Give me a break

[Zoe]

How many incidents do you have where the description of condition of property occur like you describe? Can you give me ratio? Is it .05%. What do you do in those cases?

 

[djd09]

only the elitists can see the data, with the freedom to interrupt it anyway they see fit, because we live in the land of the free.

and then

they will make it seem that every appraiser is guilty of the same high crime and misdemeanors without trial, so their elitists friends can push their fast and cheap number hitting avms.

bye bye racist appraisers.

 

[DWiley]

Again, do you take any action against lender or appraiser? What are your steps after that? I will tell how your explanation comes across. It comes across as you like your AVM better than an appraiser.

You are an appraiser. Strange.

Yes, I am an appraiser. That means that I have been trained to look at data objectively. . My primary role is to help manage risk for my employer, and that means using the tools that objectively provide the best risk management results. We use appraisals in every case where the data shows that the appraisal is the best risk management tool. But, the flip side of that is that we use other tools when the data shows they perform better.

 

[DWiley]

only the elitists can see the data, with the freedom to interrupt it anyway they see fit, because we live in the land of the free.

and then

they will make it seem that every appraiser is guilty of the same high crime and misdemeanors without trial, so their elitists friends can push their fast and cheap number hitting avms.

bye bye racist appraisers.

I have no interest in fast and cheap. I have a LOT of interest in risk management. I know it creates great angst among some appraisers to hear that in some cases the AVM actually performs better than an appraisal, but the data very clearly shows that is the case. Not all the time, for sure. That is why we still use appraisals in the majority of cases

 

[Overimprovement]

Let me piggy-back on risk management a second. I have been a bank loan officer in another life. Appraisals were ordered 80% of the time BECAUSE THEY HAD TO BE. It is rarely a lender's choice. The vast majority of RES. appraisers live by the government-mandated requirement.

But consider a survey--the vast majority of purchases do NOT require one. Why? Because the cost-benefit analyses have shown no significant risk reduction in loans that have gone bad between loans with and without a survey. Lending is all about risk mitigation, not risk elimination. There is no risk-free loan, even if 100% cash-secured. I had a loan one time that WAS cash secured. The bank made a mistake and didn't lock down the account the cash was held in. A teller then made a 2nd mistake and allowed the complete transfer of those funds into another checking account. Now the loan was unsecured.

While we may not like any instance where a full appraisal is not ordered, if risk analysis shows no or minimal difference in eventual or expected loss between an AVM and a 1004, then I can understand why a full 1004 would not be ordered. Remember, if someone is borrowing 75% from the bank on a purchase, even if an AVM is off 20%, there still is a cushion there. This is not as much about "is an AVM or no valuation tool whatsoever BETTER than a 1004?", its about "is the risk of loss to the buyers of Fannie's CMBS's any different?"

 

[DWiley]

Let me piggy-back on risk management a second. I have been a bank loan officer in another life. Appraisals were ordered 80% of the time BECAUSE THEY HAD TO BE. It is rarely a lender's choice. The vast majority of RES. appraisers live by the government-mandated requirement.

But consider a survey--the vast majority of purchases do NOT require one. Why? Because the cost-benefit analyses have shown no significant risk reduction in loans that have gone bad between loans with and without a survey. Lending is all about risk mitigation, not risk elimination. There is no risk-free loan, even if 100% cash-secured. I had a loan one time that WAS cash secured. The bank made a mistake and didn't lock down the account the cash was held in. A teller then made a 2nd mistake and allowed the complete transfer of those funds into another checking account. Now the loan was unsecured.

While we may not like any instance where a full appraisal is not ordered, if risk analysis shows no or minimal difference in eventual or expected loss between an AVM and a 1004, then I can understand why a full 1004 would not be ordered. Remember, if someone is borrowing 75% from the bank on a purchase, even if an AVM is off 20%, there still is a cushion there. This is not as much about "is an AVM or no valuation tool whatsoever BETTER than a 1004?", its about "is the risk of loss to the buyers of Fannie's CMBS's any different?"

Exactly. JG is not a fan of me referring to loan performance data, but it is that data that drives profit and loss. Collateralized lending involves risk, no matter what guardrails are in place. The question is, where do you put the guardrails and what type do you use?

