C4 is the new C5.

[Rich Heyn]

The GSEs have provided six definitions for condition ratings, plus some additional guidance in a newsletter:

https://www.fanniemae.com/content/news/uad-newsletter-april-2012.pdf

1) The appraiser views the subject dwelling and holistically (with the exception of C6) determines the rating that best fits the subject property.

2) If the appraiser has been instructed to report ratings on an "as-is" basis the appraiser rates and reports the condition of the property as it exists on the effective date of the assignment.

2 Alternate) If the client has instructed the appraiser to develop a "subject-to" appraisal for properties in C5 or C6 condition based on the hypothetical condition that certain repairs or improvements will be made to bring the property into, say, C4 condition, then the appraiser develops the opinion of value accordingly, and rates the property as C4 under the HC.

A lender's policies have nothing to do with how the appraiser rates the condition of the property, other then the "as-is" versus "subject-to" issue, which is the lender's call.

I guess I'm missing something here in that I don't see a problem, other than the age-old one of some lenders pressuring appraisers to commit fraud.

 

[Mr Rex]

MHT has been smoking the GMO ganja, pay no attention to the man behind the curtain of smoke.

 

[Mile High Trout]

Well I hope you don't see it that way, that I'm 'playing ball' Rich.

Some properties I honestly felt were financeable without repair, and did not have mandatory repair requirements per FHA order, ended up needing new appraisals since I rated them a C5 instead of a C4.

Retrospectively, I should have rated them C4, not C5, if I thought there were no subject to conditions to consider. That's my point.

Per lender pressure, I brush that off and am not worried about fraud from my end.

For lenders who insist you call c4, when you otherwise would have made a subject to statement, that's a problem, certainly.

I'm not clear how you've connected fraud to this topic, except that your statement might be generalized, and not directed at me specifically.

 

[Mile High Trout]

MHT has been smoking the GMO ganja, pay no attention to the man behind the curtain of smoke.

That's not fair! I'm more of a food, fuel, fiber advocate than anything else with that topic. I'm a liberty lover, not a hopeless stoner. And if Monsanto starts incorporating mixed species genomes into MJ, I might just reconsider my position on that. Luckily, the MJ is at the top of the plant chain, and has natural resistance which it shares with surrounding Fauna via soil rehabilitation, without any human intervention.

Look, what I've said in more simple terms: If a property does not need any mandatory repairs, in most cases, it should be rated C4.

That's all I'm saying. I'm not saying pander to lenders or be an advocate.

A good appraiser understands the lending system, and 'is the eyes and ears on the ground' for the lenders decisions. How can I be the eyes and ears when I would say a property is all good, but caveat a c5 so the lender could not loan on it? This is a topic on process, not lender pressure. Nobody ever pressured me to change my C ratings, that's an important point to be made. If the whole lending community rejects c5, well, that's the point actually.

 

[Mr Rex]

That's not fair! I'm more of a food, fuel, fiber advocate than anything else with that topic. I'm a liberty lover, not a hopeless stoner. And if Monsanto starts incorporating mixed species genomes into MJ, I might just reconsider my position on that. Luckily, the MJ is at the top of the plant chain, and has natural resistance which it shares with surrounding Fauna via soil rehabilitation, without any human intervention.

Look, what I've said in more simple terms: If a property does not need any mandatory repairs, in most cases, it should be rated C4.

That's all I'm saying. I'm not saying pander to lenders or be an advocate.

A good appraiser understands the lending system, and 'is the eyes and ears on the ground' for the lenders decisions. How can I be the eyes and ears when I would say a property is all good, but caveat a c5 so the lender could not loan on it? This is a topic on process, not lender pressure.

Can you say advocacy?

 

[Mile High Trout]

Advocacy : the act or process of supporting a cause or proposal : the act or process of advocating something

I'm advocating 'sensible C ratings which are properly aligned with the appraisal conclusions at hand.'

By your interpretation, whenever an appraiser states a property is insurable, they are advocating on behalf of a lender.

