FHFA Request opinions from Lenders & others on what the new version of an appraisal will be.

[Sadie]

I’m not really sure or the risks involved in re-financing “underwater mortgages”. I honestly don’t know enough about the secondary mortgage market and mortgage backed securities to answer that question. Can you tell me if these new refinanced “underwater mortgages” get sold into the secondary market with no valuation indicating the loan is underwater?

It is my understanding that underwater mortgages are not eligible for conventional financing. I have heard that if there may be some kind of special program for home owners that were adversely affected by the pandemic. Sub prime mortgage companies are where you find the 100%+ equity mortgages. Fannie and freddie were both in the sub prime market pre 2008-2009. Not sure now. Post recession, the only way to get out of an underwater mortgage was to pay it down or sell as a short sale. Or if you were willing to pay lots in interest, refinance with a B-D lender.

 

[Jayjay25]

So the question is about the risk of a rate and term refinance without an appraisal. What happens to that loan after it is refinanced? Is it bundled and sold off to the secondary market as a mortgage backed security? If that’s that case then Fannie and Freddie will be selling bundles of potentially underwater mortgages to the secondary market.

 

[Sadie]

So the question is about the risk of a rate and term refinance without an appraisal. What happens to that loan after it is refinanced? Is it bundled and sold off to the secondary market as a mortgage backed security? If that’s that case then Fannie and Freddie will be selling bundles of potentially underwater mortgages to the secondary market.

Well, you don't know if it is underwater without an appraisal do you? if Fannie and Freddie are waiving the appraisal requirement for mortgages they purchase, then it is on them to protect their bottom line. The risk? property is worth less than owed and the consequence is there is less incentive to pay down the mortgage. We have been down this road before. Look in the rear view at 2007-2009 if you want to know the risks.

 

[Terrel L. Shields]

Is it bundled and sold off to the secondary market as a mortgage backed security?

No risk when you bundle it within a AA Bond with far better mortgages...what do you think all the stink was about over the rating agencies back 12 years ago. The bonds were rated top grade but had some real trash buried inside the group.

 

[Sadie]

No risk when you bundle it within a AA Bond with far better mortgages...what do you think all the stink was about over the rating agencies back 12 years ago. The bonds were rated top grade but had some real trash buried inside the group.

I think fannie and freddie were buying sub prime mortgages. The oversight was not great. I was talking to a financial broker just after the mortgage crisis. He said it was becoming increasingly obvious that the mortgage backed securities were becoming more and more risky. So he got out. People thought he was nuts, but he could see the model was not sustainable. And that is just from the securities and investment side of the problem.

 

[TerryRohrer]

I think fannie and freddie were buying sub prime mortgages. The oversight was not great. I was talking to a financial broker just after the mortgage crisis. He said it was becoming increasingly obvious that the mortgage backed securities were becoming more and more risky. So he got out. People thought he was nuts, but he could see the model was not sustainable. And that is just from the securities and investment side of the problem.

I was at a family reunion in August of 08 and my uncle mentioned he owned a lot of FNMA and/or Freddie stock. I went on for a while about how bad a crash I thought the housing market was in for, and he sold out. I haven't received any of the savings yet, but at least somebody got out!

 

[glenn walker]

He has

I know who will have the most clout at the table because of their loss ratio compared to any other loan prog

Not to be disrespectful to Danny -He has no more Clout in that F & F Bureaucracy than my father had after 36 years in the US Navy as a Captain - Once -the position goes political thats another game -- So get off Danny's Butt-- he is nothing but a fly on An--Elephant's *** - And he knows it or he is dumb as a rock and -He is not its employed to keeping your job or your wants or needs he is part of the Machine and that's OK. He will anwser at a later time to his higher power-OR HE Is really trying to help you idiots navigate through what we are facing. I don't care but stop attacking him he is trying to do the best he can within his constraints. )

 

[J Grant]

The way I look at it, technology is impacting apparisals and people perceptions of appraisals, and how that goes forward depends on many factors. Are appraisals just some outdated thing that takes time and screws up deals, when AVM's and big data able to estimate value in some usable range with a non appraiser inspecting? Does the APPRAISER have a role as an appraiser ...is the speed bump of a pause to get the appraisal done a good thing ? Is the fact that an appraiser can in fact, "kill some deals ", a market factor that helps stabilize markets , even if a little ? I can hear it now, folks screaming " Stabilizing markets is not the appraiser's job !" to that I say, it is not our job, but the RESULT of our job, if done correctly, an OMV, would have a stabilizing effect on markets ( even if a little )

The problem in the past was not enough data, or the data was hard to dig up, proprietary to MLS local or searching records. Now we have a plethora of data, an overload of it. Instant online RE sites that with a click , will spit out a value estimate of your house, a rental estimate, AND make an offer on it, all at the same time !

I clicked an address I was looking for of a comp, online ...and Realist and Zillow both spat out estimates, and had offers in case I was the owner and wanted to sell. Thing is, the Realtor.com site had an estimate and offer of 430k, Zillow had 475k. So which was right, or was neither of them right ? If I clicked on 10 other sites, would I get 10 different value estimates ?

An appraiser, if allowed to do their role as a professional appraiser instead of being a "vendor" has a valuable role in the process. But if they are pressured by ultra speed, impact of low fees to get an order makes an appraiser a vendor first and appraiser second, combined with fear of losing business by coming in "low", means the appraiser role is compromised.
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What I don't understand is why lenders get a free pass on warranties and liability for value if they choose to use a waiver shifting liability and cost of a default for these loans to tax payers. Wrt decision made on their behalf...do the tax payers know about it or approve it ? Even if the risk of default is supposedly lower on a waiver, there is still a risk, so why is it for a waiver 100% on tax payer, vs a traditional loan with appraisal where the lender has responsibility wrt to the valuation in case of a default ?

 

[Jim Scholl]

Criticizing him for his day job is the cheap shot - you go after the individual when you don't have what it takes to go after these ideas and opinions.

So let's stick to the subject. If you think the facts he cited in support of Freddie's policies are inaccurate then what do you think those facts are?

Your comments don't make much sense. Its a pity you did not understand what I wrote or read my previous comments.

 

[Tom D]

i've been in real estate since the 1980's, the golden age of appraising. so i have seen it all, the ups, downs, bankster frauds, incompetent fed reserve, we didn't cause it politicians, but we can fix it again politicians. the best that i can hope for is that my little row boat in that ocean has some paddles, so that i can at least get out of the way. my opinion only counts in that little row boat.