Freddie Mac vs Appraiser Bias

[Zoe]

I really have no factual data where the synopsis could come from. It's like IDK

 

[Carnivore]

Okay, welll that's stupid in the MSA I work.

Your actually pointing out the differences in Census Tracts. Census Tracts boundaries don't make any sense in the same way many Zip Codes don't make any sense. Tracts boundaries change based on the Census. The racial percentages change every census. My Tract boundaries changed dramatically in the last census. There are other reasons why they change.

So the Racial Bias accusation is done with a Broad Brush. Well, almost all RE Appraisers are White. So it has to be true. That's the same as calling or Characterizing all Black people as Lazy. Neither one of those statements are true.

Here is what I know with some certainty. Minority household incomes have indeed lagged behind the White Racist household Incomes. You could replace the racial component to Income component by Male versus female incomes and there will be disparities.

Something is not making sense. I am not pointing a finger at freddie...but it appears that a larger entity may be twisting statistics to prove a Hypothesis.

During Covid I completed about 30+ Reviews. One neighborhood in particular was new Construction In-Fill development with phases. Almost all the purchasers were minority. Specifically Black Peeps. There were a few White Peeps and I did not see any Hispanics(names). I did not see any hints of systemic Racism in those reports. I did see in all cases proper Selection of comparable. There had not been any re-sales. Due to new construction All the appraisers found and used a sale from a competing neighborhood. Strangely they all chose the same competing neighborhood and rightly so.

This Broad Brush Painting RE Appraisers as being racist is simply not true. The Appraisal Processes are not Racist.

Question: Could there be racist White Appraisers. Yes!!! How can you possibly isolate those appraisers from the Pack using Freddie Mac Stats. Easier said than done but they can look for Appraiser names that keep showing up as opining below Contract Price on Purchases in minority neighborhoods. Another comparison they can possibly look at is the GIS Tax Values. Problem is we don't report Tax Values in the 1004/1073.

So what is going on?
I really believe this is Deflection by the Federal and State Government due to their failed social policies. We as Appraisers keep reminding them of those failures. We do it in the form of an Appraisal Report card.

 

[TerryRohrer]

.but it appears that a larger entity may be twisting statistics to prove a Hypothesis.

I think there is no hypothesis. There is a commitment to creating a narrative that proves the predetermined "problem" and the intended outcome.

My theory is that all these narratives started when the Democrats gained control of the House in 2018, though had probably been in discussion since the Obama years. I listened to one webinar during about the first week of that new congress and one of the participants indicated that the Maxine Watters committee had been working on this issue and were ready to have hearings beginning immediately. During the following year, Andrew Perry's fictional study was written. If there were any transparency, I would bet that taxpayers funded a portion of that hit piece, and Perry testified before Congress. The southern socialist's work came out at about the same time, and their funding has commonly been through government grants. By early 2020, they were on the testimony circuit, and when the Democrats gained control of the White House and both congressional bodies, all the pieces were in place to act before they lost that control.

I think Freddie was the vehicle to cement the narrative...they did just enough to find a sliver of a potential problem, enough to crow about finding the problem and setting out to fix it, even though research that had existed for most of a decade before the Freddie "research" seemed to make a pretty good case for why the noted differences could occur without the involvement of crooked appraisers. You will notice that no third research note has been offered. Nor has there been any reported effort toward analyzing specific appraisals to determine if any inappropriate actions have been taken by individual appraisers.

What we have to date is a new target for appraisers to focus on. If you hit the contract price in every purchase appraisal you do, you cannot be branded with the bias tag, given that the only measure of bias that anyone has proposed is Freddie's "appraisal gap." And, the chief appraiser at Freddie publicly offered the solution to ensuring that outcome...make a market conditions adjustment! Of course, when you are that stupid, short-sighted, and crooked, you fail to conceive of how that will look when prices are declining!

 

[djd09]

Qualifications and requirements for the property data collector

The PDR must be completed by a trained property data collector. The property data collector may be a non-appraiser, an appraiser or an appraiser trainee who:

• Performs the on-site data collection
• Is independent and unbiased, and
• Must certify that they have no present or prospective interest or bias with respect to the transaction or the property and no present or prospective personal interest or bias with respect to the participants in the transaction

Property data collectors that are not appraisers must be trained in all aspects of property data collection using the Freddie Mac property data set. The training must include instructor led or online training and an exam to ensure the proficiency of the property data collector. The property data collector training curriculum must include, but is not limited to, the following topics:

