AEI on Appraisal Waivers @ the GSEs, 01/2025

[George Hatch]

Prevalence of GSE Appraisal Waivers

The use of appraisal waivers at the GSEs has exploded in recent months and now accounts for over 40% of all valuations.

www.aei.org

 

[glenn walker]

Wow more than we realized.

 

[Trihard]

The data clearly states that the scape goat for the next market crash is the appraiser.

 

[Tom D]

The data clearly states that the scape goat for the next market crash is the appraiser.

Well, so what. That's just another shovel of dirt on the grave you are already occupying. The sound won't wake you up.

 

[OSU Beavers]

Appraiser Waivers are the new Sub Prime. What happened to waivers only being used if the LTV is less than 80%? That LTV is meaningless if the borrower stated value is inflated.

 

[shrubberyvaluation]

Appraiser Waivers are the new Sub Prime. What happened to waivers only being used if the LTV is less than 80%? That LTV is meaningless if the borrower stated value is inflated.

Correct we hear LTV thrown around, but how do you get LTV without the Value. If an AVM values my property at $10,000,000 my LTV would be extremely high, but cashing out and letting the property get foreclosed on would be very tempting.

 

[George Hatch]

Fannie/Freddie already hold the mortgage position in the No-Cash-Out transactions. They're not increasing their risk on those, just resetting the rate/term.

For purchases and cash out where there's new money going out the door they're saying their usage of waivers above the 80% LTV is still zero.

 

[shrubberyvaluation]

Fannie/Freddie already hold the mortgage position in the No-Cash-Out transactions. They're not increasing their risk on those, just resetting the rate/term.

For purchases and cash out where there's new money going out the door they're saying their usage of waivers above the 80% LTV is still zero.

Impossible for it to be zero.

If an AVM values a property for $500.000 but the property value is $400,000 the LTV could be over 80% and get a waiver.

 

[George Hatch]

80% of the valuation.

You know when you say the AVM can get it wrong a certain percentage of the time? It happens with appraisers, too. Just because we said the MV was $500k doesn't mean it actually is $500k. All it means is that we think it's $500k - same with what the calculators do.

 

[J Grant]

80% of the valuation.

You know when you say the AVM can get it wrong a certain percentage of the time? It happens with appraisers, too. Just because we said the MV was $500k doesn't mean it actually is $500k. All it means is that we think it's $500k - same with what the calculators do.

A calcalatro does ot offer E and I insurance, nor does a calcuttor have a license and career to protect when they get it wrong

An appraiser gets it "wrong" sometimes, yes, but a good appraiser working without the pressure ot make a value or be able to withstand that pressure gets it wrong on a fairly rare basis - knowing that MV is an opinion and not a fact nor a price-accurate prediction. MV allows people such as lenders to make informed decisions about a property and is much more than just the $ amount - it is a market estimate, an analysis that makes sense and is written in English, not computer garble that a user can not understand.

When an AVM gets it wrong, nobody knows why and there is no compensation for it - (far as I know ) Which is why, in a WAIVER , based on falling with a price range of a GSE AVM, there is no lender buy back and the lender is not held liave for the value and neither is fannie or freddie - the lbiatiy for a bad value is shifted to the tax payer

A little factoids they like to keep quiet- called relief of reps and warranties..

A lender is responsible for a buyback for a bad appraisal, so the lender has something at stake, and so does the appraiser..