An Open Letter to Fannie Mae RE: multiple parcels

[Lee Lansford]

You too. Can't accept you are wrong is not a good sign for future endeavors, and you are way off track. Again I ask, where is the Public Trust diminished by this publication and edict and/or why is Public Trust improved by your opposition opinion. Please elaborate.
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You, Adrei Fein (?), and JGrant should form a school for teaching appraisal principles and application of same.

 

[Lee Lansford]

"If this be the case, is Fannie Mae then prepared to accept an appraisal (and mortgage) where the appraiser has chosen “No” to the question “Is the H&BUse of the subject property as improved?"

Lee, I've already told you they will accept this. Do your own due diligence but I am speaking from real experience. They should probably have put this in the newsletter.

The reason they are willing to accept it makes perfect sense. When the HBU is no, the lender's fear is that there exists a financial incentive to alter or break up the property, leaving them with a materially different property than they originally loaned on. But in this case, the loan must be paid off first, so the risk is nullified.

"Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use as improved"

Selling Guide, Sec. B4-1.3-04, Highest and Best Use

2 parcels. 2 properties. Each has its own H&BU separate from the other.

I'd love to see your H&BU analysis on the two properties that form my example...would love to see it. I'd love to see how you arrive at one opinion of MV where the market tells you that is not the market.

But, again, you may want to get together with Mr. Rex and JGrant and form your own school for teaching appraisal principles and applications.

 

[George Hatch]

You too. Can't accept you are wrong is not a good sign for future endeavors, and you are way off track. Again I ask, where is the Public Trust diminished by this publication and edict and/or why is Public Trust improved by your opposition opinion. Please elaborate.

The borrower isn't an intended user, but if they get an appraisal which says the value was $440k even though the property was really worth $540k if sold separately, doesn't that do more to undermine the public trust in the appraisal profession than telling the lender that the real LTV on this loan is at 77% and not 95%?

I mean, from the perspective of an informed borrower and broker, doesn't the obvious lowball by the appraiser in order to rubber stamp the lender's *underwriting* policies contribute to the perception that the appraiser is playing on the lender's team with no intentions of impartiality and objectivity?

I'm an appraiser. I observe and report. I call balls and strikes over the plate as best I can. I don't play 1st base or catcher. I leave that to the lenders.

 

[Mr Rex]

I guess the damage to the public trust is like the intruder/spy you alluded to on the IL board that kept us in suspense so long that you didn't have to support it? You know but you can't say? Nice. Duck duck goose? C'mon dude, you were born with a pair (I assume), stop deferring and start explaining. I have no doubt you are intelligent and have your reasons for your opinions, but you duck, dodge, run etc rather than elaborate. WHERE IS THE PUBLIC TRUST DAMAGED BY THIS FNMA PUBLIC DECLARATION OF LOAN ELIGIBILITY?

 

[Mr Rex]

The borrower isn't an intended user, but if they get an appraisal which says the value was $440k even though the property was really worth $540k if sold separately, doesn't that do more to undermine the public trust in the appraisal profession than telling the lender that the real LTV on this loan is at 77% and not 95%?

I mean, from the perspective of an informed borrower and broker, doesn't the obvious lowball by the appraiser in order to rubber stamp the lender's *underwriting* policies contribute to the perception that the appraiser is playing on the lender's team with no intentions of impartiality and objectivity?

Where do we go from an appraiser low balling to the current scenario? Come on George, you are better than that.

 

[George Hatch]

Fannie can do whatever they want with loan eligibility - their money, their rulez. It means nothing to my opinion of MV.

 

[George Hatch]

Where do we go from an appraiser low balling to the current scenario? Come on George, you are better than that.

Read the example. Which AFAICT actually happened IRL. If I had appraised those two parcels and if the trends in the data I already identified in that area actually held (which is arguably a big "IF") I might very well have concluded to values far in excess of the $440k that property actually sold for. Which would have made that a screaming deal for the lender and possibly better terms for the borrower - just compensation for scoring that screaming deal.

If the data didn't hold and the prevailing trend showed less than $440k I would have had zero qualms about doing that, either. You know why? Of course you know why: Because in terms of a value conclusion I *literally* don't care what the borrower wants, I don't care what the broker wants and I don't care what the lender wants. I don't care what any of them want, and I certify to that apathy in every single appraisal report I sign.

 

[Mr Rex]

Fannie can do whatever they want with loan eligibility - their money, their rulez. It means nothing to my opinion of MV.

Perzactly. Can you opine a value on 2 lots with one improved and one vacant and potentially available for development? Probably so. As an aside, if the 2nd lot does not have " IMMEDIATE" (others words not mine) demand, then what is the H&BU as improved (or as vacant)? What is immediate? If immediate, why would it be included with the subject and improvements?

I am an Appraiser GOD, I'll let you know. I don't care if it's your property and the largest lender in the Galaxy will loan on both parcels, I can't let this pass. My ego and deep state belief in USPAP will not allow it dammit. Artificially low interest rates, ignoring concessions etc are fine but I'll be damned if you are going to borrow money on 2 contiguous sites that you own if one could potentially be sold if all conditions are plum and ready. Really?

 

[George Hatch]

I appraise a lot of land. Nearly 100% of the parcels I appraise in the urban areas have or had underimprovements onsite. The reason for that is because development and redevelopment occur *after* the market demonstrates financial feasibility, and per market conditions. Prior usage does not prove HBU.

HBU is a leading indicator of development, not a lagging indicator. That's fundamental.

I'll be happy to answer the question Fannie asks - no problem. But I'm not going to blow off the HBU analysis on the basis of Fannie saying they don't care. And if I have the data which demonstrates it I'm not going to blow off the values of each component.

 

[Lee Lansford]

I guess the damage to the public trust is like the intruder/spy you alluded to on the IL board that kept us in suspense so long that you didn't have to support it? You know but you can't say? Nice. Duck duck goose? C'mon dude, you were born with a pair (I assume), stop deferring and start explaining. I have no doubt you are intelligent and have your reasons for your opinions, but you duck, dodge, run etc rather than elaborate. WHERE IS THE PUBLIC TRUST DAMAGED BY THIS FNMA PUBLIC DECLARATION OF LOAN ELIGIBILITY?

Perhaps having appraisers incorrectly 'lumping' together 2 opinions of what should be MV of each individually and labeling the one value opinion as MV when it may be Value in Use or Builk Value, that might be a problem...but, perhaps not for you and Andrei Fin and JGrant.

No, of course not. No problem at all .