Is The 1004mc Really All That Important?

[Joe Flacco]

I am sure Fannie Mae is aware of the 1004MC flaws and is working on a better format. I don't think they are sitting around thinking that it's great.

 

[Peter LeQuire]

I am sure Fannie Mae is aware of the 1004MC flaws and is working on a better format. I don't think they are sitting around thinking that it's great.

I don't know - if they know it has flaws, why not withdraw it till it's revised? Or, why haven't they revised it before now? Or, easiest solution - revise the MC addendum form instructions, and divorce the MC trend conclusions from those of the URAR?

 

[J Grant]

They sure are slow if they have been working on it

 

[bnmappraisal]

Isn't that pretty much true of the entire appraisal report?

"it depends"

...but sadly, I think you're right too

 

[Deleted member 128537]

The 1004MC is a complete waste of time in rural areas. I don't have experience with it in large urban areas. I put my own statistical data into the report. I did this before the 1004MC and after the 1004MC. I simply take the data from the Realtor Association that shows a 10 year trend for my county. I update it about every 2 months, and just go with it. As a reviewer I do not say anything about the 1004MC. I've never had an underwriter ask me about the 1004MC. In fact I can remember showing on the 1004MC that I only had 3 sales similar to the subject for the entire year, only to have the underwriter ask me for another comparable. I asked, "Did you look at the 1004MC?" So I think the 1004MC is a total waste of our time. I don't spend much time developing, explaining, or referring to it. It's just a thing I do. Believe me if Fannie changes things it will end up being far more work. They never reduce the scope of work.

 

[J Grant]

Beyond that, the trends of neighborhood properties comparable to the property being appraised are meaningless outside the context of the overall trends in a larger market are, be that region, county, city or borough.

That is the whole point, to get appraisers to identify the trends for the subject immediate area of the comps used for the subject, differentiated from larger market /geo area overall trends. Since the loan is being made on this one subject property which has a specific location and influences of that location, that is their main interest, the rest is background noise. Appraisers pay far too much attention to generic trends, what the median value is in a county, the trend of the market for past 5 years etc. Do buyers and sellers really care about that? They have a general idea unless they are idiiots about the market, they along with our lender and a HS student can log on to Zillow or any RE website and get that generic trend information for a county or 5 year history or similar. We are no longer needed for that, though it's helpful to provide it for contest if you think it's relevant. What we are needed for is to identify and present in context the immediate influence trends around our subject that affect its marketability and appeal, from a multide of sources including speaking to RE agents and market particpants and analyzing the relevant transactions for terms and charcteristics, the very thing Zillow and the other generic data sources available on a smart phone can't provide

 

[J Grant]

The limitations of the MC form is its strength and its weakness, if that make sense. Or put it this way, it makes sense if appraiser understand the limitation and explains it to bolster support for appraiser's conclusions.

Since the MC form only identifies back one year, and you are appraising in a rural area with few sales or a unique home with few sales, and MC form only populates with 2 comps that sold in the past year and 1 listing, that shows support that there are few recent sales thus you had to go back in time over a year old for comps and there is low inventory.

 

[Joe Flacco]

Beyond that, the trends of neighborhood properties comparable to the property being appraised are meaningless outside the context of the overall trends in a larger market are, be that region, county, city or borough.

That is the whole point, to get appraisers to identify the trends for the subject immediate area of the comps used for the subject, differentiated from larger market /geo area overall trends. Since the loan is being made on this one subject property which has a specific location and influences of that location, that is their main interest, the rest is background noise. Appraisers pay far too much attention to generic trends, what the median value is in a county, the trend of the market for past 5 years etc. Do buyers and sellers really care about that? They have a general idea unless they are idiiots about the market, they along with our lender and a HS student can log on to Zillow or any RE website and get that generic trend information for a county or 5 year history or similar. We are no longer needed for that, though it's helpful to provide it for contest if you think it's relevant. What we are needed for is to identify and present in context the immediate influence trends around our subject that affect its marketability and appeal, from a multide of sources including speaking to RE agents and market particpants and analyzing the relevant transactions for terms and charcteristics, the very thing Zillow and the other generic data sources available on a smart phone can't provide

I disagree. Properties are too different to draw trend conclusions from small sets of data. The only way it works properly with the way the 1004MC is designed is if all the properties are model matches and they all have not had any modifications over the years. The 1004MC also shows very short term trends. You can't make a "overall trend" determination looking at one year of data.

 

[Joe Flacco]

If the purpose is to show the data to see how many sales there were in certain time periods then that is fine. But the 1004MC format is inadequate for drawing trend conclusions. It's not a credible format to determine trends.

 

[J Grant]

They are not asking for an overall trend!! The directive is specific, the increasing/decreasing etc trends are to come from the comps and similar homes/market activity for the subject. I presume they specifically made a way to do that (the MC form) because they want to identify what subject comps/immediate activity comprises vs overall market activity.

They are lending on/insuring the loan on a specific property in a fixed location, therefore the activity occurring in that location and its value influences is is of greater interest to them activities in areas they are not looking to UW this particular loan for.

You can provide as much lengthy narrative or as many charts and graphs and statistics as you want about overall activity in greater market or back 2 years or back 5 years, but the directive about trends on page one is clear, they are supposed to be those more recent year back and ongoing trends most relevant to the comps for subject, explain why the trend may differ from overall trend when that happens. If we dont' separate out for analysis the subject immediate comps/area trends, how does a client /user know if it differs from overall trend, whether that be in a positive way or a negative way?