Fannie's Own Statement About Waiver /value Acceptance;

[George Hatch]

The line is there to provide for an adjustment you can identify and quantify. Not to indicate to an otherwise unsupported allegation that some or all or most of these waivers are overvalued relative to the other transactions in the market.

Even with the disclosures we will be wholly incapable of quantifying an adjustment for any specific transaction. Once we acknowledge that fact the rest of the discussion becomes moot from an appraisal perspective.

 

[alebrewer]

still not sure how one arrives as the conclusion that waiver = overvaluation. The logical hypothesis would be that waivers would fit a similar curve as appraisals - some overvalued, some 'spot on', and some undervalued.

 

[DWiley]

They would be treated like any other sale - did the financing on that transaction affect the price on this specific comp enough to warrant an adjustment?

??? Those who get waivers do not get different financing terms because of the waiver.

 

[J Grant]

still not sure how one arrives as the conclusion that waiver = overvaluation.

Nobody is saying to make a rote conclusion of such. An overvaluation (or overprice in a sale) is analyzed one transaction at a time.

It would be treated the same as any other comp -- was the sale price affected by the financing terms? Financing is the first line in the SC grid.

As far as overvaluation in a refi or equity line of credit - are they underwater on their loan the day they closed after a refi or equity line of credit? What metric would be used....

 

[alebrewer]

Nobody is saying to make a rote conclusion of such. An overvaluation (or overprice in a sale) is analyzed one transaction at a time.

It would be treated the same as any other comp -- was the sale price affected by the financing terms? Financing is the first line in the SC grid.

As far as overvaluation in a refi or equity line of credit - are they underwater on their loan the day they closed after a refi or equity line of credit? What metric would be used....

Fair enough. Tell me, then, how you'd recognize a sale that had an overvalued appraisal?

 

[J Grant]

??? Those who get waivers do not get different financing terms because of the waiver.

They did not get different financial terms for a Waiver.

However, the metric for financing adjustment on the SC grid is: did the financing affect the price?
Cash sales are the cleanest terms possible, but in some cases, cash does affect the price up or down enough to adjust. Same for a concession, same for FHA, etc. Same for a waiver, if they were identified. If no significant effect on price is found, no adjustment is made for it.

 

[J Grant]

Fair enough. Tell me, then, how you'd recognize a sale that had an overvalued appraisal?

We can't. It might be assumed in a financed sale that sold for a price significantly more than the others for no apparent reason.

 

[George Hatch]

Let's assume the worst case scenario; that some contract prices established between buyer and seller are significantly overvalued but the deal goes through anyway because a waiver was used instead of a 1004. That is, a 1004 where the appraiser didn't just hit the number anyway in order to not get blacklisted.

If we know that some waiver transactions are fine and some aren't, how do we sift between the two groups on our way toward developing a supportable adjustment?

 

[alebrewer]

We can't. It might be assumed in a financed sale that sold for a price significantly more than the others for no apparent reason.

Why would that thought process be any different for waivers?

 

[J Grant]

Cash sales have one commonality with a waiver - in many cases, a cash sale had no appraisal. Sometimes the buyer paid a prevailing price anyway with a cash sale. If they overpaid, the cash affected the price. A WAIVER allows the sale price to be the property value. Did they overpay as a result? The price would tell the story.