C4 is the new C5.

[Mile High Trout]

Now with peer clarification, and if I could turn back time;

I would title and start this thread this way:

If C5 is not lendable, how can an appraiser call a property C5, and still claim as is acceptability for insurability without any repair being mandatory?

If C4 reflects a scenario where there would be no 'subject to' requirements,

How can an appraiser call that C5, detailing the property is uninsurable.

A property should not be uninsurable if it does not have any repair requirements. If the home is standard, typical, allowable, and legal, how could an appraiser rate it in a way which makes it uninsurable, if there are no repair conditions? That's like saying; It's a great home, but is uninsurable, and there is not a damnded thing to do about it. You can't repair anything to make this insurable. It's just not good enough, and that's that. Or you could try and update it and guess if that would please the appraiser enough to rate it higher. /

 

[Rich Heyn]

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.

Call me dense. I see no catch 22 at all and still don't understand what a lenders "floor rating" has to do with how the appraiser rates the property. Condition-wise, the subject property is what it is according to the definitions.

 

[Mile High Trout]

We're both posting real time. See the previous post, where I detailed that.

 

[Rich Heyn]

Now with peer clarification, and if I could turn back time;

I would title and start this thread this way:

If C5 is not lendable, how can an appraiser call a property C5, and still claim as is acceptability for insurability without any repair being mandatory?

If C4 reflects a scenario where there would be no 'subject to' requirements,

How can an appraiser call that C5, detailing the property is uninsurable.

A property should not be uninsurable if it does not have any repair requirements. If the home is standard, typical, allowable, and legal, how could an appraiser rate it in a way which makes it uninsurable, if there are no repair conditions? That's like saying; It's a great home, but is uninsurable, and there is not a damnded thing to do about it. You can't repair anything to make this insurable. It's just not good enough, and that's that.

Not sure I understand what you mean by "insurable" in this context. Are you saying that FHA won't insure a C5 property?

 

[Mr Rex]

I think in this case "un-insurable" means blow back/pressure from UW to change to C4, no matter that it doesn't matter other than the UW think its better folder fodder not to send C5 upstream given the current "buy back" mentality of those upstream.

 

[J Grant]

Some properties I honestly felt were financeable without repair,

A) Why are you so concerned with whether the properties were financeable
and
B), It is not up to how you "honestly felt", the condition and quality ratings are absolutes and well described, it is not how the appraiser "feels" about the property, observe and report what exists and stop playing games.

This is why the UAD was invented, to close the weasel loopholes and perhaps some good will come out of burdening appraisers with it. For condition, C 5 and C 4 are now defined, and the fudge factor of calling both of them "Average" is gone.

 

[Mile High Trout]

Perhaps I should have put this in the FHA section. This is sort of misleading in the general section.
__________

Rich that's a great question. According to underwriters, they can't sell a loan with C5.

Per insurability:

Either a property meets 'minimum property requirements' or it does not.

To state a property does not meet minimum requirements usually means a cost to cure is necessary.

Per the details of verbiage on C ratings, if mandatory repairs were necessary, that would cause C5 every time. Per Fannie FAQ on UAD, that's actually C6.

So the catch 22 is: How can you say a property does not meet minimum property requirements, without assigning a cost to cure?

In all practicality the C4 or above vs C5 or C6 is what details weather or not a property meets minimum property requirements.
___________________

If the purpose of the appraisal is to provide meaningful information for lenders to make risk management decisions, how can a lender make proper risk management decisions, if we provide them conflicting information?

Such a conflicting information scenario occurs when an appraiser notes a property C5, but does not assign any costs to cure so the property could elevate itself to minimum property requirements.

I'm already regretting starting this thread. Oh well. I don't write the guidance documents, I just do my best to interpret them.

 

[J Grant]

If the purpose of the appraisal is to provide meaningful information for lenders to make risk management decisions, how can a lender make proper risk management decisions, if we provide them conflicting information?

Such a conflicting information scenario occurs when an appraiser notes a property C5, but does not assign any costs to cure so the property could elevate itself to minimum property requirements.

YOU are the one providing "conflicting information. The ratings are clear, C 4 or C 5, subject to or "as is". By fudging things / trying to "elevate" properties in MPR you are in fact NOT providing the information for the lender to make decisions. You are editing and massaging the information.

