Give me a break

[OSU Beavers]

Just like everyone relied upon Moody's Triple A rated bonds in 2007? Reliance does not equate to making these valuations bullet proof, or even within 2 standard deviations of precision especially in a rapidly falling market. Think 2009.

Triple A, LOL

 

[TerryRohrer]

I agree that Big Data is a total misnomer when one speaks of appraisal. On the other hand “analysis“ of three or four sales is also woefully inadequate, especially given the tools available today. And, I intentionally put analysis in quotes because I believe that many still adjust from a list rather from actual data. Over my eight years at the AMC I spoke with several who could not even converse intelligently about how to derive an adjustment ( and, yes, those folks were subsequently invited to depart the panel).

Danny, Were the number of folks invited to depart said panel a significant percentage? Also, I sat through a webinar about 5 years ago where the speakers were the higher up appraisal folks in Fannie and Freddie, and repeatedly through the presentation, the Fannie guy would say how many appraisals a month their systems were taking in (20 million a month, I think). Then he would go on and on about how everyone across the country was making GLA adjustment of $25 or $35 per square foot and they knew, from their modeling, those adjustments could not be based on market reaction. He then went on to say that those appraisals did not meet their regulations and standards. That series of comments were repeated several times during the course of the session. The Freddie guy basically confirmed the same each time. Now, I understand that if half the appraisals entering the system don't meet the standards, the standards won't be enforced as the system would shut down. But what have either Fannie or Freddie done, in any significant volume, to limit the flow of substandard appraisals into their systems? In my market, appraisers have been completing high volumes of garbage for as many as four decades, and yet there has been no downside whatsoever to their cashflow. In fact, their cash flows have been enhanced by their willingness to keep the lender happy at the exclusion of sound appraisal practices. And these are not undotted "i's" or uncrossed "t's". They are glaring and easily spotted by trainees! Why do Fannie and Freddie consistently accept substandard reports without any effort whatsoever to remove the bad actors from the stage?

 

[DWiley]

Why do Fannie and Freddie consistently accept substandard reports without any effort whatsoever to remove the bad actors from the stage?

Why do you assume that since you are unaware of such efforts that they must not exist? I would not presume to know all that your company does. . But, seriously...

One of the things I am charged with in my new role is enhancing the existing programs of AQM (appraiser quality monitoring). Now, I will just stand back and wait to be assaulted by those in the group who will say, “what right do you have to do that!?! You are not the client!! You see, Terry, there are two very different schools of thought on the issue.

And, keep in mind that the GSEs have no enoforcement authority. That is reserved for the States - and every time the GSEs have turned appraisers in in any significant number There has been great wailing and gnashing of teeth.

 

[DWiley]

Danny, Were the number of folks invited to depart said panel a significant percentage?

In my 8 years thee we had a pretty constant average of about one per work day. For perspective, we were ordering several thousand a day.

 

[TerryRohrer]

Why do you assume that since you are unaware of such efforts that they must not exist? I would not presume to know all that your company does. . But, seriously...

One of the things I am charged with in my new role is enhancing the existing programs of AQM (appraiser quality monitoring). Now, I will just stand back and wait to be assaulted by those in the group who will say, “what right do you have to do that!?! You are not the client!! You see, Terry, there are two very different schools of thought on the issue.

And, keep in mind that the GSEs have no enoforcement authority. That is reserved for the States - and every time the GSEs have turned appraisers in in any significant number There has been great wailing and gnashing of teeth.

I will grant you there was an assumption on my part. But that assumption is based on the fact that some of the poorest appraisals I have seen, in my market, and which should have resulted in losses of licenses, are by appraisers 40+ years in. It may well be that efforts are being made, but how can they be serious? I will also grant that State Boards should be enforcing standards, yet a growing number are manned by the least ethical appraisers in the state, to ensure the bar is so low even they can remain in place screwing the public. But I'm not arguing that Fannie and Freddie should be enforcing USPAP or state regulations. It seems to me that refusal to accept substandard appraisals would be a sure-fire risk management strategy. It is no secret that lenders and many AMCs target appraisers who's personal mission is to never miss the target value. I have heard realtors say they use an appraiser who hasn't missed the number in 27 years. I hear appraisers say they haven't missed the target in that long. I believe much of the use of incompetent and pliable appraisers would end immediately if Fannie and Freddie said, ok, reports done by those will be your inhouse loans as we won't buy them. But until there is a price to be paid, the garbage being sent to you will not smell any better. Also, as long as the entire effort is done from DC, there is little chance of catching those who are skilled at misleading the reader...that is far more problematic than outright incompetence.

