3.6 Crunch Time

[Vermonter]

I mean - think about it for a moment. If we assume that 'traditional' valuations follow a somewhat normal distribution, why would we believe automated valuations wouldn't follow a similar distribution?

Unfortunately for us "Traditional" is not looked upon favorably in the mortgage lending world. Investors want the latest tech....even if it doesn't work and costs substantially more.

As I've said numerous times on this forum, the tech making improvements to risk analysis side of the lending pipeline is probably more of a threat to us than automated valuations.

 

[alebrewer]

As I've said numerous times on this forum, the tech making improvements to risk analysis side of the lending pipeline is probably more of a threat to us than automated valuations.

Isn't automated valuations part of tech improvements to risk analysis?

 

[Vermonter]

Isn't automated valuations part of tech improvements to risk analysis?

Technically, yes but referring to items other than collateral value. As tech improves the analysis of default risk the accuracy of the collateral value becomes less important. AVMs don't have to be better than a human appraiser, just good enough to pass some algorithmic threshold

 

[alebrewer]

As tech improves the analysis of default risk the accuracy of the collateral value becomes less important.

I personally don't think collateral value has any association with default risk. That's just me, though.

 

[Fernando]

And we wonder why we are being replaced with hybrids and perea appraisers who can't measure a home. One of our skill sets were measuring homes accurately. That's why agents called us to measure homes. Now that's taken away from us.

I can see it now...some of the gse reps on this forum....these appraisers cannot even measure a home or are xxxxing about it. Let's just go full waiver or hybrids.

We are our worst enemy. It's not rocket science. If you can't measure a home...this is your job...get the freak out or learn how to.

The purpose of measuring a home is to verify its sqft..GLA, etc. Verify...agents lie and the government is not always 100% correct. Did the government measure the home 30 years ago to ansi? Probably not.

Why stop at 0.1? Why not to 0.05? More reasonable and common sense at 0.5 as we had measured prior to ANSI.
Fannie needs real appraisers who had measured homes working there.

 

[DWiley]

... real appraisers who had measured homes working there.

I started in 1982, and from day one I was taught to measure to the tenth of a foot. Did it that way in the field for ~30 years and never knew that it was such a challenge for some until I started hanging out here.

 

[Fernando]

I started in 1982, and from day one I was taught to measure to the tenth of a foot. Did it that way in the field for ~30 years and never knew that it was such a challenge for some until I started hanging out here.

You probably prefer the metric system. Tenth of foot is not necessary for credible results. Why Fannie dwelling on such minor details?

 

[alebrewer]

I honestly just don't see the point - other than being able to certify that it was measured to ANSI standards. The law of averages dictates that, when measured to the nearest foot, the numbers will not be diverse enough to materially affect any opinion of value (in my opinion). For grins, I took the measurements for a random home - one measured to the nearest foot and one measured to the nearest 10th. The living area calculations were 1465' and 1463' respectively.

 

[DWiley]

I honestly just don't see the point - other than being able to certify that it was measured to ANSI standards.

I think that is exactly the point - having a standard way to do it.

Long ago I thought that by now there would "home surveys" like lot surveys, and we would all use those numbers rather than measuring. One of the many things I got wrong over the years.

 

[glenn walker]

You could be right, it may take another crash, unfortunately.

It’s not so much that they don’t want or need appraisals. But when you have 40,000 independent appraisers providing a service, it’s hard to control them. The GSE’s want to deal with 3 to 5 large AMC‘s that have complete control, preferably staff. You see that in every decision they’ve made in the last decade. It’s a perfect textbook example of regulatory capture. And it’s happening in almost every industry. It’s worse than ever The GSE’s would be perfectly fine if they’re friends at class and clear capital were the only two appraisal companies in this country.

And with no regulation or oversight, that’s exactly what they will get. The fox will control the henhouse. Everything some of us were talking about 10 years ago, and predicting, has come true. The chance for regulatory bodies to do their job was a decade ago, I don’t know if they can at this point.

What your watching is the Bankers Vertical Trust which is unifying the structure to be managed and finally controlled like manufacturing and distribution centers.

The 40,000 independents are not manageable and the advances in technology are allowing the boy's to finally build a sustainable model controlling the loan process from start to finish.

There's no fighting it except build a new different business model not dependent on doing production appraisals. A new menu that offers many different valuation options and prices not fixed fees and more consumer friendly valuations.