• Measuring the subject property to produce a floor plan, with dimensions and calculations reflecting the gross living area, including interior walls and representation of any functional obsolescence. In addition, the basement must also be measured to produce a floor plan with interior walls and representation of any functional obsolescence, including dimensions and calculations to reflect the basement square footage. The property data collector must be trained in the use of the technology that produces floorplans with measurements, if applicable.
• Collecting a comprehensive set of subject property photographs, as described in more detail in the addenda for the PDR
• Identification of property characteristics represented in the property data set, including but not limited to:
  • Window types (e.g., single-paned, double-paned, etc.)
  • Foundation types (e.g., basement, crawl space, etc.)
  • Heating and cooling types (e.g., forced air, central air conditioning, etc.)
  • Interior and exterior walls (e.g., brick, stucco, drywall, plaster, etc.)
  • Flooring (e.g., wood, tile, etc.)
  • Shower/bath materials (e.g., tile, fiberglass, etc.)
  • Roof description (e.g., composition, slate, aluminum, etc.)
  • Energy efficient improvements (e.g., solar, etc.)
  • Sewer (e.g., septic, public sewer, etc.)
  • Utilities (i.e., public or private)
  • Outbuilding (e.g., barn, shed, etc.)
• Identification of adverse property conditions that require repairs or alterations, or an inspection by a trained professional to determine if repairs are required, and
• Functional and external obsolescence

Seller oversight of the property data collection

The Seller must have oversight of the data collector performing the property data collection. The Seller, or their authorized third party, must have adequate processes and procedures in place to ensure the accuracy and reliability of the PDR. At a minimum, the procedures must:

• Ensure selection of property data collectors who have passed a background check
• Ensure property data collectors receive comprehensive training that demonstrates the ability to provide an accurate and comprehensive PDR
• Include a process to continuously evaluate property data collectors, including monitoring and documenting their performance to identify and remedy any recurring deficiencies
• Include a process for providing continuing education, when applicable (e.g., any significant changes to either the data set or the property data collection process, etc.), and
• Include a process for discontinuing the use of chronically underperforming property data collectors

The Seller must include a targeted review of PDRs as part of their quality control sampling.

Exhibits required for the PDR

The following exhibits are required for a PDR:

• A floor plan with dimensions and calculations reflecting the gross living area of the subject property that includes interior walls and representation of any functional obsolescence
• Photographs of the subject property containing the following:
  • A front view of the subject property
  • A rear view of the subject property
  • A view of the sides of the subject property not wholly visible in the front or rear photographs
  • A street scene (both directions) identifying the location of the subject property and neighboring improvements
  • All interior rooms of the subject property including, but not limited to, foyer, kitchen, living room, bedroom(s), bathroom(s), utility room, laundry room, basement (finished and unfinished areas), attic area accessed via a permanent staircase (finished and unfinished areas), etc.
  • Interior and exterior of any significant (permanently affixed) outbuildings on the subject site, including an accessory dwelling unit (not required for small sheds)
  • Any physical deterioration, improvements, amenities and any observed issues or external influences

PDRs with required repairs and/or inspections

The PDR contains a data set that the Seller must review to determine if the subject property meets Freddie Mac’s eligibility requirements. The property data collector must also specify when the subject property has any required “repairs or alterations” or will require an “inspection” by a trained professional when the property data collector cannot make the determination if repairs are needed. Sellers are reminded that when the condition of the subject property meets the definition for condition rating C5 or C6 or the quality of the subject property meets the definition for quality rating Q6, the Mortgage is not eligible for delivery to Freddie Mac unless the deficiencies resulting in a C5, C6 or Q6 rating have been remedied prior to delivery. Freddie Mac describes the definitions for condition and quality of construction in Guide Exhibit 36, Condition and Quality Ratings and Level of Updating Definitions

Opens in a new window.

For PDRs completed with required repairs or alterations, the Seller must obtain a Completion Report, performed by a property data collector, that verifies the repairs or alterations have been completed. The Completion Report must:

• Contain all the data points and certifications in the Completion Report data set (Addendum C (see Download dropdown above)) and the Completion Report certifications (Addendum D (see Download dropdown above))
• Include photographs of the completed repairs or alterations
• Be dated before the Settlement Date, and
• Be retained in the Mortgage file

Freddie Mac Single-Family Seller/Servicer Guide

The new, user friendly Seller/Servicer Guide will make it significantly easier for you and your team to find, understand and share critical information.

my.sf.freddiemac.com

next, they will tell you that the inspection is not critical

 

[ucbruin]

Once one has completed sufficient number of inspections (typically not many needed)....
Inspections become rote....
Not that hard to do....
List looks long but can take 15-30 minutes with average cookie cutter....

 

[djd09]

there is your inspector sign off pedo09

 

[Carnivore]

For what ever reason the Thread Topic keeps going of the rail and gets sidetracked; Actually it will also be applied to the Inspectors

This Bias issue will not be solved or go away until the Appraiser and Inspector Population resembles this list of percentages at the link I simplified it just to make a point

https://www.census.gov/quickfacts/fact/table/US/PST045221

Female 50.5%
Male 49.5%

Broken Down

White - 75.8%
Black - 13.6%
Hispanic 13.9%

 

[chad hampton]

What difference would that make? Would black appraisers stop being biased against white homeowners as soon as they make up 14% of the appraisers?

 

[Carnivore]

What difference would that make? Would black appraisers stop being biased against white homeowners as soon as they make up 14% of the appraisers?

I agree with you. The Liberal College professors who brow beat our TAF think that way.

 

[Sadie]

What difference would that make? Would black appraisers stop being biased against white homeowners as soon as they make up 14% of the appraisers?

We will probably never know.