Subject: Don't just vent about UAD 3.6

[Zoe]

I finally finished that duplex I had. I had not done a form 1025 in over 10 years. I hope it is on the right form. I could not find a newer small income form that the old one. If you are in the duplex appraisal business, you are probably doing okay on fee.

 

[Zoe]

I don't know if 3.6 will change the form for duplex or small residential like 2-4 units.

 

[Sandra Koutsopoulos]

Surf Cat: "Check the boxes on our form, take the photos where we tell you, and we'll tell you what the condition of the property is. Don't you worry about it".
Loan approved.

This interesting thread brought me to a surprising conclusion about the work I do for foreclosing lenders and their AMCs. A big chunk of that work is for FHA/HUD pre-foreclosures and short sales. Makes me wonder if the appraisal done for the original loan was a 'git er done quick' job or done by an appraiser who used their knowledge and evaluation of the situation to require themselves to do a more in-depth SOW.

Just this week, one of these had a wood porch that had been rotting (actual rot holes in the floor) for YEARS! Same with the wood siding, and the obvious water intrusion at roof valleys which funneled water into structural members. And the guy's lot was strewn with at least 10 dead cars and mountains of car parts, junk, plastics and...what a mess! (Toxic Ground Contamination Liability!!!) And in this house built in 1914, the time-frayed insulation of interior electrical wires had caused circuits and outlets to fail--I am incredulous that the house didn't burn down! Who the heck made this loan in the first place (if all that debris & original knob & tube wiring was disclosed?), and what level of appraisal inspection was done? Now that the loan is belly up, the owners of that loan can see how bad their collateral was 10-20 YEARS ago!

And yesterday, an FHA/HUD pre-foreclosure inspection revealed that at least in the 4 years since that loan was made, absolutely nothing on the property was maintained, repaired, or even CLEANED! Jeez! there was 4 years of dog and cat crap piled up around the outside of the house, extending into the 3/4 acre of the entire lot! I guess, volume-wise, it could only be worse if they had a herd of horses and an elephant back there whose poop was never cleaned up. And so I guess that is why I was given the task to inspect, report and provide my unbiased opinion of current market value, necessary repairs, and to put 'my number' on it for marketability reference.

Makes me wonder, considering others' points about appraiser not being able to add commentary to the 3.6 appraisals, would lenders on these NEW loans even have a clue about some of these weird value-affecting conditions? Also makes me wonder if some of these expeditious loans overlooked problems already in the making, and also if the 'inspector', or AVM had any awareness of condition.

IMO, one doesn't really know the collateral condition without having trained/experienced 'eyes-on' the property. Another recent example: I did another pre-foreclosure on mfg house where the wood/hardboard siding had been thoroughly eaten under the paint layer by termites, such that the exterior resembled paper. The HUD's Realtor in charge of that property who had done his own inspection prior to mine, made no notation whatsoever about the termites, termite trails or wood rot all over the place, including on the porch and wood railings. And lenders think AVMs and Waivers, and unlicensed/untrained/unvetted Property Inspectors save them money? I hope they are not that stupid. But perhaps it is a numbers game, where they anticipate a certain % of loss is acceptable, so full steam ahead. That mindset may be related to lenders off-loading to GSEs stockholders (and guarantees by our taxpayers) so they have working capital, rather than holding those potential losers in their own loan portfolios.

 

[Surf Cat]

Surf Cat: "Check the boxes on our form, take the photos where we tell you, and we'll tell you what the condition of the property is. Don't you worry about it".
Loan approved.

This interesting thread brought me to a surprising conclusion about the work I do for foreclosing lenders and their AMCs. A big chunk of that work is for FHA/HUD pre-foreclosures and short sales. Makes me wonder if the appraisal done for the original loan was a 'git er done quick' job or done by an appraiser who used their knowledge and evaluation of the situation to require themselves to do a more in-depth SOW.

Just this week, one of these had a wood porch that had been rotting (actual rot holes in the floor) for YEARS! Same with the wood siding, and the obvious water intrusion at roof valleys which funneled water into structural members. And the guy's lot was strewn with at least 10 dead cars and mountains of car parts, junk, plastics and...what a mess! (Toxic Ground Contamination Liability!!!) And in this house built in 1914, the time-frayed insulation of interior electrical wires had caused circuits and outlets to fail--I am incredulous that the house didn't burn down! Who the heck made this loan in the first place (if all that debris & original knob & tube wiring was disclosed?), and what level of appraisal inspection was done? Now that the loan is belly up, the owners of that loan can see how bad their collateral was 10-20 YEARS ago!

