Market areas and Market Trends

[CGinMN]

Appraisers, if you want to make the data cancer argument then anytime you find an outlier, call the agent to see if it received a waiver, then post your analysis online.

 

[chad hampton]

Why only adjust per month? Why not to the week? Or the day?

If it's one thing the GSE's are experts at it's making **** up. Sort of like how their fake field appraisers do better than the real ones. Or how hybrids done by min wage staff appraisers at the appraisal mill AMC's that their friends own are "better"

 

[djd09]

Underappraisal Disparities and Time Adjustments​

Published:

01/16/2024

Several studies document racial and ethnic disparities in underappraisal. Racial disparities in appraisers’ use of time adjustments for local house price growth are one important factor driving these results.



Figure 1 suggests that time adjustments are an important determinant of underappraisal. Appraisers make time adjustments for only 19 percent of properties, outlined in red in the figure, but these adjustments are often the decisive factor in determining underappraisal (11 of 19 properties, as represented in the center green box). The non-decisive 8 of 19 properties are split evenly between appraisals for which the value is above contract even without the adjustment (4 percent in the green box), and those where adjustments are not large enough to increase the appraisal above the contract price (4 percent in the purple box). Another way to appreciate the importance of time adjustments is to note that 23 percent of properties are underappraised before time adjustments (three right-most boxes), but only 12 percent afterwards (two purple boxes).

Disparities in Time Adjustment and Underappraisal​

During the period examined here, appraisers time adjusted at least one comparable property for only 18.5 percent of all properties being purchased, despite national house prices growing robustly during the entire period and very rapidly during 2021. Time adjustments are least common for homes in majority-Black tracts at only 13.4 percent, as opposed to 18.4 percent in majority-white tracts. In majority-Hispanic tracts and “no majority” tracts, there is no statistically significant difference from majority-white tracts. Hereafter, majority-Black tracts are referred to as Black tracts, majority-Hispanic tracts as Hispanic tracts, and so forth.9

When we focus on appraisals below the contract price before time adjustments, larger disparities emerge. Table 1 shows that, among these appraisals, appraisers ultimately time adjust at a 67 percent rate in white tracts, but only at a 45 percent rate in Black tracts, a disparity of 22 percentage points. We see disparities of 14 and 7 percentage points when comparing Hispanic and no-majority tracts, respectively, to white tracts.

These simple comparisons of means understate the disparity because average annual house price growth, an important predictor of time adjustments, is 3 percentage points higher in Black tracts during this period (14%) as opposed to white tracts (11%). Two other important predictors, the length of time adjustment and the number of comparable properties available, are about the same. Regression analysis confirms that the disparities cannot be explained by these market conditions.10 After regression adjustment, disparities increase in Black tracts to 25 percentage points, while remaining about the same in Hispanic and no-majority tracts. Thus, for potentially decisive time adjustments, disparities are considerably larger than in the full sample and affect homebuyers in Black, Hispanic, and no-majority tracts.

Further, examination of decisive time adjustments also shows large disparities. In white tracts, 52 percent of appraisals initially below the contract price rise above the contract price through time adjustment. However, this happens only 30 percent of the time in Black tracts, a disparity of 22 percentage points. The disparities are 17 and 10 percentage points, respectively, in Hispanic and no-majority tracts, compared to white tracts. Adding regression controls leads to little change in these figures.

Time adjustments can make the greatest difference for borrowers with appraisals initially below contract who are similar to the marginal borrowers that represent the focus of bank regulator compliance reviews and economic theory.11,12 As marginal borrowers teeter between approval and denial, additional help can be decisive. The precarious situation for these borrowers is sometimes referenced in the “thick folder” theory of discrimination, where loan officers can choose whether to make an extra effort to assist the borrower in submitting additional documents to explain or compensate for any blemishes in their application.13

Underappraisal Disparities and Time Adjustments | FEDERAL HOUSING FINANCE AGENCY

Several studies document racial and ethnic disparities in underappraisal. Racial disparities in appraisers’ use of time adjustments for local house price growth are one important factor driving these results.

www.fhfa.gov

same old same old...racist appraisers

 

[Cob]

The new form and fannie want more provable adjustments, show us the beef as to how. Maybe this will force some, we're still too many appraisers, to just leave the profession.
Although, if the new from is too annoying i'm out of here. Cause marking more money now doing something else.

The residential appraisal reports we complete are now simply called "appraisal reports" but are still considered to be "summary appraisal reports" I am convinced they changed the name, because of what they are trying to do now, as residential appraisers we complete these appraisal reports by summarizing what and how we did things in the appraisal report, now it seems the also want more of a self contained appraisal report for residential properties.

I will ask the question, but we all know the answer, when residential appraisers are "expected" to complete, what amounts to a self contained appraisal report for residential appraisal reports, do you think that the fees for this will reflect the work that will be needed to complete these appraisal reports on the new form???

