It was you that asserted that the alternatives were more risky. I just asked if you had data to back that up. Pretty simple.
"More risky" as compared to what? Do you think traditional appraisals are perfect?
When alternatives to traditional appraisals are considered for potential adoption that is only done after extensive testing. One of the major hurdles a new method has to get over is that it must provide risk management that is at least as good (preferably better) as the current process. That analysis is not done anecdotally; it is done with data and math.
It is called risk management, not risk elimination, for a reason. No matter how good the controls are, some loans go bad. That is part of lending.
THIS is the problem I was trying to point about substituting risk management " for Evaluation of the subject for a lending decision"
Despite George Hatch saying it is just semantics, they are NOT the same or similar using a different verbiage
Risk management is not just the evaluation about the property, it is about RISK down the road (some loans go bad). That is about borrower performance and future events.
So they assign a not intended use to an appraisal ( risk management ), then, since appraisals were not designed for risk management, they say other valuation methods are no more worse at risk management so let's replace appraisals.
Appraisers fall into the trap when they say other products are more risky than appraisals. The metric is are other products as good as or worse than appraisals at providing ALL the information needed to make a good lending decision for property evaluation purpose.
Is that true though -if a WAIVER is same risk or slightly less risky than an appraisal, then why aren't the humans who came up with the point value for the Waiver liable for the value? Clearly, the stakeholders don't want to assume it, so they relieve the lender of reps and warranties ( liability ) if property was over valued or faulty and a default happens
The appraisal is no better than other products at risk management because
an appraisal was not designed as a risk management tool . We are powerless to stop lenders and stakeholders from using appraisals as a risk management tool, but then they use that to say
appraisals being nothing to the table wrt risk management so let's replace them.
However, seems appraisals are still "better" as an evaluation product, it's intended use. I say that because the original appraisal is still relied on for a refinance LTV, for an existing loan with a lender when they grant a WAIVER and rework rates on the loan balance. Consider the short form products/desktop/hybrids, are still an appraisal needing the appraiser point value signed by appraiser and by extension lender takes liability for the valuation aspect, because not doing so would add to risk and thus spike mortgage rates up as then all valuation liability would shift to the taxpayer