And yesterday, an FHA/HUD pre-foreclosure inspection revealed that at least in the 4 years since that loan was made, absolutely nothing on the property was maintained, repaired, or even CLEANED! Jeez! there was 4 years of dog and cat crap piled up around the outside of the house, extending into the 3/4 acre of the entire lot! I guess, volume-wise, it could only be worse if they had a herd of horses and an elephant back there whose poop was never cleaned up. And so I guess that is why I was given the task to inspect, report and provide my unbiased opinion of current market value, necessary repairs, and to put 'my number' on it for marketability reference.

Makes me wonder, considering others' points about appraiser not being able to add commentary to the 3.6 appraisals, would lenders on these NEW loans even have a clue about some of these weird value-affecting conditions? Also makes me wonder if some of these expeditious loans overlooked problems already in the making, and also if the 'inspector', or AVM had any awareness of condition.

IMO, one doesn't really know the collateral condition without having trained/experienced 'eyes-on' the property. Another recent example: I did another pre-foreclosure on mfg house where the wood/hardboard siding had been thoroughly eaten under the paint layer by termites, such that the exterior resembled paper. The HUD's Realtor in charge of that property who had done his own inspection prior to mine, made no notation whatsoever about the termites, termite trails or wood rot all over the place, including on the porch and wood railings. And lenders think AVMs and Waivers, and unlicensed/untrained/unvetted Property Inspectors save them money? I hope they are not that stupid. But perhaps it is a numbers game, where they anticipate a certain % of loss is acceptable, so full steam ahead. That mindset may be related to lenders off-loading to GSEs stockholders (and guarantees by our taxpayers) so they have working capital, rather than holding those potential losers in their own loan portfolios.

AMC: "Appraiser to remove photos and commentary of porch, pet feces, termite damage and resubmit".

Lender: Loans Approved!

 

[DWiley]

We've always had desktops, exterior only, and interior appraisals.

LOL - No, we haven't always had those.

In fact, when the exterior only forms were adopted by the GSEs back in the 90s, it was your state board that took the bold step of declaring that an exterior only appraisal was a violation, and anyone who did one would be punished. The only problem was that they could not cite any actual law or reg to back up what they were claiming. They got their hands slapped and had to change their position.

The irony is that you basically want them to do the same thing again.

 

[chad hampton]

Sorry, we’ve had them for 30 years.

Thanks for the clarification.

 

[Zoe]

First off, bad compared to what? Compared to a hypothetical alternative that doesn't exist because it basically can't exist?

I have never had anything to do the establishment of these requirements or of any aspect of the appraisal standards or the economic environment you're complaining about. My role has been limited to understanding the content and conveying the information to my peers. The reason you keep using the term "word salad" is in an attempt to divert from your complete and total inability to mount a persuasive argument using the terms in their defined context. A competency problem.
---------

Let's run a hypothetical and see if you are capable of reasoning your way through this: What if USPAP actually had established requirements for personal inspection and minimums for that inspection for all appraisals., How do you think the users would respond to that external-to-them requirement? Would they just sit back and take what they consider the hit or do you think they would they seek their alternatives elsewhere? Use your words.

In your opinion, do you think *reducing* the flexibility appraisers currently have in their assignment choices and/or SOW decisions amounts to an advantage for appraisers or a disadvantage?

I invite you to consider the applicable parallel in this situation to the lenders' usage of

"if you won't do it we'll just go find someone else who will". ​

I don't really think about those things. I focus on market value or whatever definition and public trust. I always focus on the subject real property.

The subject real property (rights) is my best friend and value definition.

 

[glenn walker]

Years before licences the S & L used what loan officers and people called "curb appraisals" drive bye it make sure property was there and arrive at a 3 comp value. Kinda surprised how many appraisers have such a limited knowledge of the history on no physical inspections being done.

 

[chad hampton]

Years before licences the S & L used what loan officers and people called "curb appraisals" drive bye it make sure property was there and arrive at a 3 comp value. Kinda surprised how many appraisers have such a limited knowledge of the history on no physical inspections being done.

So there was a drive by inspection? So they’ve been around prior to the 90s?

Which is it? I’m getting 2 different versions of this compelling history lesson.

We turned the profession upside down due to how bad it was for appraisers to talk to mortgage brokers and now we have mtg brokers giving their own value and getting waivers. Sounds like this profession has a long history of being all over the place.

Maybe thats happens when you have weak leadership and a compromised standards board.

 

[glenn walker]

So there was a drive by inspection? So they’ve been around prior to the 90s?

Which is it? I’m getting 2 different versions of this compelling history lesson.

We turned the profession upside down due to how bad it was for appraisers to talk to mortgage brokers and now we have mtg brokers giving their own value and getting waivers. Sounds like this profession has a long history of being all over the place.

Maybe thats happens when you have weak leadership and a compromised standards board.

When I was 21 years old World Savings had their loan officers go look at houses and determined the value. Not schocking Realtors have been pricing homes for 100 years and most sales are appraised at or near contract price. Appraisers not even needed in 90% of sales we're not as important as most believe.