Self-Contained Appraisal

A Self-Contained Appraisal Report fully describes the data and analyses used in the assignment. All appropriate information is contained within the report and not referenced to the appraiser's files. A Self-Contained Appraisal Report contains information sufficient to identify the real estate involved in the appraisal, including the physical and economic characteristics relevant to the assignment. The Self-Contained Appraisal Report includes a description of the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions and conclusions.

Summary Appraisal Report/Appraisal Report

A Summary Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice (USPAP) for a Summary Appraisal Report. As such, it presents only summary discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning and analyses not included in the report is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated herein.

 

[djd09]

Why only adjust per month? Why not to the week? Or the day?

If it's one thing the GSE's are experts at it's making **** up. Sort of like how their fake field appraisers do better than the real ones. Or how hybrids done by min wage staff appraisers at the appraisal mill AMC's that their friends own are "better"

the gse's thought accpepting no doc loans was a good idea too...

 

[djd09]

More homebuyers will be eligible to skip in-person appraisals under new rules​

Change offers potential for cost savings, quicker closing process​

Fannie senior vice president Jake Williamson said in a separate statement that allowing more customers to use its automated underwriting tool will make the homebuying process more effective, efficient and impartial for lenders, appraisers and secondary mortgage market participants.

Fannie offered appraisal waivers for the first time in 2016 and Freddie followed in 2017. By using an automated system, Freddie has saved borrowers more than $1.63 billion in appraisal fees to date, according to the agency’s statement.

The decision whether to offer an appraisal waiver is up to the lender that may consider a buyer’s credit score and other factors in addition to the down payment amount, according to a Bankrate.com report. Another consideration is whether there are comparable properties nearby that have recently sold. Relying on an automated system creates some risk of a home being overvalued, the report said.

https://www.costar.com/article/337925650/more-homebuyers-will-be-eligible-to-skip-in-person-appraisals-under-new-rules

appraisers will call them time adjustments...

 

[Fernando]

More homebuyers will be eligible to skip in-person appraisals under new rules​

Change offers potential for cost savings, quicker closing process​

Fannie senior vice president Jake Williamson said in a separate statement that allowing more customers to use its automated underwriting tool will make the homebuying process more effective, efficient and impartial for lenders, appraisers and secondary mortgage market participants.

Fannie offered appraisal waivers for the first time in 2016 and Freddie followed in 2017. By using an automated system, Freddie has saved borrowers more than $1.63 billion in appraisal fees to date, according to the agency’s statement.

The decision whether to offer an appraisal waiver is up to the lender that may consider a buyer’s credit score and other factors in addition to the down payment amount, according to a Bankrate.com report. Another consideration is whether there are comparable properties nearby that have recently sold. Relying on an automated system creates some risk of a home being overvalued, the report said.

https://www.costar.com/article/337925650/more-homebuyers-will-be-eligible-to-skip-in-person-appraisals-under-new-rules

appraisers will call them time adjustments...

That can explain why there are fewer cookie cutter assignments. AVMs are best for cookie cutter tract homes.

 

[George Hatch]

They are trying to force the issue because only 10% of appraisals have a market conditions adjustment.

In conjunction with the above and for the benefit of the gallery, it should be apparent to everyone that this time it looks like they really mean it. If appraisers are waiting for this to blow over then that might not be a good plan.

Appraisers are already locked into the existential struggle for REL and they're already sweating the AVM-fortified waiver programs then mayhaps some consideration of what their AVM can and most likely is doing may be in order. If their AVM competition is making market conditions adjustments and a lot of the appraisals aren't then that might leave a mark all by itself.

If an appraiser is capable of performing this analysis and developing these adjustment factors but they aren't working to their competency then that's arguably on them. That is not an example of appraisers being poorly trained or incapable of doing "meaningful to the user". But rather refusing to perform to "meaningful to the user." If appraisers are already engaged in the struggle for domination, that is not how they're going to beat the AVM.

I know, I know. Everyone is already unhappy about the fee and putting in more time/effort is just going to increase the level of pain. But if someone is planning on presenting the take-it-or-leave-it ultimatum then they might put some thought into the possibility that the response will end up looking like "Challenge Accepted". Then what?

 

[George Hatch]

One more thing, the no-harm-no-foul thinking might be okay when the market trends are increasing. You lowball a property a little, that doesn't hurt the lender's position. All you have to worry about is making the 3min segment on the 7:00 news where the local race/social justice reporter is calling you out by name for abusing some minority borrower out of racial bias.

If you think about it, that's actually your best case scenario. It gets worse when the market trends reverse and the GSEs want to avoid a lagging value indicator due to the appraisals being 3 or 6 months behind a declining market trend because they don't want to get hassled for a negative time adjustment. AND the race/social justice reporter is still on your @ss for conspiring to abuse this poor borrower by overvaluing their property and contributing to their overencumbered mortgage.

There is no safe harbor position in either situation except to do what you can do. The bad fees notwithstanding

 

[djd09]

how else would the unethical stakeholders have it...too high number hitter too low racist...they are still living in sniffos bizarro world woke jokes