Hybrid

[djd09]

Oh i forgot about Wells Fargo, Chase, BOA, and all the other crooked banks expectations. Maybe they expect a number. But it is in their scope of work.

So the lesson will go back to another page. Keep criss crossing.

 

[djd09]

I think the only lesson learned was an appraiser can have a non-credible appraisal report with substantial errors as long as it is in the client's SOW. Right?

 

[George Hatch]

Wrong. Again. Still. I'm not going to post the screenshot because that's just dogpiling.

But here's the answer to your apparent misunderstanding:

"The credibility of assignment results is always measured in the context of the intended use." (SOWR lines 353-354)

There aren't many "always" statements in USPAP, but that's one of them.

No matter what, you can't get away from the point that our professional standards tie workproduct credibility to the expectations for development and reporting of the intended user within the context of the intended use. If these users are allowed to ask for a product then we are allowed to respond so long as we otherwise adhere to our minimums.

 

[ucbruin]

That is true but my issue is that there should be some people that matter raising concerns that looking at photos by a third party is not the same thing as the appraiser physically visiting the property. I think that regulators and investors are being led to believe that the hybrid model does not increase collateral risk and that is false.

"...my issue is that there should be some people that matter raising concerns that looking at photos by a third party is not the same thing as the appraiser physically visiting the property."

That's true and a good point....
I'm not arguing the point....
Yet for comps we rely on MLS interior photos....
It can be a conundrum....

 

[Joe Flacco]

"...my issue is that there should be some people that matter raising concerns that looking at photos by a third party is not the same thing as the appraiser physically visiting the property."

That's true and a good point....
I'm not arguing the point....
Yet for comps we rely on MLS interior photos....
It can be a conundrum....

Nobody can go in the comps. Somebody is going in the subject.

When the topic of hybrids come up, all appraisers including all chief appraisers should be saying yeah we can do it but third party inspection is not the same thing as the appraiser physically visiting the property and the appraisal will be less reliable. Seems to me like chief appraisers afraid to step on people toes or they are sheep or they playing politics. Or they don't care about it being less reliable.

 

[Joe Flacco]

The way they are going about the fee aspect about it is going to result in them getting the stupidest appraisers doing those. That is going to make the reliability issue even worse.

 

[Terrel L. Shields]

not conceal the fee debate with some moral posturing involving a faux outrage about the public interest being threatened because some appraisers will choose to perform these.

A. no one can complete one of these for $65, and do a credible job, not in Cookiecutterville, and especially say, Yawkey, WV or Crystal City, Texas. But clearly rural and small town appraisers will be asked to. You cannot separate fee from quality. And quality is USPAP compliance. It's like a MAACO paint job. Superficially it looks good from a long distance.
B. Only a retardo would accept a fee less than an evaluator charges. Drop your license and do those sans liability. Oh, wait. Join AI and lobby/campaign to have appraisers do cut rate piffle.
C. The solution to $65 appraisals is call back the Skippies. Clone reports, lie about the zoning, can't find it-fake it, don't question anything, nor research / analyze it. Just do it because it doesn't matter. The client doesn't want an appraisal, they want your signature and E & O. You are cannon fodder, and the report is a compliance document nothing more. It serves as a pacifier for the bank regulator. It won't matter until a crash and the finger gets pointed at the $65 wonders, who won't even admit they committed fraud because they are too stupid to understand they were intended as sheep and the AMC is a Judas goat. Yep, don't worry, you have their back. In fact, that's all you'll see, the backside of them abandoning you.
D. Appraisers defending these products are strange bedfellows with bankers since cut-rate products subtract dollar for dollar from the sum total of appraisal fees.

 

[hastalavista]

Nobody can go in the comps. Somebody is going in the subject.

When the topic of hybrids come up, all appraisers including all chief appraisers should be saying yeah we can do it but third party inspection is not the same thing as the appraiser physically visiting the property and the appraisal will be less reliable. Seems to me like chief appraisers afraid to step on people toes or they are sheep or they playing politics. Or they don't care about it being less reliable.

I see it differently; but that difference is more nuanced (for the most part) than substantive.
1. I don't believe any chief appraiser, risk manager, or underwriter thinks a hybrid is as reliable as if the appraiser did the inspection (drive-by or walk-through) him/herself. I've yet to hear that from anyone in those positions when this topic comes up. And, believe it or not, some in those positions don't like them and are not inclined to use them. That can be subject to change.

2. What I do hear from risk officers is that while being less reliable, the collateral value portion of the lending equation is just not that significant for the transactions these are being considered. They'd be fine with some sub-appraisal tool but prefer to have a current photo of the property. On an asset-monitoring basis (troubled asset), they are not going to get access to the property anyway; the hybrid is one step above a desk top because at least there is a current photo to document what the property looks like from the outside.

So, no one I know (other than the companies that are trying to sell these services) thinks these are as reliable as a traditional appraisal; and that includes those in positions of management at AMCs. Everyone I speak to who considers these products as a potential option are for situations where (a) the collateral value isn't the risk and/or (b) they cannot get access to the property anyway.
Everyone likes the idea of an appraiser doing the valuation because they believe the appraiser, who knows the market, will provide an independent and objective opinion of value following recognized techniques. This is much better than a BPO or an AVM.

