Inspection

[Terrel L. Shields]

the lenders have awoken to the fact that appraisals, good and/or bad, didn't prevent the massive losses in the last real estate meltdown.

Perhaps very true but the intention of FIRREA was to impose this governor upon the engine of finance. They simply bypassed the engine brake and added a turbo. The problem with our last downturn is that no lenders went to jail. None that I've heard of. I think there were plenty of folks at IndyMac and Countrywide who should have gone to jail and died there. Bernanke complained about the "moral hazard" of bailout and did it anyway, as if the nation could not stand the individuals being prosecuted and Geithner further argued that the banks were too fragile to have people prosecuted...nevermind they later fined those same "fragile" banks millions upon millions.

 

[George Hatch]

Very few, if any 2055 were done for origination lending, so there is no default comparison to be had. Origination loans have mainly used appraisals and thus there is no control group. That is why fannie is proceeding with caution.

Appraisals can not prevent default, but then neither can any other form of valuation. The change now is due some lenders pressuring for speed in the point of loan decision,.

Since the property collateral for a loan is substantial it still needs an inspection, investors need to know what they are buying /rule out the problem properties. Since USPAP did not define inspection for appraisal purpose as part of appraisal practice/sig assistance, that allows a USPAP compliant appraisal using a non appraisers to inspect. ( label data collection to CYA) Why use non appraisers- because they comprise a cheaper and more plentiful labor pool, Since RE agents are in the test group the reason is not for "better" inspections, - at least they are not pretending "better" is the reason..

The housing market crash --back then a mortgage broker could order an appraisal, and if it did not hit value, throw it in the trash and order another one. I bet there were enough good appraisals thrown in the trash to have mitigated . What banks stay silent on is majority of HELOC loans were no appraisal using an AVM or BPO and many wildly over valued, - (I applied for one, valued 150% over ). The first credit pulled was HELOC-overnight banks froze borrower's equity line of credit, which set off panic selling as the first wave .

We may go the way of Kodak or play a different role in the process. Will see ...

The lenders always push for expediency when times are good and press for more diligence when times are bad. I don't expect that pattern of behavior to change going forward

 

[Michigan CG]

I am getting really tired of deleting off-topic posts..............

 

[Michigan CG]

It appears some people can't take a hint..................

Moderator.

 

[Mr Rex]

I thought appraisers should never say the word inspection and broadly proclaim that they did not inspect a property. What happened to that narrative?

 

[Evincere]

The lenders always push for expediency when times are good and press for more diligence when times are bad. I don't expect that pattern of behavior to change going forward

I do. Expect them to change their approach as evidenced by the sweeping promotion of hybrids. Fannie, to remain viable and profitable especial needs to be fed - When, if , as times bad or slow approach the faster they can close a loan, the better.

 

[Mark K]

I thought appraisers should never say the word inspection and broadly proclaim that they did not inspect a property. What happened to that narrative?

Personally, I've always 'viewed' property.

 

[J Grant]

https://www.fanniemae.com/content/news/current-appraiser-newsletter.pdf

Overview

 

[Evincere]

Don't trainees have to go around with their supervisors for various amounts of time to learn how to do site inspections properly? I'm not sure what my state now requires. I would think that real world experience far exceeds anything sitting in a classroom will provide.

.

So said TPTB ...once upon a time not so long ago.

Apparently, and quite suddenly none of what was considered trainee apprenticeship matters anymore. Here’s the thing that’s so insane. . ...These new trainees - will no longer be required to perform “field “ work which is where so much of training and learning actually happens - instead, from the suggestions coming from on high, they will be expected to be desk jockeys trying to figure out worth without actually needing to see for themselves what it is they are valuing. Trainees required 2 years of training and thousands of hours. Now, 2 years of sitting behind a desk robo signing reports.

I’ve read where TAF is considering some BS “virtual” on line training

The reality is...what they’re after and truly interested in is an Appraisers signature and E&O

 

[Evincere]

Because the required "formal " training was the 2 years or more to get hours for a license with a mentor of supervised appraisals including inspections./ reconciling the inspection resutls with data and market analsys ( plus the years of doing so afterward)

The rote aspects such as measurement is not have enough content to merit a training course.Want to require a course in construction, which most appraisers took as an option, fine.

How to measure and work a camera can be taught in a few hours. The years of field work and inspection for appraisers are to develop a store of accumulated experience din order to comptently evaluate diverse properties and neighborhoods.Along with doing inspections came continual immersion in the market and interaction with builders, contractors, flippers, RE agents, owners etc.

Much of that will be lost to a new generation of appraisers who will be mostly at a desk /computer, so a formal class may be more critical n future.. .

Excellent post ^

I would only add...2 years of signing off on every report where credit towards a license was required. What now? Sign off now on what...adjustments and correct mathematical calculations?