New FNMA ROV requirement

[George Hatch]

Yep, you can't avoid ROVs with higher quality work, maybe a couple. Last one I had all of the comps were on the same street very close to the subject, newer homes all in similar condition and quality. ROV was all superior homes in size and new construction.

If you included that explanation in your report in the first place then the simple screen grab of that explanation sends them back to RTFR. If it's already in the report then there's no reason to do any more writing. Not unless you never wrote that explanation to begin with.

The way that probably most appraisers approach the ROV issue is to play the odds. They do their normal thing knowing only a small percentage will come back as an ROV and they wait for their credibility to be challenged before defending it. And that is definitely a profitable way to proceed when the odds are low. But if/when those odds increase the appraisers need to re-do their math.

Sooner or later the market will turn; that's when the challenges are REALLY going to increase. Appraisers can either passively wait for those challenges or they can build their reports so they CAN just do the cut-n-paste response. Asked and answered. Not "let me drop everything I'm doing right now so I can get back to you within the next 30 minutes".

Faster to do it a little better at the outset than to remediate at the last minute.

 

[shrubberyvaluation]

If you included that explanation in your report in the first place then the simple screen grab of that explanation sends them back to RTFR. If it's already in the report then there's no reason to do any more writing. Not unless you never wrote that explanation to begin with.

The way that probably most appraisers approach the ROV issue is to play the odds. They do their normal thing knowing only a small percentage will come back as an ROV and they wait for their credibility to be challenged before defending it. And that is definitely a profitable way to proceed when the odds are low. But if/when those odds increase the appraisers need to re-do their math.

Sooner or later the market will turn; that's when the challenges are REALLY going to increase. Appraisers can either passively wait for those challenges or they can build their reports so they CAN just do the cut-n-paste response. Asked and answered. Not "let me drop everything I'm doing right now so I can get back to you within the next 30 minutes".

Faster to do it a little better at the outset than to remediate at the last minute.

How long of an explanation do you make when all of your comps have no adjustments, are located within .1 mile and sold within the past 2 months? What verbiage do you use in the original report to make it clear that sales further away over double the size are not as comparable? Sure I could just point to cert 7 for every ROV, but I think that would be obnoxious.

 

[Zoe]

The Op's post is throwing a little more weight to a non-client entity, a non-intended user.

VA hits it on head before the appraisal is completed through the tidewater process. The appraiser notifies the lender through a designated point of contact the subject will likely not meet the contract price on a sales transaction and then anybody can submit whatever to the lender and VA within like 2 business days and the appraiser respond to what the client/lender sends them. It can't be a zillow report.

When tidewater is issued it is all above water and apparent to everyone since the veteran receives a copy of the appraisal. It is spelled out on a sales transaction.

Tidewater with VA don't exist on refinance transactions. VA welcomes ROVs on refinances but VA's tidewater process almost eliminates the possibility of an ROV.

VA still welcomes ROVs from the lender but it very rarely happens. The tidewater process eliminates it on purchases because the ROV has already been considered before the appraisal is completed.

This is my tidewater notice to the specified point of contact with the lender. I reference the point of contact in the notice:

Mr.Ms.etc:

I am working on the above referenced appraisal. Based on preliminary analysis, I need to invoke the Tidewater initiative. Please be advised that the subject property will likely not meet the contract price. In accordance with VA Circular 26-03-11, you are hereby notified and requested to provide any additional information you would like to be considered in the appraisal of the subject property. Please supply any information you would like me to consider within 2 business days as well as a supporting summary and analysis of the information.

Please contact me with any questions you may have.

Sincerely,

XXXXXX


Sometimes and very rarely has the subject met the contract price after a tidewater notice is completed. I can think of maybe 1-2 instances in many years that the subject met the contract price.

I only want 3 sales as well as a supporting summary and analysis of the information. I don't take zillow reports. I am happy if they have 3 sales. If all they have are 1 or 2 comps with my conditions satisfied, I have completed my job to the best of my ability.

