Freddie Mac vs Appraiser Bias

[alebrewer]

How are people who aren't aware of the existence of appraisal industry going to all of sudden become aware....

I'm sure the good folks pushing PAREA have considered that question.

 

[alebrewer]

Interesting to have no opinion when you must be aware that the combo of waivers, hybrids, and AMC gouging make res lending appraisal a stinker for a serious career choice. It used to be at one time , and might still be for a few but overall I would only recommend it to someone I want to see suffer.

PAREA might marginally enhance diversity efforts, but imo it is doing minorities a huge dis service to develop a program to draw them into a declining field. If they want to help minorities ( and others ) thinking of entering the appraisal biz on res side is clean up the payment and client order issues. But they won't, so all one can hope is the social media savvy younger folks can easily find out what the real scope is in appraising to make a smart decision.

I didn't say I don't have an opinion about where our industry is going - I said I don't have an opinion as to whether it's a good idea to push PAREA given the direction our industry is going. I personally don't think anyone is intentionally trying to sabotage anyone, but other than that, I'm not really involved in the PAREA stuff.

 

[Elliott]

Sorry, I missed the last twenty pages, but I've always wondered how I could be 'bias' when I don't know anything about the 'buyer' of a house, other than their 'name' during a purchase. So is there a correlation of 'bias' between refinances and bias, but not purchases? What exactly are the confirmation factors of bias and how are they determined?

 

[alebrewer]

Sorry, I missed the last twenty pages, but I've always wondered how I could be 'bias' when I don't know anything about the 'buyer' of a house, other than their 'name' during a purchase. So is there a correlation of 'bias' between refinances and bias, but not purchases? What exactly are the confirmation factors of bias and how are they determined?

Purchase appraisals aren't the only ones we do... I think bias would be easier to demonstrate on a refi (assuming the homeowners left evidence of their nationality, sexual orientation, etc. laying around the home.

That said, for purchase appraisals, I think the argument is more one of 'institutional' bias (or discrimination) insofar as, so long as the appraiser is comparing apples to apples, they are - to some extent - exacerbating the institutional discrimination.

 

[TerryRohrer]

Sorry, I missed the last twenty pages, but I've always wondered how I could be 'bias' when I don't know anything about the 'buyer' of a house, other than their 'name' during a purchase. So is there a correlation of 'bias' between refinances and bias, but not purchases? What exactly are the confirmation factors of bias and how are they determined?

Sorry, it is undefined, unconscious, unintended, and unmeasurable. You just have to believe, plead guilty, and acquiesce. And, per the chief appraiser at Freddie, make an upward market conditions adjustment, the easiest way to remove a negative appraisal gap (note that positive appraisal gaps, or no appraisal gaps, have apparently been deemed unbiased).

 

[glenn walker]

This thread reminds me of the AMC threads that went on endlessly but never had a solution The reasons was the same as this it was all about fee's and loss of control. The only concern about third party inspections is fear of loss of income and control. We saw the hypocracy during Covid-19 when the exterior only were loved because lenders were paying the same as a full-fee inspection. I didnt see or hear anyone talking about quality again it was all about the money.

 

[DTB]

Maybe with PAREA, appraising will become like the Post Office or DMV. What could go wrong with that?

 

[George Hatch]

Well George that’s the thing - None of us use just “any sources”. We use sources of data that have been vetted and who have some liability for the things they produce. I doubt you use opinion pieces in your reports when it comes to the data you proclaim to be reliable.

This piece of the puzzle involves the Grand Nagus of your appraisal, and you have no way of knowing it’s accuracy nor is there any real way to move the results of any inaccuracies away from our reputations.

You know, if we all had not been doing exterior-only appraisals ever since we started doing this job then we might be in a moral position to be getting uppity about the sanctity of a personal inspection from an appraisal perspective. But IRL we have been performing certain assignments that have required the use of basically blind assumptions about the quality/condition of the interior.

Then if you want to try to get around that inconvenient truth by defaulting to the GSE's official position that the appraiser "can't assume" for a 2055, then that just provides the 20 year precedence for the use of 3rd party data about the subject being acceptable for certain GSE appraisal assignments. After all, neither the MLS nor the property owner can assume to be as technically competent or as ethically unbiased as an appraiser when it comes to the accuracy of the property data and most of the public records databases don't even get into interior quality/condition.

It's a standard assumption that isn't somehow rendered moot just because it involves the use of an inspection report:



If you can't or won't consider 3rd party inspection reports to be sufficiently reliable to use in an appraisal report then don't take those assignments. But unless you can PROVE other appraisers also can't use them for that reason then you have no right to unilaterally declare those appraisers to be either incompetent or unethical on that basis.

 

[George Hatch]

Reviewed one that missed a 500 SF permitted addition. That was a first.

I've seen appraisers do the same. I've seen public records do the same. I've seen MLS listings do the same. As I'm sure you've seen.

 

[George Hatch]

"Both have used the issue to cement in PAREA on the back of diversifying residential appraisers (still not a peep about the CG side)."

How is PAREA alone going to be able to diversify the appraisal industry....

I doubt it will....

I agree. It appears that we have already scavenged a lot of future demand and that established appraisers are now facing several years of greatly diminished demand. This will most likely result in crab-bucket levels of competition among appraisers for the fewer assignments which remain. Any increases in the use of inspection-enabled AVMs or desktop appraisals will come at the expense of the conventional 1004 market.

I think a few noobs will leak into this competitive cauldron but it won't do them any good when considering the lenders will have all the latitude they need to limit their choice of appraisers to those individuals with at least 5 years of experience.