Appraisal Bias

[Zoe]

I just received an email from one of my best lending clients that listed 77 words that will cause an appraisal to be sent back for revision if found in the report. A lot of them make sense but included in the list are:
Illegal
Good
Average
Fair
Poor
Homogenous
House of Worship (if you can't say church, mosque, temple, synagogue or house of worship, what are you supposed to say when the subject abuts one?)
Young
Mature
Old
High
Low
Strong
Weak
Rapid
Slow
Fast
Diverse
Context is VERY important. IMHO, outright banning these words is completely ridiculous. If you looked at every appraisal I've written in the last 35 years I would guess you would find one or more of these words in 99% of them but not used in a way that indicates bias. I don't want to lose the client but we're going to have a problem if they send back every report that has any of these words used in a context that has nothing to do with bias.

Intended use and user has flew the coop. The new narrative in the appraisal report needs to be clear so that the borrower can understand the process to how the market value opinion was derived. That is what is going to get many people in serious trouble with CFPB.

 

[GP-CT]

I think everyone should copy and paste the full text of FNMA's Quality and Condition ratings descriptions in a text addendum so that all the scanners will get a crack at them. A partial list of their subjective terms includes: usually, unique, typically, exceptionally, refinements, highly, high or very high, above-standard, significant, well, acceptable standards, stock, adequate, some, may, economy, basic, main, plain, readily, minimal, limited, minimum, inexpensive, lower, may, often, simple, unskilled, minimal, substandard, non-conforming, recently, rehabilitated, remanufactured, like-new, significant, extended, little, virtually, recently, refinished, outdated, updated, current, almost, similar, well, renovated, limited, normal, some, not every, short-lived, estimated, majority, need, useable, exceeded.

Makes me wonder how the heck we're supposed to delineate the differences in quality and condition from one property to the next.

 

[Zoe]

I just received an email from one of my best lending clients that listed 77 words that will cause an appraisal to be sent back for revision if found in the report. A lot of them make sense but included in the list are:
Illegal
Good
Average
Fair
Poor
Homogenous
House of Worship (if you can't say church, mosque, temple, synagogue or house of worship, what are you supposed to say when the subject abuts one?)
Young
Mature
Old
High
Low
Strong
Weak
Rapid
Slow
Fast
Diverse
Context is VERY important. IMHO, outright banning these words is completely ridiculous. If you looked at every appraisal I've written in the last 35 years I would guess you would find one or more of these words in 99% of them but not used in a way that indicates bias. I don't want to lose the client but we're going to have a problem if they send back every report that has any of these words used in a context that has nothing to do with bias.

I still use many of these terms. Take for example in a 1004 form in improvements section that asks for materials/condition? What do you use for condition?

Would brilliant, awesome, sucks work? LOL

 

[Dale Floyd]

I still use many of these terms. Take for example in a 1004 form in improvements section that asks for materials/condition? What do you use for condition?

Would brilliant, awesome, sucks work? LOL

Your question and points, are more than valid. I am curious how others are planning to proceed with the condition rating for materials in the Improvement section of the 1004. Are we going to use Condition ratings for each component? EX: Floors: Vn/Cp/C3

What's everybody else going to do? (Wisdom of Crowds)

 

[djd09]

which word upsets them the most...

 

[Paul Isolda]

The more I think about this the more it irks me. One of the things that angers me the most is it is clear that short-sighted non-appraisers continue to make rules for us that are just plain stupid. I'm sure that we're not the only industry suffering from the imposition of stupidity but as a civilization we continue to learn and grow yet people with only semi-functioning brains keep trying to tell everyone what to do and not do.

 

[Tiffany Gibbons]

Your question and points, are more than valid. I am curious how others are planning to proceed with the condition rating for materials in the Improvement section of the 1004. Are we going to use Condition ratings for each component? EX: Floors: Vn/Cp/C3

What's everybody else going to do? (Wisdom of Crowds)

You know, if I was Queen for a day. I'd get rid of the "Energy Efficient Items" line on the 1004 and give myself another line for Big Ole Barns, Farm Shops, etc. not to mention more space in the Porch, Pato, Pool Catagories. Some people really are living the dream but there is no room to get everything in there. Its like trying to write on the head of a pin. And some folks actually do look for houses with all all that crap as a top priority, and I have comparable sales with similar amenities but no room on the form. Yes, I'm wrting an essay about it in the comments but nobody reads that. They need to get rid of that waste of space in their stupid form.

 

[DWiley]

You know, if I was Queen for a day. I'd get rid of the "Energy Efficient Items" line on the 1004 and give myself another line for Big Ole Barns, Farm Shops, etc. not to mention more space in the Porch, Pato, Pool Catagories. Some people really are living the dream but there is no room to get everything in there. Its like trying to write on the head of a pin. And some folks actually do look for houses with all all that crap as a top priority, and I have comparable sales with similar amenities but no room on the form. Yes, I'm wrting an essay about it in the comments but nobody reads that. They need to get rid of that waste of space in their stupid form.

I think you illustrate the challenge very well - different assignments and different regions have different needs. That is the advantage of the new dynamic UAD. For those who need more detail, in any particular area, that will be available on an as-needed basis, rather than relying on a set form/format for all assignments.

There are areas where energy related items are critical to the appraisal, and in those areas the new UAD will allow for expansion of that information. And, in areas where barns, porches, etc. are more important, appraisers will likewise have more data fields to use (when appropriate) and not have to resort to text addendum. In the new UAD there should be no need for "see attached addendum."

 

[RCA]

I think you illustrate the challenge very well - different assignments and different regions have different needs. That is the advantage of the new dynamic UAD. For those who need more detail, in any particular area, that will be available on an as-needed basis, rather than relaying on a set form/format for all assignments.

There are areas where energy related items are critical to the appraisal, and in those areas the new UAD will allow for expansion of that information. And, in areas where barns, porches, etc. are more important, appraisers will likewise have more data fields to use (when appropriate) and not have to resort to text addendum. In the new UAD there should be no need for "see attached addendum."

For appraisers who do complex work using computer languages like R or C#, and where output is typically Excel spreadsheets - will the UAD be capable of allowing excel spreadsheets to be imported? If so, to what extent? --- OR, will appraisers have to type in all the data manually?

In other words, the new UAD could be a step backwards. Way backwards. (Because now I can import Excel into the current URAR with Alamode.)

 

[DWiley]

For appraisers who do complex work using computer languages like R or C#, and where output is typically Excel spreadsheets - will the UAD be capable of allowing excel spreadsheets to be imported? If so, to what extent? --- OR, will appraisers have to type in all the data manually?

In other words, the new UAD could be a step backwards. Way backwards. (Because now I can import Excel into the current URAR with Alamode.)

As today, that is up to the software provider.