Sometimes, the lender will respond that they don't have any additional information. Please proceed. That is what I do.

 

[djd09]

...this is a matter for civil courts

 

[Zoe]

You understand that the same procedures VA uses could be used in a conventional or FHA loan process on a purchase transaction. It all has to be disclosed in the final appraisal report. It is not like the old mortgage broker days where they would say if you can meet the contract price, we will send you the appraisal.


Anything in an ROV on a refinance has to be disclosed in the revised appraisal report.

Lenders know they better not send me a list of comps printed off a computer. I will send it right back and say that is not what I asked for. I can't complete the assignment unless you comply with my conditions.

Real estate agent or whoever may send that to the lender, but that is not my client.

I will take any information a person can give me on the front end on a refinance or a purchase transaction for a lender. No harm there. I get tons of information from agents and homeowners many times before I complete an assignment.

I am not addressing pie in the sky list of crap on an appraisal on an ROV or a tidewater.

I will throw it in the report on an ROV or tidewater and tell lender, that is not what I asked for.

Once tidewater notice goes out, all the rules change on a purchase transaction. Once the appraisal on a refinance for a lender has been submitted, the rules change on an ROV on MY END.

On tidewater, I want all the information going through the lender/client to me. Too late to send it directly to me. Once the appraisal is submitted to my client on a refinance, too late to send it directly to me. It has to go through my client on an ROV to me.

 

[djd09]

Step 5

If the lender won’t reconsider or you think you received an unfair home appraisal, there are places to turn to for help. You can file a complaint with your state appraisal board, the CFPB or the U.S. Department of Housing and Urban Development. ​

 

[Zoe]

Step 5

If the lender won’t reconsider or you think you received an unfair home appraisal, there are places to turn to for help. You can file a complaint with your state appraisal board, the CFPB or the U.S. Department of Housing and Urban Development. ​

Is GSE on that list? Who do you file complaint with on a waiver or whatever? UAD, AVM, hybrid, the list is getting longer?

 

[TerryRohrer]

With all of the changes and old guard retiring in droves, if we're still even a thing in 5 years I bet fees go up considerably.

Trump unlatching Fannie and Freddy off the people's teet and taking away the golden parachute may just reinvigorate the need for appraisals and appraisers.

I think there is a real concern, and a fairly high likelihood, that appraisers will be swinging in the wind to such an extent that a large percentage will be forced/enlightened enough to find something (sometimes even better things) to do, and when the worm turns, there will actually be a shortage of appraisals. That possibility/likelihood is probably behind much of the rush to get waivers and deficient valuation products and AMC staffing infrastructure in place.

Covid proved there does not have to be a sound valuation mechanism in place...just one that gets the box checked. A short stint in my youth as a government employee made clear the magic of lists with check boxes. It soon becomes obvious no one checking the boxes know why the box exists. They just know something has to be in the file, and their cookies keep coming.

 

[djd09]

B. No person is allowed to influence or attempt to influence the development, reporting, result, orreview of an appraisal through coercion, extortion, collusion, compensation, inducement,intimidation, bribery, or any other manner including, but not limited to:

two faced..

 

[Zoe]

I think there is a real concern, and a fairly high likelihood, that appraisers will be swinging in the wind to such an extent that a large percentage will be forced/enlightened enough to find something (sometimes even better things) to do, and when the worm turns, there will actually be a shortage of appraisals. That possibility/likelihood is probably behind much of the rush to get waivers and deficient valuation products and AMC staffing infrastructure in place.

Covid proved there does not have to be a sound valuation mechanism in place...just one that gets the box checked. A short stint in my youth as a government employee made clear the magic of lists with check boxes. It soon becomes obvious no one checking the boxes know why the box exists. They just know something has to be in the file, and their cookies keep coming.

If what you predict is true, it is highly unlikely GSE will ever come out of conservatorship because much of the lawsuits will be filed on GSEs.