Hybrid Appraisals

[Bobby Bucks]

The mystery to me is why there such a sudden sense of urgency for the industry to embrace this product. What happens behind the curtain if they cannot collect enough widgets to satisfy a goal that has been set? Meanwhile, the begging will continue.

 

[shrubberyvaluation]

PMI, servicing, and HELOC is mostly gone. Refis are now half gone. Purchase is 15% gone and climbing. Appraisal review is mostly automated. AVMs have been putting appraisers out of business for the past 15 years.

I am not against technology putting people out of business. I understand for very low risk transactions using AVMs. My problem is just the taxpayers bailing out. I have no problem with private businesses doing their own risk assessment otherwise. If someone has 10% principle left on their loan and getting a HELOC, I'm not mad an AVM is doing it. The problem is making out AVMs to be better than they actually are, we saw what happened to zillow in an increasing market.

Oh and adding a bunch of scope to appraisals that really doesn't do much just makes the other options that are less reliable more attractive.

 

[CGinMN]

I'm no Luddite either. I'm just saying let's be honest, appraisers have been right about tech making gains and it will continue to happen.

 

[shrubberyvaluation]

The mystery to me is why there such a sudden sense of urgency for the industry to embrace this product. What happens behind the curtain if they cannot collect enough widgets to satisfy a goal that has been set? Meanwhile, the begging will continue.

I think its mostly for the PDC + AVM for pennies. Plus it helps push through risky loans. First check the AVM, don't get the result you want, then do PDC + AVM, don't get the result you want, do PDC + appraisal, don't get the result you want, do full appraisal. So they get 4 shots and hope to get lucky and have someone or something make a mistake to inflate the value and they only need one.

And if FNMA has to do a buyback on a hybrid, you think the lender will be are going after the PDC for making mistakes or the appraiser who relied upon them who has E&O and a license.

 

[Non Sequitur]

Appraisers have been saying AVMs will put them out of business for the last 15+ years, yet here we are today with 80% of our acquisitions coming to us with an appraisal.

It is happening, per Radke there has been a +/-25% drop in unique licenses submitting reports to Fannie in the prior 8 years or so. In the world I live in, a 25% drop is a blood bath.

See the attached slide:

 

[DWiley]

I am not against technology putting people out of business. I understand for very low risk transactions using AVMs. My problem is just the taxpayers bailing out. I have no problem with private businesses doing their own risk assessment otherwise. If someone has 10% principle left on their loan and getting a HELOC, I'm not mad an AVM is doing it. The problem is making out AVMs to be better than they actually are, we saw what happened to zillow in an increasing market.

Oh and adding a bunch of scope to appraisals that really doesn't do much just makes the other options that are less reliable more attractive.

Hybrids are appraisals, not AVMs.

 

[Joe Flacco]

The mystery to me is why there such a sudden sense of urgency for the industry to embrace this product. What happens behind the curtain if they cannot collect enough widgets to satisfy a goal that has been set? Meanwhile, the begging will continue.

Seems like it is at the moment where hybrids either takes off or it dies. I wouldn't be surprised if it is one of the programs on the chopping block right now.

 

[shrubberyvaluation]

Hybrids are appraisals, not AVMs.

Yes but they are there to get PDCs rolling to go to PDC + AVM.

 

[shrubberyvaluation]

Seems like it is at the moment where hybrids either takes off or it dies. I wouldn't be surprised if it is one of the programs on the chopping block right now.

I guess it depends on the vision of the new administration. I think that is why there is a push to claim they are more accurate, but that is not the reasoning for wanting it in the first place. It has been so appraisers turn to doing AMC work turning out 5+ appraisals a day, not having time to verify information, which is suppose to increase accuracy...

Is it suppose to make going after the appraiser easier during buybacks since they rushed the report in an hour?

 

[Joe Flacco]

I guess it depends on the vision of the new administration.

I think the vision is to slim down the GSE's to their core function of securitizing mortgages.

Plus it is a program pushed forward by the appraisers are racist narrative and the administration is anti-DEI.