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

[Zoe]

It will come back to haunt GSE's and lenders soon. AMC's too. Appraisers too that don't have a good workfile.

 

[Sadie]

Sure. But, we already had the loan. So, we already had the risk. How would a new appraisal reduce that risk? And, by the way, a new appraisal is not the only choice for evaluating the value and condition.

Most of those loans already had appraisal waivers. After a certain amount of time, someone needs to see the inside of the subject. People can do a hella lot of damage to a property in a short amount of time. It all goes to what risk the lender is willing to take. If you are going to give someone hundreds of thousands of dollars, don't you want to see what you have as collateral? It can all go south again.

 

[Zoe]

MSN

www.msn.com

I am not stupid.

Can't pour that much money in economy like prior administration and this administration and not expect inflation.

 

[TerryRohrer]

Yes, that has been widely reported. And, as I said, it is primarily because during that time >75% of loans were refis. Waiver use on purchases remains very low.

I have asked this before, but no one seems willing to answer - I am a lender. I have an existing loan on your home. I can refi your loan balance and lower your payment $200. What benefit does an appraisal add to that scenario? I already have the loan and any risk associated with the collateral. What benefit would a new appraisal bring? Even if you are upside down on the property, if I lower the payment I lower the default risk.

I agree with your point. Every situation doesn't demand an appraisal. Maybe you could enlighten me on another point. In several of your posts, I have seen verbiage to the effect that loans based on waivers and other valuation methods perform better than those backed by appraisals. That is likely at least partly related to what you are saying here. Waivers in support of a change that makes the credit stronger should perform better. That makes your statement implying that appraisals somehow degrade credit quality is a bit slanted. Also, I was taught early on that bad loans are made bad, they don't go bad. While I can understand how risk and dollar losses directly relate to appraisal quality, I have never bought the implication that bad appraisals change the creditworthiness of the borrower.

 

[Zoe]

I already told you I have family members that are rich and they got free money from the govt in prior administration. They took the loan too. Their business never suffered. It exploded because of what they sell. They are republicans too. Interesting.

 

[DWiley]

I agree with your point. Every situation doesn't demand an appraisal. Maybe you could enlighten me on another point. In several of your posts, I have seen verbiage to the effect that loans based on waivers and other valuation methods perform better than those backed by appraisals. That is likely at least partly related to what you are saying here. Waivers in support of a change that makes the credit stronger should perform better. That makes your statement implying that appraisals somehow degrade credit quality is a bit slanted. Also, I was taught early on that bad loans are made bad, they don't go bad. While I can understand how risk and dollar losses directly relate to appraisal quality, I have never bought the implication that bad appraisals change the creditworthiness of the borrower.

We agree. That is why we when do such comparisons it is always using only other properties in the same credit box. Anything else would be an unfair comparison

 

[Zoe]

We agree. That is why we when do such comparisons it is always using only other properties in the same credit box. Anything else would be an unfair comparison

That doesn't make sense. So that is discrimination at it's highest. I have appraised people's homes in the ghetto that have never missed a payment on anything. The house might be worth $30,000.

 

[Jim Scholl]

Yes, that has been widely reported. And, as I said, it is primarily because during that time >75% of loans were refis. Waiver use on purchases remains very low.

I have asked this before, but no one seems willing to answer - I am a lender. I have an existing loan on your home. I can refi your loan balance and lower your payment $200. What benefit does an appraisal add to that scenario? I already have the loan and any risk associated with the collateral. What benefit would a new appraisal bring? Even if you are upside down on the property, if I lower the payment I lower the default risk.

Did you originate that first loan last month, last year, 10 years ago? Your assumptions on current may or may not be correct. Its not as simple as you would like. Why take an avm guess? Why take the risk at all? We heard these same rationales in 2005-2009 or so. Now, someone answered.

 

[Zoe]

How does somebody's credit enter into a market value appraisal? I have never seen that.

Yeah, I'll lose my license quick saying this subject's market value is X due to borrower's credit score.

 

[DWiley]

That doesn't make sense. So that is discrimination at it's highest. I have appraised people's homes in the ghetto that have never missed a payment on anything. The house might be worth $30,000.

I would advise extreme caution in making such an accusation, especially when you make it in such a way that makes clear you are not even following the conversation.