Appraisal Independence & Bias

[George Hatch]

The lenders, who were the cause of the problem in the first place, shouldn't have been allowed to choose the solution.

You haven't thought this through.
Can't hold the lenders accountable for their decision making unless without also ceding to them the discretion to make those decisions.

If not the lenders themselves, then who? Surely you're not suggesting that discretion be outsourced to a disinterested 3rd party that is not working for either the origination side nor the due diligence side?

 

[J Grant]

You haven't thought this through.
Can't hold the lenders accountable for their decision making unless without also ceding to them the discretion to make those decisions.

If not the lenders themselves, then who? Surely you're not suggesting that discretion be outsourced to a disinterested 3rd party that is not working for either the origination side nor the due diligence side?

Then who? A government-run panel, the way the VA panel is or the way old FHA panel was. That is the only disinterested third party. It is govt via taxpayer backing of loans that allow the lenders' fat profits by being able to offer borrowers the preferred rates and terms of the taxpayer-backed loans.

The AMCs are NOT a disinterested third party because they have a conflict of interest. To survive economically, the AMC's need to keep the originating side happy because the originating side is their customer.

And keeping the lender client happy means, in many cases, ensuring that the appraisers deliver a minimum of "low" values. Virtually every appraiser here who has worked for AMCs has experienced being dropped from work after coming in "low" on more than rare occasion. Most of us in the past have experienced brutal ROV's from an AMC if the value was "low," which could last for days and involve multiple rounds of comps sent and petty revisions for nothing. This was a Darwinian way to teach appraisers that coming in low would be punished, and it was.

 

[George Hatch]

The GSEs can enforce their internal policies, the banking regulators can enforce the existing regs as written. Fire the individuals who are violating the AIR and if its an AMC then ban the AMC from participating in those conduits. Etc, etc.

Enforcement is always the weakest link, regardless what the rules are or where they come from. But the numbers are the numbers - cheaper and easier to regulate the limited number of lenders than to attempt to regulate the barbarian hordes.

 

[chad hampton]

Now that the loan production teams have control of the appraisal portion through waivers and direct contact with AMC staff appraisers, I don’t see them giving that up.

 

[djd09]

with a mortgage broker, a waiver, and ACE, the sky is the limit...

 

[George Hatch]

Now that the loan production teams have control of the appraisal portion through waivers and direct contact with AMC staff appraisers, I don’t see them giving that up.

In what way do sales have contact with staff appraisers? Because if a lender is engaging or accepting appraisals where that happens its a violation of their regs. And the GSE policies.

When was the last time you did an AMC assignment and had the loan originator contact you? Miuch less control any aspect of your assignment? Because if that happened you were supposed to snitch them out to the compliance officer at the AMC or lender, and not complete the assignment. If you do direct engagement assignments those engagement letters will TELL you to not interact with anyone outside of the appraisal pipeline.

As for the waiver element of your comment, I suggest you read it aloud to yourself to hear whether that makes any sense: If the waiver dodges the appraisal requirement then there is no appraisal for the loan salesmen to control. Duh.

 

[ZZGAMAZZ]

I'm with George on this. I really don't care who the borrower or owner or agents or builder or loan officer is. My job, as appraiser, is to tell the story of the subject property. The borrower, owner, agents, and/or builder isn't an Intended User.

True That. But IMO because of readily available online info, especially for a marketed purchase, the appraiser should be able to nail the Opinion of Value easily with a 5% max margin of error in 90% of all assignments. One brackets the salient value-related factors, appllies sensivity, and the adjusted value range inevitably based upon at least, say, the adjusted values of six of seven sold comps, is narrow to the extent that the Opinion is obtained within that range, with the location within the range based upon factors that weren't addressed in the SCA grid. Granted that an outlyer exists periodically although sufficient due diligence should 'splain 95% of any value-based factor. Just IMO but it still takes several hours to write every report even using Spark to populate the report.

 

[OSU Beavers]

with a mortgage broker, a waiver, and ACE, the sky is the limit...

What is ACE?

 

[Dublin ohio]

What is ACE?

Basically a waiver with a PDR

 

[J Grant]

True That. But IMO because of readily available online info, especially for a marketed purchase, the appraiser should be able to nail the Opinion of Value easily with a 5% max margin of error in 90% of all assignments. One brackets the salient value-related factors, appllies sensivity, and the adjusted value range inevitably based upon at least, say, the adjusted values of six of seven sold comps, is narrow to the extent that the Opinion is obtained within that range, with the location within the range based upon factors that weren't addressed in the SCA grid. Granted that an outlyer exists periodically although sufficient due diligence should 'splain 95% of any value-based factor. Just IMO but it still takes several hours to write every report even using Spark to populate the report.

This has been true for decades.