it says conventional I wonder if it was a waiver. That’s why many of us have felt waivers should be indicated in the MLS.

But I’m just someone who does residential appraisal/GSE work every day, so I’m not nearly an expert at it like some of the people on our board are.

the waiver fraud is rampant...

 

[J Grant]

OMG. I can't believe you are citing that as a parallel.

The use of MV (for the subject's value) is literally based on an if/then hypothetical, the assumptions for which are laid out. Our use of that comparable data (aka, the comps) is analyzing actual sales for what those buyers did/didn't do. Those data points don't involve any hypotheticals - they actually occurred as a matter of fact.

We analyze what they actually did, not what we think they should have done. We analyze the market for what actually happens, not what we think should happen.

Of course, the data points are not hypothetical, and we work with actual sales data. But we are supposed to filter the data through a set of tests and development standards ( the appraisal) . That is why sometimes our OMV is higher than or lower than a sale price or refi target number.

We analyze what they actually did, and then, if need be, make adjustments to what they DID ( grant a concession, overpay, underpay, etc ) to the set of HC SHOULD terms of behavior in the MV definition.

The whole point of an appraisal is running the data and analyzing what buyers and sellers did against a test of shoulds....what the price would have been without a concession, or the duress of a sale under pressure, or if the buyer was typically motivated, etc.

It is much easier to just report a SC price and say it is the value. Which is what a WAIVER does.

I used it as an example because we deal with it every day. OR should be, lol.

 

[glenn walker]

Actually only market participants buyers and sellers determine true market value.

 

[George Hatch]

there is no one here that can name a property that has been waived...and without transparency the public trust will die in darkness

That's right. We can't tell from where we're operating how the values from the [data-driven analytics] waivers are comparing to the values from the 1004s.

But we do know who does have access to both sides of that data and who can make those direct comparisons. Who can run their AVM and compare it to the outcome of the 1004. We also know how that user has been acting when it comes to authorizing and using that waiver program.

 

[J Grant]

Actually only market participants buyers and sellers determine true market value.

OMG here we are 20 years later having the same argument...

Buyers and sellers determine prices.

What is true market value ? Where is the definion for it?

The buyers and sellers pay or accept a price. They are free to believe whatever they want, wrt whether they paid MV. Buyers and sellers use their own vernacular for it..."I paid too much, I got it at a steal, I sold it too low, I wish I had known X before I went and bought that loser property" and so on.

An appraiser, when hired to deliver an opinion of MV uses those prices and runs them through a set of tests and development ( the appraisal, and then rconcialinis the OMV per the MV definition used)

 

[George Hatch]

Of course, the data points are not hypothetical, and we work with actual sales data. But we are supposed to filter the data through a set of tests and development standards ( the appraisal) . That is why sometimes our OMV is higher than or lower than a sale price or refi target number.

We analyze what they actually did, and then, if need be, make adjustments to what they DID ( grant a concession, overpay, underpay, etc ) to the set of HC SHOULD terms of behavior in the MV definition.

The whole point of an appraisal is running the data and analyzing what buyers and sellers did against a test of shoulds....what the price would have been without a concession, or the duress of a sale under pressure, or if the buyer was typically motivated, etc.

It is much easier to just report a SC price and say it is the value. Which is what a WAIVER does.

I used it as an example because we deal with it every day. OR should be, lol.

I commented on how appraisers analyze the comparable data they use everyday (what the market participants actually do) as a parallel to observing how the lenders and other users - and appraisers - act IRL (also what people actually do).

As in, what should be being immaterial to what is.