Freddie Mac Oks Appraisal Alternative For Some Mortgages

[Mike Kennedy]

August 23, 2017
Freddie Mac OKs Appraisal Alternative for Some Mortgages

Freddie Mac announced Aug. 18 that it will utilize automated collateral evaluations to determine when an automated appraisal can supplant a traditional appraisal for new home mortgages and refinancing. ACE will be available Sept. 1 and use data from multiple listing services, public records and historical home values to determine collateral risks.

“Since 1994, the government sponsored enterprises have been exempted from appraisal requirements established by Congress on the basis that they would make responsible decisions,” said Appraisal Institute President Jim Amorin, MAI, SRA, AI-GRS. “Last week’s announcement to waive appraisals in blind loan purchase decisions calls this privilege into question, as it will undoubtedly result in a race to the bottom and create more risk for taxpayers.”

Read more about Freddie Mac appraisal alternatives.

 

[Randolph Kinney]

No problem in an "up" market.

 

[timd354]

“Since 1994, the government sponsored enterprises have been exempted from appraisal requirements established by Congress on the basis that they would make responsible decisions,” said Appraisal Institute President Jim Amorin, MAI, SRA, AI-GRS. “Last week’s announcement to waive appraisals in blind loan purchase decisions calls this privilege into question, as it will undoubtedly result in a race to the bottom and create more risk for taxpayers.”

Maybe Amorin is right, maybe Amorin is wrong, but unless he is able to present a detailed analysis and argument showing how and why this creates more risk for the taxpayers, then his statement will be too easy for some to dismiss as nothing more than a self-serving effort to protect appraisers' turf and income.

 

[gregb]

Maybe Amorin is right, maybe Amorin is wrong, but unless he is able to present a detailed analysis and argument showing how and why this creates more risk for the taxpayers, then his statement will be too easy for some to dismiss as nothing more than a self-serving effort to protect appraisers' turf and income.

Not so unlike or different from self-serving AMC employees protecting their turf and income...

 

[timd354]

Not so unlike or different from self-serving AMC employees protecting their turf and income...

I am not going to argue that and if that is the bar you want set those who represent your profession so be it.

My point was that I don't believe that the statement provided (if that is all he actually said) will be effective and made some suggestions that would make his comments possibly more effective

 

[Randolph Kinney]

Not so unlike or different from self-serving AMC employees protecting their turf and income...

Lets role the dice ... GSE ACE (AVMs) does not have a track record in a down market.

 

[timd354]

Lets role the dice ... GSE ACE (AVMs) does not have a track record in a down market.

Actually, GSE appraisal waivers do have a track record in a down market as they were utilized for several years prior to the bubble bursting in 2007-2008. My understanding from my previous time at Freddie Mac is that these loans did not default at a higher rate or at a worse severity than loans with an appraisal (the analysis that I saw compared the default rates of loans with like LTV's, credit scores, DTI's etc. with the only difference being an appraisal or lack of an appraisal). There is no doubt that Freddie had to get FHFA's permission to roll this program out and I would guess that Freddie showed FHFA the data regarding loan performance of loans with appraisals versus non-appraisals and that is how they got FHFA to sign off on this.

I personally do think there are transactions where obtaining an appraisal is not necessary to properly manage risk (i.e. low LTV transactions to borrowers with great credit and low DTI's), however the danger is that they will expand the use of appraisal waivers out of the low risk loan buckets that appraisal waivers should be confined to.

 

[Randolph Kinney]

Interesting that GSEs are getting into more property waivers claiming that with a prior appraisal, MLS, and other data, etc., they already have that assurance. But you are saying they don't need the "new" ACE program, the old way was just as good.

 

[Gregory Beck]

August 23, 2017
Freddie Mac OKs Appraisal Alternative for Some Mortgages

Freddie Mac announced Aug. 18 that it will utilize automated collateral evaluations to determine when an automated appraisal can supplant a traditional appraisal for new home mortgages and refinancing. ACE will be available Sept. 1 and use data from multiple listing services, public records and historical home values to determine collateral risks.

“Since 1994, the government sponsored enterprises have been exempted from appraisal requirements established by Congress on the basis that they would make responsible decisions,” said Appraisal Institute President Jim Amorin, MAI, SRA, AI-GRS. “Last week’s announcement to waive appraisals in blind loan purchase decisions calls this privilege into question, as it will undoubtedly result in a race to the bottom and create more risk for taxpayers.”

Read more about Freddie Mac appraisal alternatives.

I am mobile and have all the technology to get an appraisal out asap. The problem is and has been the phone monkeys shopping for the lowest fees; trying to make the biggest profit off the appraiser;then yelling "shortage"

 

[hastalavista]

I personally do think there are transactions where obtaining an appraisal is not necessary to properly manage risk (i.e. low LTV transactions to borrowers with great credit and low DTI's), however the danger is that they will expand the use of appraisal waivers out of the low risk loan buckets that appraisal waivers should be confined to.

(my bold)

This is the real danger and, IMO, where appraisers should make their stand.