So Punk, Can You Prove Your Adjustments, Go Ahead Prove Them !

[Elliott]

Got this email update on Fannie Changes from a very "classy" AMC:


"Yes, there may be revisions! FNMA, states "

the

underwriter must determine if the opinion of value is adequately supported".

Your report should be demonstrating that the scope of work conducted was sufficient to produce credible results.

The following is taken from the FNMA's web site which provides the appraiser and lender, Fannie Mae's expectations and guidance regarding the Analysis of Adjustments.

Analysis of Adjustments:

Adjustments must be market based (the value the market has proven for difference in properties). "

I came from a science background, where the word "proof" meant something. Do you think adjustments can be "proven?"

 

[gregb]

What training and license does the underwriter hold in order to determine if the opinion of value is adequately supported?

 

[glenn walker]

Not much different than a State AG getting a grand jury --- Sounds impressive to the lay-person but in reality it's just a bunch of people dragged in from the streets and given authority to make major decisions.. BUT the word GRAND JURY sounds impressive .. A grand jury can- hang a ham sandwich and Fannie-Freddie can hang the appraiser because he-she can never prove their adjustment was 110% correct : )

 

[Meandering]

I came from a science background, where the word "proof" meant something. Do you think adjustments can be "proven?"

Sure,
When they are for lower downpayment requirements coupled with low credit scores. Heck we have most of the 2000's to prove people pay more, when they can pay with other people's money and no skin in the game.

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[Bobby Bucks]

I came from a science background, where the word "proof" meant something. Do you think adjustments can be "proven?"

I'll simply include a gif of a hockey stick beside mother earth and state that support for all adjustments is settled.

 

[Michigander]

For every "proof" there is someone/some thing that will "disprove" it. It is support, not proof in my opinion, for whatever that is worth. I believe what they are looking for is support for the opinion, not irrefutable proof, since that seems impossible when humans buy with emotions. Doubt anyone is going to prove anything, nor that the GSEs expect proof. Question comes to what is support then. Is it "market reaction" without any information on how that was extracted? Is it data showing how one arrived at an adjustment, such as the spreadsheet showing regression analysis? Might be different for different underwriters of course, but my suspicion is that major elements of comparison that lack bracketing might cause the question of support, or adjustments that widen the unadjusted range might trigger that question.

 

[Ahhhh Yeahhhh]

The only method that works is bracketing.

I would say that any reviewer, underwriter, or supervisor that sees an appraisal report with the words "paired sales analysis" in it should just go ahead and throw that paper in the garbage.

 

[Meandering]

The only method that works is bracketing.

I would say that any reviewer, underwriter, or supervisor that sees an appraisal report with the words "paired sales analysis" in it should just go ahead and throw that paper in the garbage.

Paired sales work very well for condo and townhouse communities and other areas where there is great conformity of neighborhoods,
and at least a few sales outliers with each of the line item considerations being different than the majority of the neighborhood,
and a sufficient number of those outliers and "typical" properties sold in that neighborhood in the past year,
and that the market conditions haven't changed in the past year,
and that interest rates and lending incentives haven't changed in the past year.
and that laws and regulations haven't changed - skewing public favor for one item of consideration over other items of consideration

Could happen in a very transient neighborhood,

But that would beg the question of why the neighborhood has a large number of sales and listings?
Is the surrounding economy stable?
Is the surrounding employment situation stable?
is there some other issue providing incentives for people to move out and other people to move in?

Just do a desktop evaluation and call it a day.

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[ucbruin]

The only method that works is bracketing.

I would say that any reviewer, underwriter, or supervisor that sees an appraisal report with the words "paired sales analysis" in it should just go ahead and throw that paper in the garbage.

That's funny!!!

 

[DWiley]

For every "proof" there is someone/some thing that will "disprove" it. It is support, not proof in my opinion, for whatever that is worth. I believe what they are looking for is support for the opinion, not irrefutable proof, since that seems impossible when humans buy with emotions. Doubt anyone is going to prove anything, nor that the GSEs expect proof. Question comes to what is support then. Is it "market reaction" without any information on how that was extracted? Is it data showing how one arrived at an adjustment, such as the spreadsheet showing regression analysis? Might be different for different underwriters of course, but my suspicion is that major elements of comparison that lack bracketing might cause the question of support, or adjustments that widen the unadjusted range might trigger that question.

I agree. "Proof" implies a single correct answer (e.g. proving a theorem). The standard for an appraiser is support, not proof. Two appraisers might use the same data set and one credibly support a GLA adjustment of $100 while the other credibly supports an GLA adjustment of $125.