I am not doing the 3.6 FORM deal

[J Grant]

An appraisal is an opinion. A price is a statement of fact. I'll take the merits of a price over the merits of an opinion every single time. Although I'm not surprised you think an appraisal is a more accurate rendering of a property's value than an actual price.

As an appraiser, you should be able to at understand that an opinion of market value is a model of a theoretical sale price ( the definition of MV, the most probable price given a certain set of conditions). And the most probable price vetted by the comps and analysis is the appraisal. THE MV definition set of sale terms and buyer/seller motivations are not always present in a real-world price.

Your last statement is a reverse of what an appraiser does, and I can not understand why you became an appraiser if you believe that.

BTW an appraisal does not tell a client what to do with its opinion of value. It is a model containing information that gives the client information to make a better informed decision about the property. The appraisal thus has a different purpose and existence then an actual price.

 

[alebrewer]

The Enterprises were pedaling the idea that appraisals are used as a "risk tool " - maybe they are, but an appraisal is not designed to be a risk tool!! The purpose of an appraisal is a front-end lending decision - on their own form, it states the purpose of an appraisal is to provide a market value opinion - it does not say the purpose of an appraisal is to analyze risk.

You seem to be confused about the difference between purpose and intended use. The lender isn't going to use it to provide a market value opinion. The lender is going to use the appraisal to make informed decisions about assessing risk - which includes determining acceptable LTV, TPC's, IPC's, etc. All those decisions are made based on perceived risk.

Tell me, J - have you ever wondered why lenders' review and underwriting departments are so big? Or why AMC's have to have review departments? Or why the GSE's built this massive behemoth known as UCDP/CU? I mean - if what you're selling is correct (that appraisals are accurate), then why would they even need to be reviewed? The simple fact is that the users of our services do not trust our services to be 'accurate' (or correct, or reliable, or credible, or whatever term you choose to use). And, for the most part, they have valid reason for their distrust.

 

[J Grant]

You seem to be confused about the difference between purpose and intended use. The lender isn't going to use it to provide a market value opinion. The lender is going to use the appraisal to make informed decisions about assessing risk - which includes determining acceptable LTV, TPC's, IPC's, etc. All those decisions are made based on perceived risk.

Tell me, J - have you ever wondered why lenders' review and underwriting departments are so big? Or why AMC's have to have review departments? Or why the GSE's built this massive behemoth known as UCDP/CU? I mean - if what you're selling is correct (that appraisals are accurate), then why would they even need to be reviewed? The simple fact is that the users of our services do not trust our services to be 'accurate' (or correct, or reliable, or credible, or whatever term you choose to use).

You are confused about what an appraisal even does or why it is of value. Your scorn of them indicates it. Your past posts with statements like one number is as good as another in the range indicate it.

If an AVM or the metrics are used for the range for the value estimated in a WIVER/value acceptance, the enterprises do not back it. This shows they are not confident about its "accuracy." The taxpayer absorbs the liability, while the lender is relieved of a buy-back. (their term is relieved of reps and warranties.

They are so frightened about liability for their own AVM or other data analysis for a WAIVER/now value acceptance, that they pass the buck by having a LOAN PERSON estimate the value !! Or the sale pride is the value !! ( as long the property is eligible)

THAT is how little they trust their results. The rest of their massive UW is still used with a waiver/value acceptance or other product.

 

[alebrewer]

If an AVM is used, the GSEss do not back it, do they? NO.

Are you absolutely certain about this? It was my understanding that if VA is granted (and used), the GSE's offer rep and warrant relief on the value. I'm sure you're better informed than I, though.

They are so frightened about liability for their own AVM or other data analysis for a WAIVER/now value acceptance, that they pass the buck by having a LOAN PERSON estimate the value !! Or the sale pride is the value !!

You really don't understand how this works, do you? And I'm not being mean or condescending. You just haven't been exposed to that side of the equation. That said, I've always found it less embarrassing to express my opinions as just that - opinions (and not fact). I asked Perplexity and got a pretty good response:

 

[J Grant]

AI Overview



Yes,
exercising a value acceptance offer or appraisal waiver does relieve lenders of representations and warranties related to property value and marketability, according to guidelines from Fannie Mae and Freddie Mac. This means the lender is relieved from potential repurchase demands if the value is later found to be incorrect, though they remain responsible for other warranties like the accuracy of the data they submitted to the automated underwriting system.

How it works

• Value acceptance: This is the official term used by Fannie Mae for its program that accepts the lender-submitted value instead of requiring a full appraisal. It is often used for loans with low risk scores or where an automated underwriting system finds the value acceptable.
• Appraisal waiver: This is the term for when an automated underwriting system waives the requirement for a traditional appraisal. Freddie Mac offers a similar program called Automated Collateral Evaluation (ACE).
  • The relief: When a lender exercises one of these "offers," they receive "Day 1 Certainty" which provides relief from certain representations and warranties.
    • What's covered: The lender is relieved of reps and warranties regarding the property's value, marketability, and some aspects of its condition.

 

[J Grant]

AI Overview



No,
Fannie Mae does not take liability for a value acceptance/waiver; the lender remains responsible for the accuracy and completeness of the property data, including representations and warranties about the property's value, marketability, condition, and eligibility. When a value acceptance offer is exercised, Fannie Mae provides the lender with relief from its own enforcement of these specific representations and warranties for property value and marketability, but the lender must still ensure the loan meets all other requirements.

 

[alebrewer]

So which is it? Do the GSE's offer R&W relief on VA or not?

 

[J Grant]

l am not on the inside, so I can not say, and your question involves VA loans specifically?

 

[alebrewer]

l am not on the inside, so I can not say, and your question involves VA loans specifically?

VA, at least in this context, is an acronym for 'Value Acceptance'. Here's your answer: when VA is offered and used, the GSE's DO provide R&W relief on the VALUE of the property. The lender is still (as they are when VA isn't offered) responsible for the accuracy and completeness of the property data.

Here's an example that might help: Lender uses the SP as the 'estimated value' and inputs that # into AUS. AUS kicks out the option for VA + PDC. Lender reviews the PDC and notices several latent defects in the property, but does nothing to verify whether they are addressed/remedied. The lender wouldn't be responsible for the 'value' that was input (as they have R&W relief for the value component), but would still be responsible for misleading property condition information (i.e. they didn't address property condition issues). That make sense?

 

[Justinjla]

So which is it? Do the GSE's offer R&W relief on VA or not?

Fannie Mae offers R&W on Value Acceptance loans.