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

[Mejappz]

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.

Because they can simply have the tax-payer flip the bill again.

 

[DWiley]

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.

What difference does any of that make? None.

You have a loan. Your payment is $1500 per month. If a refi can lower the payment to $1,250, the default risk is lowered, because your financial obligation is lessened.

But, wait, you say - the house value has declined and it is no longer worth the loan balance!! So?? The the loan balance is already on the books. If you default on the current loan (which is more likely with the higher payment) , the lender is upside down anyway

But wait, the house has degenerated into C5 condition!! So?? There is already a loan on the house in that condition. If you default on the current loan (which is more likely with the higher payment) lender gets it back in that C5 condition.

The bottom line is that an appraisal offers no additional risk management in this scenario. Investors are in the risk management business, not the appraiser employment business.

 

[Zoe]

Your on to something too Danny. I'm telling you with technology the way it is developing. Who knows in future?

That is why I like the coalition of the regulators on a single commission.

 

[Zoe]

What difference does any of that make? None.

You have a loan. Your payment is $1500 per month. If a refi can lower the payment to $1,250, the default risk is lowered, because your financial obligation is lessened.

But, wait, you say - the house value has declined and it is no longer worth the loan balance!! So?? The the loan balance is already on the books. If you default on the current loan (which is more likely with the higher payment) , the lender is upside down anyway

But wait, the house has degenerated into C5 condition!! So?? There is already a loan on the house in that condition. If you default on the current loan (which is more likely with the higher payment) lender gets it back in that C5 condition.

The bottom line is that an appraisal offers no additional risk management in this scenario. Investors are in the risk management business, not the appraiser employment business.

He didn't say the value has declined. Come on Danny. Come on Danny. Value is a confidential issue.

 

[Zoe]

The market value could have surely declined. Come on man.

 

[Zoe]

Idk who you are protecting but it is not the profession.

 

[Zoe]

I can see where a GSE looks at credit rating in their decision making but it has nothing to do with a market value appraisal. Nothing whatsoever.

 

[Jim Scholl]

What difference does any of that make? None.

You have a loan. Your payment is $1500 per month. If a refi can lower the payment to $1,250, the default risk is lowered, because your financial obligation is lessened.

But, wait, you say - the house value has declined and it is no longer worth the loan balance!! So?? The the loan balance is already on the books. If you default on the current loan (which is more likely with the higher payment) , the lender is upside down anyway

But wait, the house has degenerated into C5 condition!! So?? There is already a loan on the house in that condition. If you default on the current loan (which is more likely with the higher payment) lender gets it back in that C5 condition.

The bottom line is that an appraisal offers no additional risk management in this scenario. Investors are in the risk management business, not the appraiser employment business.

Illogical nonsense! Right out of 2008!

 

[Jim Scholl]

FHFA Request opinions from Lenders & others on what the new version of an appraisal will be. Click on the link then look at the number of respondents who are pushing bifurcated / hybrid appraisals.

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Let's not lose sight of the original point....please click on the link and go read what your clients are saying. Clients and regulators are pushing bifurcated appraisals as the next step. This include Freddie, Fannie, large banks, small banks, credit unions. Appraisers and a mortgage insurance association were some of the only contrarians.

 

[DWiley]

Illogical nonsense! Right out of 2008!

I am all ears. Please explain how the logic is flawed. Should be easy if it is so far off base