"growth" Checkboxes On Gse Forms

[DWiley]

The only benefit of stating the smallest houses sold in the most recent quarter, as we all know, is too slide this stupid accumulation of data past a QC know nothing, with all the "trend" boxes marked as stable, while the numbers on the paper are not the same.
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Actually, the real benefit is to demonstrate that the appraiser actually analyzed the market as opposed to just filling out a form. That is the type of thing that distinguishes an appraiser from a form filler.

 

[Meandering]

Actually, the real benefit is to demonstrate that the appraiser actually analyzed the market as opposed to just filling out a form. That is the type of thing that distinguishes an appraiser from a form filler.

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No,

The REAL benefit is that the GSEs could get appraisers to call the market stable under all circumstances, and make it look like it is an analysis of the market.

It wouldn't matter if an appraiser wrote that 50% of all sales in the past year were REOs or had 6% seller assist. They could still mark the trends as stable. And you know they would, because god forbid they start making market condition adjustments for favoriable financing of interest rates below the natural or normal rates of 4-6% and God forbid they start making positive market adjustments based on raw data that contains an abundance of sales with seller concessions. Appraisers might be lazy or pushed hard for time, but they are not stupid.

It is a self serving form, of no value to readers of the report, borrowers who are supposed to be able to "rely" on the information. And, it does not meet the requirement to discuss the market condition. It might get acceptance as far as discussing two trend lines, but no, I should think that trend lines don't exist in a vacuum and that insufficient data points typically exist to define a trend in anything other than propaganda.

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[DWiley]

The REAL benefit is that the GSEs could get appraisers to call the market stable under all circumstances, and make it look like it is an analysis of the market....

It is a self serving form, of no value to readers....

That is funny, considering that the form was introduced for exactly the opposite reason - too many appraiser were marking STABLE or INCREASING in markets that had turned and were in fact decreasing.

The "value" of the form, like any form, depends entirely on whether or not the appraiser provided meaningful content. The 1004 itself has no value if all the content is bogus.

 

[Meandering]

That is funny, considering that the form was introduced for exactly the opposite reason - too many appraiser were marking STABLE or INCREASING in markets that had turned and were in fact decreasing.

The "value" of the form, like any form, depends entirely on whether or not the appraiser provided meaningful content. The 1004 itself has no value if all the content is bogus.

BS.

The form was introduced, in 2009, because the banks were going to start sitting on shadow inventory, and interest rates were going to be kept low, to build the smoke and mirrors economy. They needed a way to get appraisers to agree with that shadow economy as being "normal" to boost the market.

You're a mathematician right?

Tells us how that small data set of competitive and comparable properties does not need to be "qualified' and there is no "qualifier" for the determination of a movement in those numbers.


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[Meandering]

And one other thing on this.

IF prior to 2009 appraisers were not discussing market conditions and trends, and those appraisals were acceptable to lending, those appraisers and their reports were not reported to the states for being "deficient". that's because, that's what the Ivory tower wanted.

Let me dig in my memory,

When exactly was it that the AI and the Treasury had a meeting, and changed the Dictionary of Real Estate Appraisal, to reflect a new reality of Disposition value being a current value instead of it's previous future value definition???

Hummm,

Was that in 2009?

I just can't remember, I'm only a blonde.


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[DWiley]

BS.

The form was introduced, in 2009..., because the banks were going to start sitting on shadow inventory, and interest rates were going to be kept low, to build the smoke and mirrors economy. They needed a way to get appraisers to agree with that shadow economy as being "normal" to boost the market.

You're a mathematician right?

Tells us how that small data set of competitive and comparable properties does not need to be "qualified' and there is no "qualifier" for the determination of a movement in those numbers.
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The form was introduced by Fannie Mae in 2009. Those who were working with Wells Fargo at the time know that it started its life as a Wells Fargo form, designed by their chief appraiser because he observed that appraisers were not picking up on changing markets. Fannie picked it up and modified it over several drafts because they saw the same thing.

I do have a math degree, but I consider myself an appraiser, not a mathematician Still, I did address the size of the data set in every 1004MC that I ever completed. Of course, my 1004MCs contained big data sets, because I never let the form drive the process, so I did not let my analysis be limited to just the grid on the 1004MC. In addition to that grid, I also used Excel and SMART to analyze large data sets and included that analysis in my 1004MCs. Again, the form is just a standard format - it should not drive the process.

The lack of good technology tools (or the skillset to use such tools) is also a major factor in all the 1004MC angst. There are now a LOT of good tools available to assist one in doing a lot of analysis in a relatively short time. By I would wager that 50% or more of appraisers don't use them, and of those that do use them many rely solely on the weak "1004MC calculator" in their MLS.

The notion that lenders are "pushing" for stable all the time just isn't consistent with what I have experienced. We work with a LOT of lenders, and not a single one has ever approached us with any sort of directional pressure of any kind related to the reporting of market conditions. The only pressure is to provide support for the reported conclusions.

 

[residentialguy]

I just can't remember, I'm only a blonde.

Marion and another blonde walked into a bar. You'd think one of them would have seen it.

