Hybrid Appraisals

[Joe Flacco]

The bottom line on the controversy is that the appraisers think the desktop+PDR combination is inferior to the conventional 1004 to the point that it poses an unacceptable risk to the lenders and the public.

Some of the lenders think that - for certain assignments - the risk is minimal and is completely acceptable.

What the combination ISN'T is a violation of the minimums in USPAP, the rules/regs at the state appraiser regulators, the appraisal policies of the GSEs or of the applicable rules and regulations which apply to the development and usage of these assignments.

That which isn't impermissible is effectively permissible.

Yeah. The lenders offloading risk to GSEs and tax payers think it is acceptable.

I am all for making it clear that there is no government guarantee and then letting the GSEs do what they want.not one without the other.

 

[shrubberyvaluation]

The bottom line on the controversy is that the appraisers think the desktop+PDR combination is inferior to the conventional 1004 to the point that it poses an unacceptable risk to the lenders and the public.

Some of the lenders think that - for certain assignments - the risk is minimal and is completely acceptable.

What the combination ISN'T is a violation of the minimums in USPAP, the rules/regs at the state appraiser regulators, the appraisal policies of the GSEs or of the applicable rules and regulations which apply to the development and usage of these assignments.

That which isn't impermissible is effectively permissible.

I understand the risk element If they assess the risk as lower why can't I use someone I trust like a trainee to inspect? Why can't I clarify information with the PDC?

I also know many times they are snuck in by saying its just for low risk, and then it creeps up to riskier and riskier and I can see who FNMA is partnering with doesn't have a good track record of being ethical. They can claim all they want that FNMA is holding them to be ethical for their products, but the stink will be there.

When things go wrong they will still go after the appraiser. Courts and lender buybacks won't care about some clause saying I'm not responsible for bad information.

My issue is that its being sold that a PDC is superior to an appraisal to the public, not that its something for just low risk investments.

 

[George Hatch]

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"I understand the risk element If they assess the risk as lower why can't I use someone I trust like a trainee to inspect? Why can't I clarify information with the PDC?"

Of course these sorts of issues are all subject to negotiation. All you need to do is find clients who are willing to negotiate them. They want what they want and you want what you want. Perhaps there will be a meeting of the minds in there somewhere. If they won't do it you can just go find clients who will.

​

I also know many times they are snuck in by saying its just for low risk, and then it creeps up to riskier and riskier and I can see who FNMA is partnering with doesn't have a good track record of being ethical. They can claim all they want that FNMA is holding them to be ethical for their products, but the stink will be there.

​

When things go wrong they will still go after the appraiser. Courts and lender buybacks won't care about some clause saying I'm not responsible for bad information.​

​

My issue is that its being sold that a PDC is superior to an appraisal to the public, not that its something for just low risk investments.​

​

You might be 100% correct on all of the above. It also might not matter to any of your clients.

 

[Justinjla]

If Drive Bys and hybrids paid the appraiser $500, then they could do a far more credible job if they wanted to. With a $75 hybrid the appraiser must fill out numerous reports in a single day to make a living. Hybrids will drive appraising back into the days of part-time work while you broker sales or sell time-shares the rest of the day.

Nobody is doing a 1004 hybrid appraisal for GSE origination for a $75 fee.

As noted repeatedly in this discussion, hybrid valuations come in different forms, each with distinct scopes and purposes—most commonly for loan servicing, based on my observations. These have existed for years, and I’d guess that for certain limited-scope assignments, a $75 fee is possible.

 

[CGinMN]

Yeah. The lenders offloading risk to GSEs and tax payers think it is acceptable.

I am all for making it clear that there is no government guarantee and then letting the GSEs do what they want.not one without the other.

Apparently the GSEs aren’t even telling MBS investors the type of appraisal (desktop, hybrid, traditional) that was performed, just whether or not there was an appraisal. I can only think of one reason why they would withhold this information.

 

[Bobby Bucks]

If hybrids were profitable to perform and carried the same level of risk as a standard 1004, appraisers would be soliciting clients and requesting assignments, but interestingly enough, the reverse is true. Practically no one wants to be associated with them and odd tentacles in the lender pipeline are arrogantly begging appraisers to perform them. It's both comical and pathetic.

 

[CGinMN]

There is probably a way to perform hybrids profitably, but it would involve closing up shop, working for a national firm, then getting kicked to the curb in 3 years when there is a little downturn or one of the trainees undercuts you. Independent appraiser can’t scale a hybrids at low volumes and low fees. If you are going to make half the fee you can’t be hopping back and forth between traditionals and hybrids. You need to dedicate your focus to efficiency and cubicle grind.

 

[George Hatch]

There is probably a way to perform hybrids profitably, but it would involve closing up shop, working for a national firm, then getting kicked to the curb in 3 years when there is a little downturn or one of the trainees undercuts you. Independent appraiser can’t scale a hybrids at low volumes and low fees. If you are going to make half the fee you can’t be hopping back and forth between traditionals and hybrids. You need to dedicate your focus to efficiency and cubicle grind.

That's my perception, too.

 

[Surf Cat]

There is probably a way to perform hybrids profitably, but it would involve closing up shop, working for a national firm, then getting kicked to the curb in 3 years when there is a little downturn or one of the trainees undercuts you. Independent appraiser can’t scale a hybrids at low volumes and low fees. If you are going to make half the fee you can’t be hopping back and forth between traditionals and hybrids. You need to dedicate your focus to efficiency and cubicle grind.

It would have to be a hybrid appraisal team. A couple of runners being the pdcs whom post the photos in Dropbox....a couple of report writers with appraisal scripts, typing up the reports, working in conjunction with a signer or two picking 3-4 comps to input into said hybrids and signing reports. Churn and burn, then profit split.

 

[Terrel L. Shields]

Nobody is doing a 1004 hybrid appraisal for GSE origination for a $75 fee.

You're right. They don't even what to pay that...



Don't tell me the bastids are not offering $75 for a hybrid. They most certainly are and claiming it "only" takes 45 minutes to do.