comp values in nondisclosure state

[CANative]

Well, none of that is accurate and none is part of FD.

I'm thinking that your loan broker feels that since Barney Frank somehow had his hand on FD the law is now icky. lol

 

[CANative]

PS, the underwriter approved the application but would not accept the appraisal without narrative on the appraiser's conclusions since that is allowed in the guidelines.

Good on the underwriter / shame on the appraiser.

 

[George Hatch]

ie, the highest appraisal for a home can be no higher than the last highest sale in the area.--a house just sold for 560k, so that is the new ceiling--. Or you can't use a comparable across a county line, even if it is close and otherwise comparable. Lender cannot choose an appraiser and must simply send a appraisal request to AMC. and many more that get quoted by lenders as being told to them by appraisers. These are the kinds of things I am hearing in the name of the new rules in the aftermath of Frank Dodd. I could be wrong with the Frank Dodd reference, but this is what I am told.

With respect, almost none of the non-appraisers who comment on appraisal issues have more than just the most superficial understanding of what we actually do or how we do it. None of those elements you're referring to are related to Dodd-Frank or its predecessor (the HVCC agreement with Fannie/Freddie). Well, the AMC-element you mentioned is related to D-F even though it's in error.

As for "lenders" I think you may be commingling the roles of the loan originators (mortgage brokers) with the role of the lending institutions that actually underwrite and fund the loans. The MBs like to refer to themselves as lenders even though they don't make any lending decisions and they don't loan any money. They are and have always been mostly ignorant of appraising except to the extent that prior to the HVCC and D-F they could control the appraisals. Now they can't, which is why so many people are now shocked to find out how often an independently engaged appraisal won't just rubber stamp the deal. Asking an MB about appraisals and appraisers is like asking a convict about criminal law. Most of them can barely spell the word "obsolescence" let alone recognize it in an appraisal context or explain the concept to you.

When the appraiser's relationship is with the loan originator the results can sometimes be a little different than when it's with the lender who's actually making the loan. Which if you think about what appraisals are supposed to be used for actually makes some sense.



I have seen these types of issues clarified with supporting guidance. I have found that lenders don't know the Fannie Mae guidelines on appraisals but the underwriters within lending do. In my situation, the underwriter simply wanted wanted the appraiser to document the logic of his conclusions which I recognize can be complex, but allowable under Fannie Mae guidance.



I am not meaning to bash, to the contrary, I am learning the complexity of appraising and realizing that lenders should ask for appraisers with experience related to their projects and let the professional judgment reign. With this knowledge, I think I will have a lender with an appraiser with the right experience and the appraisal may come in lower than my pre-construction number, but at least it will have the same standard of analysis.

Apart from the value conclusion itself, the decisions a lender makes about your loan are primarily driven by their own internal policies. That includes the mode and method of valuation that they will "accept" as being meaningful to their decisions. When a lender tells an appraiser they won't accept a sale from across the county line that has an effect on how the appraiser does their thing. When a lender declines to "accept" an appraisal conclusion that exceeds the highest previous sale in the neighborhood that's them exercising their prerogatives. The same is true when the "accept" more aggressive approaches to valuation - as has happened in the past and will happen again in the future.

Lender "acceptance" has a big influence on the appraisals they choose to use.

 

[George Hatch]

PS, the underwriter approved the application but would not accept the appraisal without narrative on the appraiser's conclusions since that is allowed in the guidelines.

That just means they wanted some more explanation. It's not uncommon. On occasion, appraisers sometimes have responded to such requests by copying and pasting the original comments that they already included in the report but which the reviewer or underwriter didn't read. It's not just appraisers who sometimes screw up in their explanations.

 

[utah buyer]

Thanks again guys, good information.