Dave Bernstein
Freshman Member
- Joined
- Jul 1, 2006
- Professional Status
- Licensed Appraiser
- State
- California
About two weeks ago I completed an appraisal on a SFR for a mortgage broker. I indicated to her before the appraisal that the subject's neighborhood had declined -12.8% over the past 12 months (-1.06% per month). When I did the appraisal I indicated the market trend on page 1 of the URAR as "declining." The neighborhood has not stablized and continues to decline. The subject is in a newer sub-division where it appears that every other sale is this neighborhood was either a foreclosure or REO property. The local newspaper has indicated that this particular sub-division leads the community in the highest percentage of decline in median home sale prices. My local MLS statistical data backs this up and supports the numbers that I used in my appraisal report for percentage of decline.
Here's the kicker- The mortgage broker called me up yesterday and told me that FNMA just changed their guidelines and she can't go 100% L.T.V. with her borrower unless I change my appraisal report to indicate that the market is "stable," not declining I told her that I can't do that because my research indicated otherwise and changing my appraisal report would be fraud.
She hired another appraiser in my area to do another appraisal on the property and he indicated in his final report that in his opinion, this particular sub-division and subject's neighborhood was "stable" He obviously supplied her with the report she needed to get her loan approved! I sent the other appraiser an e-mail with my research before he completed the appraisal. This other appraiser sent me his reply with his justification for checking the box "stable" on the URAR. His explanation is as follows:
"The box is for “arms length transactions” not REO or bank sales. You do not compare distressed sales with “arms length transactions.” Distressed sales are part of the real estate “submarket”. They are evaluated separately.
Per Dataquick: Some might point to the October-to-November increase as evidence sales have bottomed out, he continued, but we’ll need to see a sustained trend. We also saw November sales rise a bit back in the troubled market of 1994, well before it hit bottom. It’s worth noting, though, that sales financed with conforming loans have increased each month since September, and last month we saw signs that the jumbo loan problem, while unresolved, wasn't worsening."
My question is this- Does this guys logic make sense, or is he just blowing hot air? Am I missing something here? I feel that my research was thorough. When comparing median home prices which is an indicator of market trend in a particular area, you include all sales after filtering for similar physical characteristics as the subject property. I didn't realize that the market trend box on page 1 of the URAR was only for "straight" sales!? All comments would be welcomed.
Dave
Here's the kicker- The mortgage broker called me up yesterday and told me that FNMA just changed their guidelines and she can't go 100% L.T.V. with her borrower unless I change my appraisal report to indicate that the market is "stable," not declining I told her that I can't do that because my research indicated otherwise and changing my appraisal report would be fraud.
She hired another appraiser in my area to do another appraisal on the property and he indicated in his final report that in his opinion, this particular sub-division and subject's neighborhood was "stable" He obviously supplied her with the report she needed to get her loan approved! I sent the other appraiser an e-mail with my research before he completed the appraisal. This other appraiser sent me his reply with his justification for checking the box "stable" on the URAR. His explanation is as follows:
"The box is for “arms length transactions” not REO or bank sales. You do not compare distressed sales with “arms length transactions.” Distressed sales are part of the real estate “submarket”. They are evaluated separately.
Per Dataquick: Some might point to the October-to-November increase as evidence sales have bottomed out, he continued, but we’ll need to see a sustained trend. We also saw November sales rise a bit back in the troubled market of 1994, well before it hit bottom. It’s worth noting, though, that sales financed with conforming loans have increased each month since September, and last month we saw signs that the jumbo loan problem, while unresolved, wasn't worsening."
My question is this- Does this guys logic make sense, or is he just blowing hot air? Am I missing something here? I feel that my research was thorough. When comparing median home prices which is an indicator of market trend in a particular area, you include all sales after filtering for similar physical characteristics as the subject property. I didn't realize that the market trend box on page 1 of the URAR was only for "straight" sales!? All comments would be welcomed.
Dave