 

[Michigan CG]

"Change is the only constant in life." Heraclitis

There is a lot of resistance to change and technology has been changing things for thousands of years. Research on things and what we have done in the past will change the way we do things in the future.

I have an analogy. My wife had a trauma patient that was technically a pediatric patient and my wife does not do peds. The teenager had problem X from a car accident so my wife went down to the peds unit and told the nurse that she wanted her to do X. The nurse let her know that she has been doing this for 40 years and they have always done Y.

My wife explained to her that Y has not been common for years, about a decade, and she wanted X. There was still much resistance for X from the nurse as everyone resists change.

=============================

Fannie and Freddie process millions of loans a year. When they have millions of loans a year and it is proven that for some loans an AVM provides the same risk or ever less risk than an appraisal then why order the $600 product when the $50 product serves their needs?

Appraisers don't have millions of data points for their analysis. Many appraisers say they use regression analysis when they don't know the first thing about it. Some loan products don't need a $600 solution when a $50 solution will suffice.

Another medical analogy. My wife had a resident come to her and he wanted to do X for a patient that was going to have surgery. My wife said instead of doing X why don't we do Y? The resident said that if he did Y then surgery would have to be delayed until the next day. My wife said that is true but X costs about $10,000 and Y only costs about $500 and the results will be the same and the guy doesn't need surgery today and tomorrow would be fine.

Again, the final results would be similar and the cost/benefit obviously favored Y by 20 times.

 

[Michigan CG]

.................. But that assumption is based on the fact that some of the poorest appraisals I have seen, in my market, and which should have resulted in losses of licenses, are by appraisers 40+ years in. ................... I will also grant that State Boards should be enforcing standards, yet a growing number are manned by the least ethical appraisers in the state, to ensure the bar is so low even they can remain in place screwing the public. ........................It seems to me that refusal to accept substandard appraisals would be a sure-fire risk management strategy. ..................... I hear appraisers say they haven't missed the target in that long. I believe much of the use of incompetent and pliable appraisers would end immediately if Fannie and Freddie said, ok, reports done by those will be your inhouse loans as we won't buy them. ..................

I think that bad appraisers are of all ages. I have been involved with the 40-year appraiser who is clueless but those are the guys who trained the people from 2002-2008 to be just as clueless.

I have met many state board members and only know of one of them that I think to be unethical.

I think there is a lot of improvements to be made in appraisal quality and I think the AMC model is making the quality worse. Reports are all canned comments to avoid stips and move on to the next report but most appraisers cannot write a credible reconciliation telling the reader where that number at the bottom came from.

 

[djd09]

all we are missing is barney frank.

these two quasi gov agencies (whatever that means) that required the biggest bailout in the history of the world has the data from the staff appraisers from corelogic who couldn't even pay them overtime.

 

[TerryRohrer]

I think that bad appraisers are of all ages. I have been involved with the 40-year appraiser who is clueless but those are the guys who trained the people from 2002-2008 to be just as clueless.

I have met many state board members and only know of one of them that I think to be unethical.

I think there is a lot of improvements to be made in appraisal quality and I think the AMC model is making the quality worse. Reports are all canned comments to avoid stips and move on to the next report but most appraisers cannot write a credible reconciliation telling the reader where that number at the bottom came from.

I agree the quality is not a function of time in the game. My point was, if Fannie and Freddie were making even a minimal effort to reduce their risk from sorry appraisals, one couldn't be doing sorry appraisals for Fannie and Freddie, uninterrupted, for 4+ decades.

No doubt about the canned comments. When I first started fee work in about 1993, I worked for a month for one of the worst. About 2 days in, he handed me an addendum from a report he had reviewed and said, "I like this, type this up so I can start putting this in ours." That and a few other similar circumstances made that a short engagement. Lately, I have seen that same addendum, almost verbatim still referencing the 1992 version of USPAP and the 1993 version of the URAR. Yet, they remain active and in demand!

 

[Mejappz]

all we are missing is barney frank.

these two quasi gov agencies (whatever that means) that required the biggest bailout in the history of the world has the data from the staff appraisers from corelogic who couldn't even pay them overtime.

Don't drag me back into this thread, please.