 

[Carlos Danger]

Oh, some of us picked up on it well before 2009. And paid dearly for reporting it, by the way. Thanks Chase. Thank you LandSafe.

 

[Meandering]

The form was introduced by Fannie Mae in 2009. Those who were working with Wells Fargo at the time know that it started its life as a Wells Fargo form, designed by their chief appraiser because he observed that appraisers were not picking up on changing markets. Fannie picked it up and modified it over several drafts because they saw the same thing.

I do have a math degree, but I consider myself an appraiser, not a mathematician Still, I did address the size of the data set in every 1004MC that I ever completed. Of course, my 1004MCs contained big data sets, because I never let the form drive the process, so I did not let my analysis be limited to just the grid on the 1004MC. In addition to that grid, I also used Excel and SMART to analyze large data sets and included that analysis in my 1004MCs. Again, the form is just a standard format - it should not drive the process.

The lack of good technology tools (or the skillset to use such tools) is also a major factor in all the 1004MC angst. There are now a LOT of good tools available to assist one in doing a lot of analysis in a relatively short time. By I would wager that 50% or more of appraisers don't use them, and of those that do use them many rely solely on the weak "1004MC calculator" in their MLS.

The notion that lenders are "pushing" for stable all the time just isn't consistent with what I have experienced. We work with a LOT of lenders, and not a single one has ever approached us with any sort of directional pressure of any kind related to the reporting of market conditions. The only pressure is to provide support for the reported conclusions.

So,
you and I both use large datasets, but apparently I opt for more discussion of things that drive changes, instead of focusing on if numbers changed or not. Okay, I'll buy that as we are on the same page that the form presented, even with a couple of "qualifying" statements on it, does not represent a discussion of the market condition. I am no fan of magic math, and I make no bones about that. If we can get to near the same conclusions using two different methodologies, that's fine.

The technology exists in the computer connected to the internet, in front of every appraiser. There wasn't any time wasted in pulling HUD's country market report and putting it into an addenda with comments. No super statistical module needed. HUD says so, that should be a great place to start and whittle it down to the micro market. Yes we have population declines, an issue the OP wanted to address in this thread. I don't know how you would find or address that in a statistical calculation of list and sale prices from a large dataset, without parsing REO/bankruptcy/court ordered sales from the aggregate to trend over a decade or more, so let the population folks opine it.

Lets not make a joke out of lenders needing appraisers to say markets are stable to slightly increasing. We can track ALL of real estate market activity and know that lenders don't lend when markets are declining, hence, they just look for a "different" appraiser to tell they what they want to hear. It's no secret and it's allowed by the law. The only difference is that now the borrower can't be charged for that second, more "acceptable" appraisal that will get the deal done.

But hey, that's not appraisal pressure, that's just good lending business, and appraisers already know the risks they take in hand by calling the market declining on too many appraisal reports in an area. The funny thing that seems to show up on the forum is that when markets are stable to increasing there is never a call back to the appraiser for more information, or to look at different data. Too many appraisers see these call backs for more information as punishment, for stating a market is in decline. They have been conditioned, 'cause we all need to work, and know who it is that holds the keys to that kingdom.

Smoke and mirrors, see it, recognize it.

Marion and another blonde walked into a bar. You'd think one of them would have seen it.

A blonde was walking her dog down the street when it started whining and spinning in circles. She did not know what was wrong with the dog, so she pulled and tugged, and tried to talk to the dog, but it just kept whining and spinning in circles.

A policeman seeing this walked up to the blonde and told her,
"Miss, your dog is in heat."

Frustrated the women, called out, it's 50 degrees, the dog is not in heat, I am not in heat, the whole city is not in heat.

The policeman grinned and said,
"No, your dog needs to be bred."

The woman stopped tugging at the dog and looked at it a long time. She looked up at the policeman, smiled, and said,

"Go ahead, I always wanted a police dog."



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[Mike Garrett RAA]

This is, in my opinion, one of the most interesting and valuable discussions on the forum in recent times. What I conclude is that Danny is right in saying much of the problem is appraisers not understanding or properly preparing the form. I am definitely in the "not understanding" class. What I plan on doing is asking our local appraiser's group to bring this up as a 2 hour CE seminar and having 10 appraisers bring one of their 1004mc forms for inclusion and discussion. Should be a lively meeting since most of our members consume adult beverages prior to and during the dinner and before the presentation.

Danny, do you have anyone in Colorado who might be a good contact person or who might be a presenter for this?

Some more personal observations based on the discussion. The grid is not the form. The data set on the grid may or may not indicate a true trend. The data set on the grid is possibly too narrow to produce credible results. While there should be consistency between page 1, page 2, and the MC form...most appraisers are having difficulty with that.

Important concepts:

1. Appraisers need to consider more analysis a necessary part of an appraisal assignment.

2. Simply filling out the form isn't necessarily more analysis.

3. Lenders are depending on us to tell them a story and not just report some numbers.

4. Danny Wiley, former chair of the AQB? or was is ASB? is a real treasure for this forum and should be respected if not honored.. Ok, Ok, i know that's a suck up. Merry Christmas Danny.