ACE

[Jayjay25]

Per the new Ace study that was completed by those who profit from the lenders, in their own interest. (Thanks for the assist DW!)



Lending - Numerous studies have investigated moral hazard in the appraisal valuation process, in which appraisers may have a vested interest in confirming contract prices or inflating valuations to support refinances. Agarwal, Song, and Yao (2017) report a negative correlation between below-contract appraisals and the appraiser's future business volume from the same lender.



Let’s see if this works for the government health department….



Numerous studies have investigated moral hazard in the health departments restaurant inspection process, in which health inspectors may have a vested interest in confirming health standards or overlooking food spoilage/contamination to support restaurants and small business. Agarwal, Song, and Yao (2017) report a negative correlation between the health department and the health inspectors future business volume from the same restaurants that hired them.



Hahahaha, the lending industry is so corrupt all you can do is laugh. Can’t rein in the loan officers from committing fraud so let’s get rid of the appraisers

 

[DWiley]

Per the new Ace study that was completed by the lenders in their own interest.

No lenders were involved in the study posted.

 

[JTip]

So you can get ACE if you have an 800 credit score with LTV of 60%, but an appraisal is required for FHA borrower with a 500 credit score.

Wonder who is going to default? Numbers look good when you are lending to the best of the best of the best.

 

[CGinMN]

For anyone who wants to see how ACE performs, as compared to appraisals, here is a link to some actual data and analysis.
https://capitalmarkets.freddiemac.com/crt/docs/pdfs/SF_CS_ACEResearchNote.pdf

We divide loans into two subgroups: “ACE,” which represents loans that were originated without an appraisal due to receiving ACE waivers and “Eligible Non-ACE,” which comprises those loans that met the ACE program eligibility requirements but were not offered waivers by the ACE decision logic or were offered waivers but originated with an appraisal.

What are the reasons the consumer would want an appraisal when they already received a waiver (e.g. eligible non-Ace)?

 

[DWiley]

So you can get ACE if you have an 800 credit score with LTV of 60%, but an appraisal is required for FHA borrower with a 500 credit score.

Wonder who is going to default? Numbers look good when you are lending to the best of the best of the best.

That is why the paper compares loans with similar borrower characteristics.

 

[alebrewer]

If the paper is assumed to be accurate (which is a fairly considerable assumption considering the authors of the study are the GSE's themselves), then I'd agree that the two groups of borrowers have similar characteristics - for the most part...

 

[CGinMN]

What are the reasons the consumer would want an appraisal when they already received a waiver (e.g. eligible non-Ace)?

I will answer my own question. One reason is that borrowers and lenders know something about the collateral and value that the GSEs do not, making these comparisons not apples to apples.

One also has to wonder, if ACE performs equal to or better than appraisals, why do the GSEs default to the appraisal in cases where a waiver was granted but an appraisal was ordered? Is ACE a better risk tool than an appraisal or not?

IMO any study authored and published by the GSEs is designed to be favorable to the GSEs interests. The above concerns notwithstanding, measuring the default risk of 65% LTVs in an appreciating market is one thing. Default risk in the 80-97LTV+ bucket with declining prices is another.

 

[djd09]

Biased home appraisals steal $150 billion from Black home wealth​

Pilot training and education program brings potential to transform industry

For most consumers, buying a home is the single-largest investment of their lifetimes. But for Black America, home equity – the increase in market value from the time of purchase – is often the dominant, if not sole source of wealth-building. Home equity represents 65 percent of all Black wealth, according to the nation’s oldest minority professional trade association, National Association of Real Estate Brokers (NAREB).

Yet the unfortunate reality for Black homeowners, according to NAREB is that systemic discrimination used in appraisals that determine home fair market values all too often perpetuate — instead of narrow — racial wealth gaps, for homeowners and buyers alike. These mandatory reports are a key factor used by lenders to reach decisions on loan applications to purchase, sell or improve homes.

Home Appraisals in Black and White, a new NAREB research report, examines disparities in the estimated value of homes by racial neighborhood composition. Analyzing housing data from 2021 and 2023, its two authors James H. Carr and his colleague, Michela Zonta, both housing finance and urban policy experts, reached a startling finding: Blacks have lost $150 billion in home equity due to biased home appraisals.

According to Courtney Johnson Rose, NAREB president, “For decades, the undervaluing of property in African American neighborhoods has contributed to the expansive Black-White wealth gap in America, a spread so expansive that the 400 wealthiest Americans control the same wealth as all 48 million Blacks.”

In Black neighborhoods with large shares of homeowners, homes were undervalued by 47 percent, compared to similar homes in White neighborhoods with no Black borrowers. These lower property values prevent Black families from building and earning comparable wealth via home equity than similarly-situated white neighborhood homeowners, and additionally suppresses the ability of Black homeowners to develop intergenerational wealth.

The report also pinpoints where these disparities are widest.

Biased home appraisals steal $150 billion from Black home wealth

For most consumers, buying a home is the single-largest investment of their lifetimes. But for Black America, home equity – the increase in market value

chicagocrusader.com

blaming appraisers for their own confusions...tell them DW...they should have got an ACE waiver

 

[NC Appraising]

I'll take this in a different direction.

Taking jobs away from Americans and replacing them with AI or software.

AI or software can replace humans and in some cases do a better job, cheaper and faster. Okay.

And we wonder why we have so many of our youth that are hopeless, have no direction, depressed, on drugs, etc.

We wonder why there are a huge disparity between college educated and the non-college educated.

Do we really need UWs? Car salesman, loan officers, re agents, appraisers, could go on and on.

Sure, for the most part there is no longer a need for appraisers. There is a need for dignity.

The question is: if the computer and robots can do everything better than you, does your life have meaning.

Maybe the GSEs can answer that one.

 

[alebrewer]

The question is: if the computer and robots can do everything better than you, does your life have meaning.

If you value your life based on what computers and robots can do, the answer is obvious...