The fact that you don't get what is wrong with this is part of the problem.

I have posted sometimes with some comments that left me with egg on my face but l learned from them and was able to admit, if only to myself, where I made an error in thinking. An appraiser who can not consider other peers' points of view or that they may be wrong can not solve the problem.

Appraisers rationalize fudging by believing they are being "practical", client friendly, "helping", and the like.

 

[Mile High Trout]

I'm dropping this, because I've got things to do. I think I've made my position sort of clear, hopefully.

I think in this case "un-insurable" means blow back/pressure from UW to change to C4, no matter that it doesn't matter other than the UW think its better folder fodder not to send C5 upstream given the current "buy back" mentality of those upstream.

But with government foreclosure orders you don't get any blow back pressure. However, It seems sort of misleading to provide a conflicting reporting scenario, in those unusual cases where a property is on the fringe of lendability.

I appreciate your point there REX, and I suppose you've most wisely identified the root cause of this issue. And that's the appraisal environment we appraise in. High pressure, high liability.

I think to properly form an argument about this, we need more imperical data about lenders lending on C5. It's my understanding it's no go. However, I could be wrong. Who here knows of lenders who loan on C5's?

Some properties I honestly felt were financeable without repair,

A)
B),

This is why the UAD was invented, to close the weasel loopholes and perhaps some good will come out of burdening appraisers with it. For condition, C 5 and C 4 are now defined, and the fudge factor of calling both of them "Average" is gone.

Jaded lately?

A: That's part of the scope of work for government foreclosure. They don't know what they're dealing with, condition wise as that relates to marketability. So in order to market the properties, the contractors include insurability statements in the scope of work. In other words, insurability means the same thing as financeability.

B: I 'feel' about a property, after critical analysis. The term 'feel' is relative, and you're misreading me. Except when I have to say; It's too bad about all these damages, that could have been a real nice home if they'd treated it better. When I say I felt the property was this or that, I'm detailing professional opinions, not emotions.

JGrant, you're assuming my intention is other than what it is. If there are repair requirements, they're called. Read the highlighted details in my previous posts, between the narrative for C4 and C5. I think it's pretty self explanatory, and I merely built an argument around existing text. I think I'd been doing it wrong, and I'm changing my opinion of ratings .
___________________________________________________________

I feel like spock in front of the Science Academy. I'm Out!

Vulcan Science Minister: You have surpassed the expectations of your instructors. Your final record is flawless, with one exception: I see that you have applied to Starfleet as well. <>Why did you come before this council today? Was it to satisfy your emotional need to rebel? Spock: The only emotion I wish to convey is gratitude. Thank you, Ministers, for your consideration. Live long and prosper.

http://images1.wikia.nocookie.net/__cb20101117060038/memoryalpha/en/images/5/5e/SpockCouncil.jpg

 

[Rich Heyn]

1) Rich that's a great question. According to underwriters, they can't sell a loan with C5.

2) Per insurability:

Either a property meets 'minimum property requirements' or it does not.

To state a property does not meet minimum requirements usually means a cost to cure is necessary.

3) Per the details of verbiage on C ratings, if mandatory repairs were necessary, that would cause C5 every time. Per Fannie FAQ on UAD, that's actually C6.

So the catch 22 is: How can you say a property does not meet minimum property requirements, without assigning a cost to cure?

In all practicality the C4 or above vs C5 or C6 is what details weather or not a property meets minimum property requirements.
___________________

If the purpose of the appraisal is to provide meaningful information for lenders to make risk management decisions, how can a lender make proper risk management decisions, if we provide them conflicting information?

Such a conflicting information scenario occurs when an appraiser notes a property C5, but does not assign any costs to cure so the property could elevate itself to minimum property requirements.

1) I don't understand what that has to do with how an appraiser rates property condition. Unless, of course, in cases where the lender has indicated to the appraiser than anything rated C5 or C6 must be appraised "subject-to" in which the appraiser simply rates it C4 (or whatever) and outlines the "subject-to" conditions.

2) To whose "minimum property requirements" are you referring? And I don't understand how cost to cure plays into establishing an "as-is" property rating. Does FHA not accept C5 properties?