Thank you for the link, printed it out and will take the info to our next appraiser's group meeting.
I think too many of us have "mis-read" what Fannie is doing with the appraisal waiver....it doesn't apply to all applications, only a small percentage will qualify.
It's funny, I get Fannie Mae liquidation appraisal assignments all the time, do you suppose they can waiver those???? LOL!
Mike,
Ineteresting your should mention Fannie Mae Liquidation or REO Assignments. Here is a copy of a Letter to the Editor or the Florida Association of REALTORS Member's Only Website Published last week.
Letter to the Editor
Let's not repeat history
Re: Fannie Mae experiments with forgoing appraisals
Clearly, there are situations when an appraisal is overkill and should not be required. For instance, refinances, purchase money mortgages and equity loans less than 50% of the property's value. Value could be determined by tax assessment or Broker's Price Opinion. Many lenders have been taking advantage of their ability to forgo an appraisal considering the deminimus level of $250,000 for residential loans.
My concern is the loan/value ratio, the risk to a Federally Chartered Secondary Lender, the reliance on technology which is proprietary and untested by a volatile and uncertain market, and the resulting risk which might be absorbed by the Federal Government, hence, taxpayers. Although newspapers and Web sites are full of stories documenting cases of appraiser participation in providing appraisal reports for originating fraudulent loans, at least there is the requirement for an appraisal to independently offer an opinion of value and there is a mechanism in place to regulate the appraisal profession. There is no regulatory scheme in place or envisioned to discipline a machine. How long will it take for unscrupulous individuals to come up with methods to tweak the numbers and slip fraudulent loans through Fannie Mae's new program?
A recent news story in American Banker reports 60 to 80 percent of credit reports are now believed to have incorrect data, which can produce inaccurate scoring. If the credit reporting agencies cannot keep their databases clean, what does that say for the operators of the Automated Valuation Models? Errors in either direction will end up costing consumers and taxpayers much more than what is "saved" by not properly evaluating the security offered for a mortgage loan.
The general health of the GSEs is being questioned by some in the mortgage industry. Will this new program, and similar ones soon to follow, tend to weaken them more? What effect would that have on the availability of mortgage money and it's cost, as well as the housing market?
The appraisal is most likely the least expensive component of the mortgage loan procedure and might be one of the most important. The potential savings touted by Fannie Mae amount to a cheap night on the town. To this biased observed, it appears as though the effort is directed to remove an obstacle rather than provide a savings for the borrower.
Back in the eighties, Congress studied mortgage lending and appraisals as a result of the collapse of the thrift industry. Doesn't it make sense to learn from history, rather than repeat it?
Here is an excerpt from a congressional report written in the wake of the collapse of the Savings and Loan Industry in 1986.
"The real estate appraisal serves a variety of purposes, which affect investment choices, insurance decisions and regulatory activities, in addition to the primary area of loan origination. In the case of lending institution officials, it provides market information and other critically important data to support sound underwriting decisions on risk exposure, loan-to-value ratios, and maximum loan amounts. The appraisal also serves as an essential part of the process by which public (e.g., VA and FHA) and private sector mortgage insurers attempt to assure themselves of an, acceptable risk of loss. Similarly, and particularly in recent years that have seen tremendous growth in the secondary mortgage market and in the sale of mortgage-backed securities, the appraisal serves as one of the principle means buy which individual investors and institutions, (e.g., Fannie Mae, Freddie Mac, and thrifts) evaluate the quality of the loans they purchase. Finally, the appraisal serves as an important tool used by Federal and State regulators who supervise the Nation's financial institutions, to monitor loan portfolio quality both in terms of the institutions' overall soundness and the potential risk exposure to State and Federal (FDIC and FSLIC) insurance funds.
In short, accurate and reliable appraisals have come to serve new and increasingly important functions. They are essential, not only in the loan origination context, but in the broader realm of the public's perception of and confidence in the Nation's real estate finance and mortgage insurance and investment industries."
At any rate, every appraiser I know is busy as all get out. If Fannie starts taking these properties back, the first thing they'll do is order an appraisal to see what in the heck they own. There is plenty of business for appraisers other than loan originations. We appraisers just do not want
to see a repeat of the eighties.
Sincerely,
Francois (Frank) K. Gregoire IFA RAA
Gregoire & Gregoire, Inc.
St. Petersburg
p.s.
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