 

[J Grant]

Exactly. JG is not a fan of me referring to loan performance data, but it is that data that drives profit and loss. Collateralized lending involves risk, no matter what guardrails are in place. The question is, where do you put the guardrails and what type do you use?

I understand the loan performance data is the lifeblood of lending and risk management drives the profit and loss

My issue is when risk management /loan performance is used to judge the the measure of an appraisal or an appraiser - appraisers can not "perform" in that arena since the purpose of the appraisal is a MV opinion of the property, and not an opinion of risk management /performance of the loan .

The value of an appraisal (or substitute valuation) is on the front end, when the lending decision of yes no (or maybe , when subject to ) is made . Better appraisals and valuations of course on the front end can result in a lower risk over life of loan at least regarding the collateral of the property .

The other issue is whether an appraiser is just another "tool" for risk management, or whether the appraiser as a professional has a role in the process...I believe the latter is needed since only the appraiser has a non biased role, every other party has a vested interest in outcome of the deal being made - and that includes Fannie and freddie agencies ! So when fannie and freddie themselves using their models/ data are also in dual role of valuator ( such as in a waiver) is that a positive or negative? It does put all the players on one side - getting the deal made.

.

 

[djd09]

i am not a lawyer, but in some cases it could be considered wire fraud.

what is also interesting is how the lender was not mentioned in DW example.

per the gse own lender letter, the lender is responsible for the quality of the appraisal. see below

Lenders’ responsibilities for appraisal review

Importantly, the lender remains responsible for:
the description of the subject property,
ensuring the subject property meets property eligibility requirements, and
the accuracy and completeness of all data on the appraisal that pertains to the property and project (if applicable), other than the appraised value. This includes the subject property’s condition and quality ratings (Selling GuideB4-1.3-06, Property Condition and Quality of Construction of the Improvements).

Inaccurate reporting of subject property characteristics including the condition or quality of the subject can invalidate the lender’s relief from representations and warranties on property value.

https://singlefamily.fanniemae.com/media/24766/display

picking and choosing what to quote is hilarious

to witness a crime and not reporting it is a crime

 

[J Grant]

Danny, do you have an opinion of fannie/Freddie expanding their role in making funds avail to owners for property maintenance and repair while they own the house?
Imo more risk and deprecating /loss of value occurs from house neglect /inability of owner to repair and maintain (or upgrade )seems like the role stops at getting someone into the house/purchase but then nothing happens afterward in keeping up with condition of the house --it is the collatreal for the loan and if at time of loan it starts out C 3 good condition and over the next 10 years of nothing done falls into C 4 avg or avg minus condition it has lost value. Putting the lender/secondary market more at risk for loss and owner more vulnerable if they need to sell what $ they can recoup as equity

 

[OSU Beavers]

Let me piggy-back on risk management a second. I have been a bank loan officer in another life. Appraisals were ordered 80% of the time BECAUSE THEY HAD TO BE. It is rarely a lender's choice. The vast majority of RES. appraisers live by the government-mandated requirement.

But consider a survey--the vast majority of purchases do NOT require one. Why? Because the cost-benefit analyses have shown no significant risk reduction in loans that have gone bad between loans with and without a survey. Lending is all about risk mitigation, not risk elimination. There is no risk-free loan, even if 100% cash-secured. I had a loan one time that WAS cash secured. The bank made a mistake and didn't lock down the account the cash was held in. A teller then made a 2nd mistake and allowed the complete transfer of those funds into another checking account. Now the loan was unsecured.

While we may not like any instance where a full appraisal is not ordered, if risk analysis shows no or minimal difference in eventual or expected loss between an AVM and a 1004, then I can understand why a full 1004 would not be ordered. Remember, if someone is borrowing 75% from the bank on a purchase, even if an AVM is off 20%, there still is a cushion there. This is not as much about "is an AVM or no valuation tool whatsoever BETTER than a 1004?", its about "is the risk of loss to the buyers of Fannie's CMBS's any different?"

The lockdown from this CoronaHoax has damaged the credit of enough borrowers to keep us busy for the next ten years.