Fannie, appraisers move to the back of the bus.

[OSU Beavers]

Less than 2 decades ago we had liar loans. Now they want liar appraisals calling then more accurate. Liar appraisals is a more apt description of appraisal modernization.

Those were called "Stated Income" loans. No need to verify.

Now we have "Value Acceptance" instead of appraisals or as I like to call them "Stated Value" loans.

 

[djd09]

Those were called "Stated Income" loans. No need to verify.

Now we have "Value Acceptance" instead of appraisals or as I like to call them "Stated Value" loans.

the mortgage brokers say it is like hitting the lotto...everyday

https://www.tiktok.com/video/7163891763495849262

...

 

[Non Sequitur]

The most recent fannie newsletter of more better ways than an appraiser. And some of yous think we still have a future.

More innovative, efficient ways to establish a property’s market value​

Leading an ever-evolving market, Fannie Mae has an updated range of valuation options that balances traditional appraisals with innovative alternatives, making the process of establishing a property’s market value more efficient and accurate. These options match the risk of the collateral and the loan transaction.

View attachment 103812

And some still claim this is a blip and traditional appraisals will never go away.

REVAA and its members must be proud.

 

[Sadie]

And some still claim this is a blip and traditional appraisals will never go away.

REVAA and its members must be proud.

Its all cyclical and change is the only constant. We have gone down this road before and it hasn't worked out well for most participants. It just boggles my mind that the decision makers somehow think human nature has changed. There will always be someone ready to take advantage of any system. Extremely few people will challenge a value that gets them what they want. Now its just the waiting game of when the over leveraged need to sell or tap into their equity. Although many of these will be the 'value acceptance' loans, I am pretty sure somehow the appraisers will get the blame, instead of where it needs to go.

 

[George Hatch]

One cliche from the last mortgage bust is that we don't have RE bubbles. We have financing bubbles.

 

[OSU Beavers]

 

[J Grant]

One cliche from the last mortgage bust is that we don't have RE bubbles. We have financing bubbles.

Speaking of fianncing bubbles -
Wrt the valution aspect of financing, the WAIVER/value acceptance circumvents appraisal regulations ( by skipping the appraisal) and DOES WHAT THE HVCC WAS MEANT TO PREVENT - it "hits" a target value or sale price ( providing the value or sale price is within the property Fannie or Freddie AVM range. Incredibly, the LENDER ESTIMATES THE property value as the target value they need to make the loan. That would have been a mortgage broker's wet dream in the last bubble. And to top it off, the WAIVER relieves the lender of reps adn warranties - a fancy way of saying the lender has no obligation for a buy back wrt the collateral value issue- the taxpayers cover it.

If this had been proposed during the bubble, it would have been laughed at. Now it is approved by regulators. How did that happen? We will never know. The banking industry has billions to spend in in lobbying and perks and job offers to those who play ball, so there's that.


The GSE's claim the same or lower risk-, however, there is not way for the general public or data analysts to tell which property was financed using a WAIVER/value accpetnace, since it is not disclosed on MLS or public records. Somebody would need to do a deep dive and get access to the non-disclosed information in order for an outside source to verify there is less risk and more or less overvaluation or homes going underwater etc. Imo, the early stages of the WAIVER program had lower risk when it was limited to a large amount of down payment and strong borrowers and higher equity. Recently it was expanded to low $ down payments, loans, perhaps looser credit or other borrower or property standards. The result of the expansion is unknown since it takes time to play out.

Any fallout will play out differently this time - more like a slow bleed than a crash ( assuming our economy does not implode, fingers crossed it stays stable ) The high prices combined with the high property taxes and insurance is what is hurting people. I see more houses showing delinquent taxes on public records. The last bubble had crazy financing with no $ down and 125% LTV and teaser rates and adjusable rates etc. We don't have that this time, so the overvaluation itself or over-borrowing for a refinance or equity line might be a problem. Folks might have low interest rates if they paid a sky-high price back in 2022-2023, but their taxes and insurance is climbing and they might be underwater in the loan -which wipes out their equity if they need to sell or refinance. -

 

[Sadie]

Speaking of fianncing bubbles -
Wrt the valution aspect of financing, the WAIVER/value acceptance circumvents appraisal regulations ( by skipping the appraisal) and DOES WHAT THE HVCC WAS MEANT TO PREVENT - it "hits" a target value or sale price ( providing the value or sale price is within the property Fannie or Freddie AVM range. Incredibly, the LENDER ESTIMATES THE property value as the target value they need to make the loan. That would have been a mortgage broker's wet dream in the last bubble. And to top it off, the WAIVER relieves the lender of reps adn warranties - a fancy way of saying the lender has no obligation for a buy back wrt the collateral value issue- the taxpayers cover it.

If this had been proposed during the bubble, it would have been laughed at. Now it is approved by regulators. How did that happen? We will never know. The banking industry has billions to spend in in lobbying and perks and job offers to those who play ball, so there's that.


The GSE's claim the same or lower risk-, however, there is not way for the general public or data analysts to tell which property was financed using a WAIVER/value accpetnace, since it is not disclosed on MLS or public records. Somebody would need to do a deep dive and get access to the non-disclosed information in order for an outside source to verify there is less risk and more or less overvaluation or homes going underwater etc. Imo, the early stages of the WAIVER program had lower risk when it was limited to a large amount of down payment and strong borrowers and higher equity. Recently it was expanded to low $ down payments, loans, perhaps looser credit or other borrower or property standards. The result of the expansion is unknown since it takes time to play out.

Any fallout will play out differently this time - more like a slow bleed than a crash ( assuming our economy does not implode, fingers crossed it stays stable ) The high prices combined with the high property taxes and insurance is what is hurting people. I see more houses showing delinquent taxes on public records. The last bubble had crazy financing with no $ down and 125% LTV and teaser rates and adjusable rates etc. We don't have that this time, so the overvaluation itself or over-borrowing for a refinance or equity line might be a problem. Folks might have low interest rates if they paid a sky-high price back in 2022-2023, but their taxes and insurance is climbing and they might be underwater in the loan -which wipes out their equity if they need to sell or refinance. -

I think we only need to look to the head of FHFA and Fannie. Both who think appraisals are a drag on the process. Not a needed piece of information

 

[Non Sequitur]

 

[Elliott]

I've gotten refi- quotes with two lenders....one quoted $1000 for the appraisal and the other $850. LTV on the property is 30%. I'm guessing "Hybrid" in lender speak means "High Junk Fee."