When you switched to digital photography, did you do that because you hated the local one hour photo shop?
Or, did you do that because you found something that was just as good (at least for your purpose), more efficient and less costly?
The performance of ACE is evaluated in comparison to the performance of appraisals (see attached document referenced earlier). So, if appraisers want to influence waiver use, then the best thing they can do is provide good appraisals - appraisals with supported adjustments (including market condition adjustments when warranted) and appraisals that are made subject to repair and subject to inspection, when warranted.
The comparison between digital photography and appraisal waivers (or ACE) is an oversimplification that doesn’t hold up when examined critically. Digital photography didn’t replace the one-hour photo shop because it was "just as good"—it became a new standard due to technological advancements that improved quality, accessibility, and user control. Appraisal waivers, on the other hand, are not necessarily an improvement, nor are they “just as good” for valuation.
The fundamental role of an appraisal goes beyond efficiency or cost-cutting; it involves a nuanced understanding of the local market, property-specific factors, and potential risks. Automated systems like ACE lack the human judgment required to assess these complexities effectively. While ACE may work in cookie-cutter scenarios, it falls short in unique or atypical properties, fluctuating market conditions, or cases where repairs, zoning issues, or legal non-conformities are at play.
Additionally, the argument that appraisers can reduce waiver use by providing "good appraisals" is a mischaracterization. Most
professional appraisers already strive to deliver well-supported, credible valuations with warranted adjustments and appropriate "subject to" conditions. The problem lies in the oversimplification of property valuation by automated systems, not in the quality of appraisals.
What are the GSEs doing to ensure that professional appraisers who consistently meet their standards are rewarded with more work, while those who do not align with the GSEs' requirements stop receiving assignments? It seems counterproductive to bypass the appraisal process entirely through waivers rather than holding appraisers accountable and elevating the profession to meet evolving expectations.
Freddie Mac should focus on enhancing appraisal standards and processes rather than replacing them. Waivers might save time and money in certain cases, but they risk sacrificing accuracy, reliability, and the ability to account for the myriad of factors that a skilled appraiser brings to the table.
