Freddie Mac vs Appraiser Bias

[George Hatch]

We're only responsible for what WE do.

The problem is, much of the development in the appraisal that WE do is based on, or intersects with the results from the subject inspection. So we end up being responsible for the results regardless.

The reality is anyone can challenge us on our decision to rely on the inspection, claiming we should have (somehow) suspected the accuracy of ( fill in the blank ). It does not matter if they are right or wrong- all they need do is allege we made a poor decision about it.

If what you're worried about is the allegation itself we're already exposed to those when we personally inspect and regardless of whether we're right or wrong. Using a 3rd party inspection not only doesn't increase that risk but it also provides the easy out.

"I wasn't there, I didn't do it, and I have never even seen you".

 

[NC Appraising]

Danny does not lie and it may be disingenuous for him or anyone at Freddie to state they are working with appraisers to better improve on how properties are rated. Also you may want to consider maybe they gave up on appraisers opinions as its rare appraisers offer any real solutions as they want things to stay the same way .

You blew that one up and took it out to left field.

As I take it, the GSE's are re-writing and updating the UAD.

Second, Me and DW on this forum has already had a conversation on how the GSEs could improve the communication with appraisers. Fannie has youtube videos, https://singlefamily.fanniemae.com/originating-underwriting/appraisers/noble-appraiser-video-series

https://singlefamily.fanniemae.com/media/25101/display

Glenn said:
Freddie to state they are working with appraisers to better improve on how properties are rated.

Never said to lie or they are. My point is that they need to be.
That is my point. Maybe in the future, they can do that. Emails, classes, online videos, mandatory once a month "zoom" calls, etc.

We are required to take so much BS CE each year, but we fail to take any required classes from the GSE's which is 90% of out work??????

 

[NC Appraising]

I am missing your Point ! Please Clarify

Must be. Appraisers are screwing the condition and quality ratings on a daily basis.

 

[NC Appraising]

Does not look like a Q5 to me. Looks like a Q4 but if some call it Q3, who cares...as long as they use a similar rating for the similar construction comps.

That above is the problem!!

That has to be one of the dumbest statements that I have ever read. So they can call it a Q1 and you would be fine with it as long as they rate the comps as Q1 homes?

Use that defense when Fannie sends you a letter or you appear before the board.

Danny is right!

 

[NC Appraising]

2128 Talbert Ct, Charlotte, NC 28214 | Zillow

2128 Talbert Ct, Charlotte NC, is a Townhouse home that contains 1556 sq ft and was built in 2020.It contains 3 bedrooms and 2.5 bathrooms.This home last sold for $307,500 in June 2022. The Zestimate for this Townhouse is $297,900, which has increased by $3,300 in the last 30 days.The Rent...

www.zillow.com

Tract built townhome. Vinyl siding. Limited amount of upgrades.

Q5 Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. These dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades.


Screams starter tract home all day long?

 

[glenn walker]

Improving communications has no bearing on changes being made but it does make some feel warm and fuzzy. My theory is watching them for 38 years is they will do what they will do .

 

[glenn walker]

2128 Talbert Ct, Charlotte, NC 28214 | Zillow

2128 Talbert Ct, Charlotte NC, is a Townhouse home that contains 1556 sq ft and was built in 2020.It contains 3 bedrooms and 2.5 bathrooms.This home last sold for $307,500 in June 2022. The Zestimate for this Townhouse is $297,900, which has increased by $3,300 in the last 30 days.The Rent...

www.zillow.com

Tract built townhome. Vinyl siding. Limited amount of upgrades.

Q5 Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. These dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades.


Screams starter tract home all day long?

Those are Q4 being that there Standard Builder Stock. A True Q5 is below normal construction standards and today most Cities or Counties in my area wont even sign off on a permit to build one.

 

[George Hatch]

My personal preference is to see everything in person. Obviously. But the reason for that is because I want to do a good job and that includes me doing certain things that go above and beyond the minimums. Meaning, a couple extras most appraisers don't do, and most inspectors won't be doing. I'm equally sure a certain percentage of appraisers have their own (different) extras that I never meet, too.

But aside from wanting to do a good job, I think the other IRL primary objections appraisers have to these are

• the reduced fee that goes along with the reduced billable hours per assignment. "It's the money, stupid."
• the reduced income going forward
• the reduced demand for the number of appraisers we already compete with
• being stuck in front of a computer all day/every day instead of being able to get out
• much tighter expectations for turn time
• losing control of your work day due to being required to get this report done today
• the increased likelihood of the job becoming an actual job where the appraiser is working as a W2 employee and not as an outside 1099 contractor.
• the total elimination of the opportunity to run a fee shop and leveraging the supervisor's signature
• etc

It's apparent that appraisers are 100% right to be concerned by every one of those elements and more. They're not wrong about that. Taken to its logical conclusion a big expansion in the use of these probably will result in every one of those concerns being coming to bear on appraisers. The net outcome most likely will end up detracting from the lifestyle that we value so highly and to which we have become accustomed.

-----------------
The thing is, none of the above are related in any way to the question of "what is an appraisal?". Or what our professional obligations are WRT due diligence in an appraisal assignment. Every appraisal assignment includes terms and conditions and employ the use of a standard assumption about the accuracy of the information we are using. Some assignments just use more of those assumptions that others - that's a reality which has ALWAYS existed in our business. The conventional 1004 with personal inspection is not now and never has been the 100% solution WRT the accuracy of the facts being presented in the report and upon which the valuation is based. So, "error free" isn't one of the lender's choices; they're stuck with choosing between more vs less, which (within limits) that choice is on them, not the appraisers. If the lenders are allowed to use it then we're allowed to provide it.

WRT to the "increased liability" appraisers are claiming as their primary concern, that isn't actually a thing. By the time the lenders reject the first dozen or so complaints related to appraisers being limited to using a desktop SOW they're going to become well practiced at making that distinction and coming to that conclusion right at the outset. If they're not already there then it won't take them long to realize there's no reason to even allow any of the squawking related to those types of complaints to get conveyed to the appraiser.

 

[J Grant]

That above is the problem!!

That has to be one of the dumbest statements that I have ever read. So they can call it a Q1 and you would be fine with it as long as they rate the comps as Q1 homes?

Use that defense when Fannie sends you a letter or you appear before the board.

Danny is right!

NO I would not be alright with what is obviously either a C3 o4 C 4 home and appraiser calls a Q 1.

Per the photos in the example, the best Q rating is Q 4 but if an appraiser calls it Q3 it is not that far off perhaps - and it would not imo affect value. Whereas calling such a home Q1 is preposterous. And dumb of you to assume calling it such would be fine with me. And dumb of that other poster to call it a Q5, which is very inferior low grade construction

 

[NC Appraising]

Those are Q4 being that there Standard Builder Stock. A True Q5 is below normal construction standards and today most Cities or Counties in my area wont even sign off on a permit to build one.

That is your opinion and what facts are you basing that on?

Yeah, Q5 or Q4. It proves the point that the UAD needs to be updated and appraisers needs to be better educated.

economy of construction...tract built homes to make as much profit as cheaply as possible.

Here is the UAD:

Q5 Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. These dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades.


If you want to argue that the UAD is poorly written and needs to be improved, we can.

Why can't the UAD have a simple statement like: Q5 homes are more than likely to include homes that are built in starter projects by national home builders. etc.