That would make every government foreclosure appraiser in this country an advocate, by your definition. That's a pretty broad brush stroke.

Step back and try to understand my perspective. I'm fully willing to restate my argument in more sensible terms, if i've come across that way. But honestly, I think you're jumping the gun by calling me an advocate.

Price advisement, insurability advisement. Those are the sow issues. How can you advise on insurbility two different ways at once? You can't say insurable, and then give it a rating that is uninsurable. That's my point. / Even with normal UAD orders, these train of though would apply, I think.

If the appraisal is a tool by which lenders make risk management decisions. How can the lender make proper risk management decisions if I provide them conflicting information? Am I a defacto advocate, because I have a clear position that a property is either insurable, or uninsurable?

And suffice it to say, only rarely is this issue included in the sow, except like NC stated, as a minimum standard.

 

[Mr Rex]

C5 is not un-insurable, but you make the case for C4 to keep the property from being "un-insurable". Sometimes a POS is just a POS. Rather than call it a POS in a PC World, you have C5, so you can sleep at night. It is what it is, by trying to "make the deal" you denigrate the need for a professional appraisal and thus denigrate the appraisal profession. Put on your big boy britches, add a jock strap and cup if you need to, and tell the truth as it is. (That last thing is a period)

 

[Rich Heyn]

1) Well I hope you don't see it that way, that I'm 'playing ball' Rich.

2) Some properties I honestly felt were financeable without repair, and did not have mandatory repair requirements per FHA order, ended up needing new appraisals since I rated them a C5 instead of a C4.

3) Retrospectively, I should have rated them C4, not C5, if I thought there were no subject to conditions to consider. That's my point.

4) Per lender pressure, I brush that off and am not worried about fraud from my end.

5) For lenders who insist you call c4, when you otherwise would have made a subject to statement, that's a problem, certainly.

6) I'm not clear how you've connected fraud to this topic, except that your statement might be generalized, and not directed at me specifically.

Hope you don't mind, I edited the quote by adding numbers to make things easy to follow.

1) I don't see it that way at all and did not intend to imply that in any way.

2) A lender's policies regarding if a property does or does not qualify for financing don't have a darn thing to do with how an appraiser should rate the property condition, other then whether the assignment is "as-is" or "subject to."

3) This is the part I don't understand. If the property was actually a C5 why should you have rated it anything else? Some days I'm kinda slow to get the point, so if you could please expand on this, I'd appreciate it.

4) That's good.

5 & 6) The statement was not in any way directed to you specifically. When a lender asks an appraiser to overstate the condition of the property and he or she does it, it's fraud. That's how the F word is connected to this issue.

 

[Mile High Trout]

Rex, I think the answers are in the details of the C descriptors.

Me previously: When all items from cost to cure are answered, and there were no "significant repairs" left, then the subject should presumably go c4 in most cases.

Now I did not bind that with an absolute statement.If there is excessive deferred maintenance, it could still go C5.

It seems to be a pretty straightforward issue, when you look at the details, that if no mandatory repair damage exists that effects the 'health and safety of home and residents', that C4 is the most appropriate rating, more often than not

 

[Mile High Trout]

3) This is the part I don't understand. If the property was actually a C5 why should you have rated it anything else? Some days I'm kinda slow to get the point, so if you could please expand on this, I'd appreciate it.

Roger those other points. Thank you.

Well like usual, I make a mountain out of a molehill and confuse people around me in the process.

Why did I rate it anything else? Because per Fannie guidelines or whatever I read on C ratings. They stated that C5 is acceptable for lending.

Therefore, if a property was weak, but lendable, I'd give it 'a floor rating', or a 'lowest possible, but still lendable rating'.

Having learned that in the real world the 'floor rating' is C4, I feel it's appropriate to adjust my methods so my reports accomplish the intended goals of providing meaningful and straightforward analysis so the lender can make their own risk management decisions.

It's a catch 22 issue.