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Just Curious

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Overimprovement

Senior Member
Joined
May 31, 2017
Professional Status
Certified Residential Appraiser
State
Kentucky
Does anyone know what Fannie does when a review appraisal comes back in at a value significantly lower (or even $1 lower) than the origination appraisal?
 
The client weighs which one they think is more credible and acts accordingly.
 
The client weighs which one they think is more credible and acts accordingly.
Yes, but what is acts accordingly? What are their real choices when the loan has already been made and sold to Fannie? Fannie would be the actual client in this scenario, not the originating lender.
 
Was the appraisal performed in accordance with fannie guielines? If yes then that is part of the risk of being in the business of buying loans. If not, fannie can require the lender re-purchase the loan under the reps and wzrranty agmt.
Yes..

But lets assume not--even though the loan may still be good (ie current), Fannie can still require a repurchase? Just based on one review appraiser's opinion? Does the lender get any say so?
Never been a part of this from any angle (and am not now, but like I said, just curious as the topic came up in a recent conversation).
 
Yes..

But lets assume not--even though the loan may still be good (ie current), Fannie can still require a repurchase? Just based on one review appraiser's opinion? Does the lender get any say so?
Never been a part of this from any angle (and am not now, but like I said, just curious as the topic came up in a recent conversation).
If Fannie issues a repurchase demand the lender may refute the claim and present its case with regard to the legitimacy of the appraisal.
 
Yes..

But lets assume not--even though the loan may still be good (ie current), Fannie can still require a repurchase? Just based on one review appraiser's opinion? Does the lender get any say so?
Never been a part of this from any angle (and am not now, but like I said, just curious as the topic came up in a recent conversation).
Fannie is currently very, very unlikely to issue a repurchase demand unless the field review value opinion is more than 10% lower than the appraised value unless the field review exposes something about the subject property that shows that the property is an ineligible property (in which case value does not matter). Even if there is a greater than 10% variance, it will not automatically result in a repurchase demand since Fannie's analyst may determine that the field is no more credible than the original appraisal or Fannie may offer the lender a repurchase alternative such as paying an additional fee or requiring the lender to obtain mortgage insurance on the loan (or increasing the amount of MI coverage on the loan). As Danny stated, even if a repurchase request is made, the lender has an opportunity to refute the claim
 
Was the appraisal performed in accordance with fannie guielines? If yes then that is part of the risk of being in the business of buying loans. If not, fannie can require the lender re-purchase the loan under the reps and wzrranty agmt.

Give that man a cigar:dancefool:

It is not unusual for Fannie to do just that.
 
Never been a part of this from any angle (and am not now, but like I said, just curious as the topic came up in a recent
My only experience in buy backs was a client with a mortgage arm, about a year before the crash, had a meeting for appraisers. The CEO of the mortgage arm spoke about a loan in Bartlesville, OK they had a few years earlier. The price of RE is low and the borrower paid about $50,000. Unblemished credit history, and employed by the only game in town, Phillips Petroleum. Sold the loan to Fannie. Then Phillips 'merged' with Conoco. Frankly they sold out and were basically moved to Houston, stranding hundreds of people without jobs or any substitute jobs available. Housing prices crashed, the borrower defaulted unable to sell and he moved on to Tulsa and a new job.
Fannie then reviewed the original report and the reviewer found a nearby sale that closed for $38,000 or so. Demanded a buy back. The mortgage company and the appraiser said that they were aware of the sale but the condition was much worse so it was rejected as a comp. Fannie refused to budge, so they bought it back.
The moral of the story was that please explain any potential low priced nearby sales that are not used. I am not keen on "yes, we have no banana's today" but it made sense. The CEO basically said they considered Fannie Mae unreasonable, they supported their appraisers opinion, but that was the price for using Fannie Mae.
 
My only experience in buy backs was a client with a mortgage arm, about a year before the crash, had a meeting for appraisers. The CEO of the mortgage arm spoke about a loan in Bartlesville, OK they had a few years earlier. The price of RE is low and the borrower paid about $50,000. Unblemished credit history, and employed by the only game in town, Phillips Petroleum. Sold the loan to Fannie. Then Phillips 'merged' with Conoco. Frankly they sold out and were basically moved to Houston, stranding hundreds of people without jobs or any substitute jobs available. Housing prices crashed, the borrower defaulted unable to sell and he moved on to Tulsa and a new job.
Fannie then reviewed the original report and the reviewer found a nearby sale that closed for $38,000 or so. Demanded a buy back. The mortgage company and the appraiser said that they were aware of the sale but the condition was much worse so it was rejected as a comp. Fannie refused to budge, so they bought it back.
The moral of the story was that please explain any potential low priced nearby sales that are not used. I am not keen on "yes, we have no banana's today" but it made sense. The CEO basically said they considered Fannie Mae unreasonable, they supported their appraisers opinion, but that was the price for using Fannie Mae.
The probable reason that they did not fight back against Fannie too hard on that one is that it was only a $50k loan...if it had been a $500k loan, they likely would have fought Fannie much harder.
 
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