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Fannie Mae Appraisal Wavers

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wyecoyote

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
Talked to an underwriter the other day about the FNMA appraisal wavers. They were participating in these. However, they have discontinued the participation. The UW stated that the AVM's values were to far off of the actual value of the house and that they percentage of foreclosures on these were unacceptable. The UW stated that in one case the value of the AVM was over $300,000 less than the actual market value provided by an appraiser. Also that in another case the subject had acreage of 10+ acres. The AVM over stated the value by over 30% because it did not take in the wetlands consideration of the site. And the comp's used in the AVM were all sold to developers. They took this one back 6 months after it closed. The HO simply pocketed the cash and moved on.

I don't know if anyone else has heard of this but, it does go to show what would happen if they got rid of the us appraisers. Has anyone else out there heard of these issues with the pilot program? Maybe that is why it has not come into full effect by FNMA.

Ryan
 

chazjazz9

Freshman Member
Joined
Jan 30, 2002
Looks like some UW have the brains and the olfactory prowess to wake up and smell the coffee. While I think the AVM works well in cookie-cutter developments if everything is automated I'm not sure when the UW will be able to know before ordering if a property is "cookie cutter" or not.

Seems like smaller lenders have the advantage here if they lend locally -- national lenders trying to identify characteristics of local markets seems laughable.
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
Ryan,
It is something alot of us appraisers have been saying all along concerning the use of AVM's. Now some might say that AVM's are a tool to benefit appraisers, but I don't see it. By the time you get yourself up to speed on understanding the regression model used for all the AVM's out there you might as well just do your own simple regression on each appraisal. Are these appraisals waivers being used on tranaction amounts that exceed $250,000 of federally insured money? If so Is that not a violation of federal regulation?
 

Leon Stewart

Member
Joined
Jan 15, 2002
FRR:

The Authorities are only concerned about Appraisers violating the Regulations, lenders are not the problem.

Don't expect the Lenders and FNMA to drop the AVM Program they have too much invested. They will just do some tweaking and move on.

leart3
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Every AVM I have reviewed has significant problems with data and evaluation. The idea of an AVM is to make the deal, not to provide a justificable and defensible estimate of value.
 
Joined
Jan 16, 2002

Every AVM I have reviewed has significant problems with data and evaluation. The idea of an AVM is to make the deal, not to provide a justificable and defensible estimate of value.

Well said and straight to the point.

It's a perfect scam, especially in light of all the techo-geeks out there who actually believe in such models, if the computer says so it must be true.
 

Joe Moore

Junior Member
Joined
Jan 30, 2002
Professional Status
Appraisal Management Company
State
Pennsylvania
It's my understanding that there is no AVM tied into the waiver program.

In regards to AVM's, I've had the opportunity to cross reference hundreds of these with completed appraisals over the course of the past few years. In addition, I also cross reference appraisals with each other in the course of my work.

I can say that from a national perspective the value variances going from appraisal to appraisal, and AVM to appraisal unfortunately isn't as different as many appraisers would like to believe, even in less populated areas. I won't pretend to be an AVM advocate, as I do believe an appraisal completed by an experienced professional should always be better, however I do believe AVM's have their uses, as long as the user recognizes the limitations of the data provided.

Instead of complaining, I think it would make more sense for appraisers to take a step back and recognize exactly WHY AVM's are being considered instead of appraisals. Cost and time are certainly factors, but the bottom line is quality and service, something anyone who has experienced on a national scale will tell you is lacking in many areas of the country, (regardless of fee, by the way).

I don't think anyone has a problem paying for something that has value, but when you consistently get reports back weeks late, covered with typos, on the wrong forms with missing signatures, maps, photographs, etc., (and this happens again and again when you're dealing with volume reporting), over time the search for alternatives has to be inevitable.

What appraiser advocate is addressing this issue?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Joe:

With all due respect for the quality of reviewers in the company at which you work, who have caught more than a few typos, forgotten signatures etc on MY part.

The cost for all that review and your assumption of liability to your client is some serious over head, for your value added service, despite the client being provided with a nicely complete (if occasionally inaccurate) report...

There are days added to the process due to communication glitches, since appraisers canot contact the client directly... there are problems when orders come to us incomplete... missing data, incorrect phone numbers or addresses, etc...

In some instances the client does not really understand what they want or need on a given property....

The kids game of telephone is a pretty good good analogy.

Few respectable appraisers who produce properly T's crossed and I's dotted appraisals can afford to work for you. Since you cut the fees again in our area, obviously some of my competition is either working a whole lot smarter than I - or 8O (gasp) cutting corners to meet time frames and production requirements.

What is your company doing to help solve the problem of poor quality appraisals instead of contributing to it??

You seem to be contarcting with desperate appraisers who do not (and cannot) under the terms of contract perform quality work??? :?
(24 hour turns are ususally not reasonable in our market.)

Regards,

Lee Ann
 

Joe Moore

Junior Member
Joined
Jan 30, 2002
Professional Status
Appraisal Management Company
State
Pennsylvania
Lee Ann,

I don’t see how any of your comments relate to the AVM issue. Quality is a problem nationally. Fraud is a big part of that. So is a lack of understanding of USPAP, Fannie Mae requirements, or basic appraisal theory, even on the part of appraisers with double digit years of experience. Certainly this isn't every appraiser, but how many field reviews have you done where you've found gross mistakes? How many prior reports have you seen where the value was obviously inflated?

As far as my company is concerned, we have a quality program designed to evaluate every report prior to client delivery, working with each appraiser to provide the client with the best, professionally presented, logical, unbiased report possible. In no cases do we expect the appraiser to “cut corners,” but instead we expect the appraiser to live up to the commitment made at the time of assignment.

My company does a lot to help solve the problem of poor quality appraisals by monitoring the performance and quality reporting of every appraiser who does work for us, screening out problem appraisers, ensuring our clients that only the best work is being provided for them. I also personally have been involved working with the various state licensing boards, helping to isolate problem appraisers, as we do a lot of portfolio anaylsis evaluating broker originated work. I also do my part to bring attention to the national problem that any client working with volume needs outside of a quality driven management structure faces when looking for high quality appraisal reports.

My comments come from more than thirteen years of experience working with a high volume on a national scale. My company certainly would not be competitive if our focus was on hiring “desperate” appraisers (I hope you aren’t including yourself in that category??), and appraisers that do not meet quality and/or service commitments are not kept on our panel. This is reevaluated every 30 days. I believe the appraisers that we use are at the top of the industry in terms of quality and performance, and having worked with many of them for 5-12 years I have seen that their valuations and work history has stood the test of time.

However, ask any national industry professional about the difficulty in finding qualified appraisers outside of an established management system that’s focused on service and quality and they will tell you the same story, one of frustration and disbelief.

I think any appraiser who is seriously upset and confused about the use of AVM’s and other appraisal alternatives in this country should be given the opportunity to spend the time to see what’s realistically involved in recruiting appraisers for volume work in multiple states, and be accountable for the resolution of that work (quality/service, etc.) in a timely fashion. The considerable work that's involved in this process, what any potential client would have to do simply to get appraisals done, (unless using an established management company), is something that more appraisers need to recognize as something that's significantly hurting the industry as a whole, and has not improved, but instead is getting worse over time.

As I've indicated AVM's are a logical symptom of this, and this is an issue that has been largely ignored.
 
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