GSE Waiver & Data Collection Data

[Justinjla]

Because you don't know if the building is even there, perhaps? Or remember in 2008 when by 2010 properties were often sold for well under half what was lent against them? Or, like one REO I valued, the entire house was filled with trash bags, a storage shed was full of trash bags, many broken, and even an abandoned truck there was filled both the bed and cab with trash bags. Sometimes it helps to have eyes on the prize. In the old days when people dealt with real banks and real bankers regulated by the FDIC or OCC, and not mortgage originators or online lenders, bankers themselves often visited their borrowers and looked for themselves. That was especially true of rent properties, farms and commercial. Bankers often spent an afternoon each week just checking on the loans they had, performing or not.

Why is a borrower in good standing currently paying for and trying to refinance a house that isn't there? I understand your point, but there are many things that mitigate the risk on these loans. That doesn't mean we mitigate all risk. 100% of the loans we acquire contain some level risk including loans with appraisals.

 

[Terrel L. Shields]

Why is a borrower in good standing currently paying for and trying to refinance a house that isn't there?

Why did I go to a lot and find the manf. home gone? Why did I get sent to a drive-by and smelled a rat and drove down the alley behind and saw the backside being remodeled? How many homes have I walked into where the owner has started some remodeling project, and the interior is ripped out in room after room? Or, once a "new" house didn't have a single interior door. You don't know what you don't know. And that is the purpose of the appraiser in the first place. I am OK with it if you want to eliminate the appraiser. It's just the person who signs off on the loan - well, if they have Skin in the Game. In other words, they are required to make the loan whole if the loan is based upon a faulty premise. That person should personally be saddled with the loss along with their boss who approved it. The bank? The mortgage originator? They deserve the economic death penalty if a risk to the financial system. Seize them. Ban all their employees from working in the banking world for life. The FDIC can do that. The OCC can do that. I know some ex-bankers who cannot ever return to the business. Yes, no appraiser, just skin in the game.

 

[glenn walker]

A sovereign wealthy fund (if one is setup) will not replace the GSE's but instead will be given most of their newly issued shares, which they may sell in whole or part. Either way, the current GSE infrastructure is likely to remain in place.

Yes agree but disagree that current GSEs infrastructure will remain in place unless you mean private companies will use similar methods to manage portfolio's.

My belief is the new ones won't be Quasi Govt Entities whose MB securities are insured by the taxpayers.

The one that may continue as a Govt Sponsored GSE is Ginnie Mae who may purchase Insured FHA and VA and other Govt Insured loans.

 

[shrubberyvaluation]

You didn't answer the question. Do we need a full appraisal on that loan? If so, why?

Glad you qualified your last sentence with a "guess" and not a statement of fact, because it is wrong. If you would have read the link you posted today, you would have seen that a substantial % of waiver acquisitions fall in the <60% LTV bucket. That is a statement of fact.

LTV will always be based on an opinion of value. How do you know what the V(value) is. If its from an appraisal it is their opinion of market value. If it is from elsewhere it is still someone else's opinion of what the value is or some other metric. Obviously the reliability of this metric could be of importance.

 

[shrubberyvaluation]

Why is a borrower in good standing currently paying for and trying to refinance a house that isn't there? I understand your point, but there are many things that mitigate the risk on these loans. That doesn't mean we mitigate all risk. 100% of the loans we acquire contain some level risk including loans with appraisals.

Maybe temporarily for a month or however long it takes to cash out? It could also be a relative paying for someone else and not even know.

 

[timd354]

My guess is that the move to increase the implementation to 95% LTVs was at the behest of the previous administration. As in, at least partially driven by the politics of the day, not as an expression of runaway approval intentions. Hence the utility of adding more filters to those particular loans.

Your guess is correct. A lot of the expansion of risk by the GSE's over the past 4 years was due to FHFA directing the GSE's to do things that met their political and social goals, Fortunately, since William Pulte became the new FHFA director, he has put an end to the worst of the nonsense by terminating special purpose credit programs (SPCPs) supported by the government sponsored enterprises.

 

[Non Sequitur]

You didn't answer the question. Do we need a full appraisal on that loan? If so, why?

Glad you qualified your last sentence with a "guess" and not a statement of fact, because it is wrong. If you would have read the link you posted today, you would have seen that a substantial % of waiver acquisitions fall in the <60% LTV bucket. That is a statement of fact.

I did in another post. I have pulled the trigger for "less than" full appraisals in similar situations when I was on the bank side, and I have never claimed appraisals were needed in the situation you described. What I have questioned is the outsized proportion and frequency of waivers because IMO 20% of hundreds of billions (or trillions?) in loan volume is a huge number that shouldn't be dismissed, even at the moving LTV ratios you claim.

Beyond that I'm not sure why you're here promoting and defending waivers and hybrids. There's not a damn thing boots on the ground appraisers can do to influence or change what the GSEs are doing, something must be up we're not aware of.

 

[Non Sequitur]

Back to my point about the recent expansion of waivers. See the link below. Skip to the 10:30 mark if you aren't interested in the full conversation and hear from the horse's mouth "None of this was meant to be permanent" and "Although it is too early to know for sure, I do remain concerned that the appraisal flexibilities we implemented during the pandemic contributed to the record home price increases." Then ask yourself if the GSEs are taking advantage and expanding the use of waivers and hybrids beyond what was intended.

 

[djd09]

Home Prices Will Stay High, Powell Forecasts​

By

Megan Leonhardt
Like interest rates, Americans should expect home prices to stay higher for longer as well.
Or at least, that’s Powell’s forecast. “I think for a long time we're still going to see upward pressure on housing prices, maybe until population growth slows, or until we catch up,” he said.

Home Prices Will Stay High, Powell Forecasts

Like interest rates, Americans should expect home prices to stay higher for longer as well. Or at least, that’s Powell’s forecast. “I think for a long time we're still going to see upward pressure on housing prices, maybe until population growth slows, or until we catch up,” he said. Even before t

www.barrons.com

the combination of the unlicensed mortgage brokers appraisal and a thumbs up by the borg....the sky is the limit

 

[J Grant]

We are told that the WAIVERS are low risk from the GSE viewpoint. Yet every loan carries some risk, and the taxpayers assume the risk for the collateral value of a WAIVER-backed loan. (When a loan has an appraisal, the lender is obligated to buy back if there was a collateral value issue.) The lender is relieved of that obligation with a WAIVER ( the lender is relieved of reps and warranties )

How nice for that lender. And how nice for that borrower that they are saved paying an appraisal fee. But why is the tax apyer picking up the tab for it by assuming the risk?

If a WAIVER risk is so low, and their AVMs that deliver the value range for the WAIVER so "accurate", why aren't the GSE's assuming the risk for them?