Maybe Appraisers aren't the Primary Culprits After All

[alebrewer]

maybe it's still the folks its always been - unscrupulous mortgage lenders. MUCH easier to blame the appraisers, though...

Understand Top Defects to Help Strengthen Loan Quality | Fannie Mae

What are the top defects and trends Fannie Mae saw in the most recent three months of post-purchase file reviews? Understanding the industry’s top quality control defects and trends helps to strengthen loan quality and support sustainable homeownership.

singlefamily.fanniemae.com

 

[TerryRohrer]

Well....

 

[Tawfik Ahdab]

Thank you both for those charts. Terry’s chart is of particular interest because it deals with appraisals specifically.

The thing is, that chart presents defects such as failure to adjust, incorrect comp selection, and inaccurate quality and condition ratings as if they are objectively determinable, rather than just the tally of reviewer opinions they actually have to be.

So just because this information - or rather, tally of opinions- is presented in histogram form doesn’t make factually correct. What is presented as fact is no more than accumulated opinions presented in graphic form.

 

[TerryRohrer]

Thank you both for those charts. Terry’s chart is of particular interest because it deals with appraisals specifically.

The thing is, that chart presents defects such as failure to adjust, incorrect comp selection, and inaccurate quality and condition ratings as if they are objectively determinable, rather than just the tally of reviewer opinions they actually have to be.

So just because this information - or rather, tally of opinions- is presented in histogram form doesn’t make factually correct. What is presented as fact is no more than accumulated opinions presented in graphic form.

And, as has become the norm for the GSEs, we don't have a clue if these "defects" impact .001% of appraisals or 75% of appraisals. Appraisers are charged with not misleading...it seems the de facto appraisal standards promulgator could aspire to the same, but it pays better to lie.

 

[Tawfik Ahdab]

The GSE‘s demand excellent analytical skills from appraisers. Well, then, they shouldn’t be surprised that we appliy those very skills to scrutinize them and their findings. You would think that they would actually encourage appraisers to provide feedback, responses, or critiques of their methodologies, but the GSEs’superiority complex and long-standing tradition of top-down dictates to appraisers make that impossible.

 

[Mark K]

If they spent 1/2 the time and effort vetting borrowers to the extent that they spend micromanaging appraisals, the default rate would drop to nearly 0.

All they want to do is to make as many loans as possible to anyone that can fog a mirror and they don't give a damn about future default rates because its always the appraiser's fault.