If appraisers aren't being paid enough and no one wants to do them, then this product dies on the vine. Period.

I'd do them if they paid me what I think I'm worth. I'd do them with little hesitation (assuming I agree with the SOW and the extraordinary assumptions or limiting conditions).

I've repeated the story in my market where, this product was rolled out and there were not enough takers at the initial bid (about $75). The price has moved up to $125 to $150, and there are takers. That's not enough for me, but enough for those who are taking them.

Terrel pointed out that this isn't a USPAP thread so the discussion on this product shouldn't be based on its ability to be completed according to the USPAP. I agreed with another poster who said that USPAP compliance isn't the problem.

The problem here is
(a) the individual appraiser's choice to take this work or not based on their minimum standards; I'm good with that and have no issues if someone says they just don't think they're credible enough regardless of what the client may think. I and most of the rest of us make that decision myself for traditional appraisals based on what the SOW is for the intended use.
Or
(b) they don't pay enough. I agree; that's why I don't take them at this price.
Or
(c) the liability is too high. Again, an individual choice that is partially based on the SOW for the assignment and usually based on the fee received (does the fee offset the risk?). Another valid reason as far as I see it.

You early stated that its (I'm paraphrasing) disappointing that I seem to be a supporter of these products and it leaves you wondering why?
I said the term support implies endorsement. So let me be clear:
I don't support hybrids for all lending transactions. I think they are appropriate for a very limited set of conditions. I think for some lending purposes, a product like this can match the risk attached to the collateral value-component of the equation. I've said I'd rather see appraisers have the opportunity to take this business then let it go to a non-appraisal source. I've clearly said I wouldn't do them at the fees they are offered at, but I also consistently say I'm not going to tell another appraiser not to take them because the fee doesn't meet my benchmark.
I've also said this isn't a USPAP issue, it is a regulatory issue. I endorse advocating for limits on their use with the regulators... because they are the ones who are going to ultimately decide (for lending-related transactions) how far these things can be used. And regardless of what the regulators say, if enough appraisers say no for whatever reason, these are not going to become a viable appraisal-option.

That's the world as I see it. The public trust issue, from my vantage point, isn't on the appraisal process. I can do these and conclude credible results as defined by the USPAP (otherwise, they wouldn't be USPAP compliant) for a certain set of transactions.
If there is a public trust issue, it is with the regulators and the regulations. I've said that we are stakeholders in that process, so we have a voice and it should be heard. The organizations I'm involved with are making their voice heard and are looking to significantly reduce or limit these hybrids for lending purposes. That's a position I do endorse.

The fees... I'll leave to the individual appraisers.

 

[Dublin ohio]

You cannot separate fee from quality

So please show the fee=quality graph. Obviously you must have some data that supports you comment. Not saying it does not happen or that I agree with the fee. But you seems to be painting all appraiser's with a very wide brush.

 

[George Hatch]

A. no one can complete one of these for $65, and do a credible job, not in Cookiecutterville, and especially say, Yawkey, WV or Crystal City, Texas. But clearly rural and small town appraisers will be asked to. You cannot separate fee from quality. And quality is USPAP compliance. It's like a MAACO paint job. Superficially it looks good from a long distance.
B. Only a retardo would accept a fee less than an evaluator charges. Drop your license and do those sans liability. Oh, wait. Join AI and lobby/campaign to have appraisers do cut rate piffle.
C. The solution to $65 appraisals is call back the Skippies. Clone reports, lie about the zoning, can't find it-fake it, don't question anything, nor research / analyze it. Just do it because it doesn't matter. The client doesn't want an appraisal, they want your signature and E & O. You are cannon fodder, and the report is a compliance document nothing more. It serves as a pacifier for the bank regulator. It won't matter until a crash and the finger gets pointed at the $65 wonders, who won't even admit they committed fraud because they are too stupid to understand they were intended as sheep and the AMC is a Judas goat. Yep, don't worry, you have their back. In fact, that's all you'll see, the backside of them abandoning you.
D. Appraisers defending these products are strange bedfellows with bankers since cut-rate products subtract dollar for dollar from the sum total of appraisal fees.

I don't know what to tell you, Terr. The product is the product. The fee is the fee. Same as with any other type of appraisal assignment. This here's still America, and indentured servitude doesn't exist in our business. If an appraiser thinks they have to take assignments that pay $10 or $15 hr in order to keep his/her family in rice and beans I'm not going to judge them for that. I only care that they say what they do and do what they say. All work is honorable.

Now the would-be supervisors who are contributing to an oversupply in the face of a looming reduction in business? That's the kind of short-sighted greed that I will criticize.

The designers of these programs that are using the existing 1004 forms to depict these assignments as something they aren't? That's the kind of deception that I will criticize

The appraisers who make dumb comments about what actually is and isn't required for these assignments because they know nobody cares about their fee problem? I'll criticize that kind of dishonesty, too.

And if the lenders choose to take unnecessary risks and later claim they didn't know? I'll criticize that dishonesty as well. As far as I'm concerned if they break it they buy it.