This is a pretty niffty detailed chart for finding time adjustments, we are done.

[alebrewer]

Ps.....the gses have got to stop lenders from trying to improve the CU score.

On the contrary - the GSE's are exactly the reason that lenders DO try to improve the CU score. If the CU score is 2.5 or less, the GSE's offer rep and warrant relief on the collateral (generally speaking). If I'm a lender and I get an appraisal with a 2.7, you can bet your *** I'm gonna try to get that appraisal under 2.5.

 

[Surf Cat]

This is wrong!!

We should not be setting out to increase value nor decrease values in some neighborhoods and not others!!

Yes, it very well may be. I did preface that by saying "I believe" that's what they're trying to do. I also ended my post by stating "that's everywhere, no matter the location".

I'm basing "my belief" on what this Administration has accused appraisers of being along with the whitewashing stories. Please forgive my cynicism.

Additionally, this has come about due to the many appraisers out there whom don't do any market condition adjustments whatsoever. It seems typical for the government to knee-jerk the requirement and go all extreme by requiring month to month, different Market condition percentages as opposed to smoothing out the trend line.

So now it's extreme month to month, different percentages in market condition adjustments for "exactness"....OR non-licensed Property Data Collectors and waivers the next day.... the irony is really thick here.

 

[alebrewer]

So now it's extreme month to month, different percentages in market condition adjustments for "exactness"....OR non-licensed Property Data Collectors and waivers the next day.... the irony is really thick here.

It will be interesting to see how many appraisers jack up their adjusted sales range by blindly following the GSE guidance without using any common sense in their application of the adjustments.

 

[Mike Ault]

On the contrary - the GSE's are exactly the reason that lenders DO try to improve the CU score. If the CU score is 2.5 or less, the GSE's offer rep and warrant relief on the collateral (generally speaking). If I'm a lender and I get an appraisal with a 2.7, you can bet your *** I'm gonna try to get that appraisal under 2.5.

I believe that's the point the OP was making. One of the tactics lenders use to try and improve the CU score is to pressure appraisers to change the neighborhood classification from suburban to rural when their comp proximities exceed a certain parameter. Not good.

 

[J Grant]

from one of the links in post 34- open the content in it
FHFA paper -- insanity IMO maybe will be addressed in the next admin- bring it to their attention -
This is practically telling us to over-value properties in certain areas and use time adjustments to do it. That is my take on it anyway

Underappraisal Disparities and Time Adjustments to Comparable Sales Prices in Mortgage AppraisalsWilliam M. Doerner and Scott SusinFHFA Staff Working Paper 24-07November 2024AbstractMortgage appraisal accuracy became a major concern following the global financial crisis in the late 2000s. Legislative standards and industry guidance have adjusted professional practices to improve inefficiencies and inequities. Nonetheless, systematic evaluation continues to be documented for single-family residential homes, which creates problems when appraisals are used by financial lenders to gauge the potential risk and an asset’s worth. Real estate prices have been appreciating continuously over the last dozen years, which means comparable sales and benchmark indices merit revision to reflect fair market conditions, but it only happens for around 10% of properties. Example from a uniform appraisal database of over 45 million records from “subject”single-family properties and 228 million records from “comparable” homes covering the entire United States from 2015 through 2023. This paper asks whether time adjustments are made, if they improve fair market measurements, and whether they fix neighborhood appraisal disparities. Results show these readily available corrections are underutilized, too small, applied less frequently in minority areas, and cure half of initial underappraisals. The limited usage of time adjustment accounts for as muchas 67% of the underappraisal bias in Black neighborhoods and 49% of the disparity inHispanic neighborhoods.Keywords: appraisal · mortgage · racial disparities · time adjust

 

[NC Appraising]

On the contrary - the GSE's are exactly the reason that lenders DO try to improve the CU score. If the CU score is 2.5 or less, the GSE's offer rep and warrant relief on the collateral (generally speaking). If I'm a lender and I get an appraisal with a 2.7, you can bet your *** I'm gonna try to get that appraisal under 2.5.

I actually had a loan processor call last week to see if I would remove the 1.5 mill multi lot sale from the developer to the builder. The subject was appraised for 500k.

I could only guess to improve the CU score.

And we want to gives these scum bag lenders waivers and hybrids. Lenders and mortgage brokers are as crooked as they come.

 

[shrubberyvaluation]

This is wrong!!

We should not be setting out to increase value nor decrease values in some neighborhoods and not others!!

Tell that to the current HUD

 

[alebrewer]

I believe that's the point the OP was making. One of the tactics lenders use to try and improve the CU score is to pressure appraisers to change the neighborhood classification from suburban to rural when their comp proximities exceed a certain parameter. Not good.

Never heard of that one before. I'm not even sure neighborhood classification affects CU score - maybe it does. The things I'm usually pushing back on appraisers for is missing prior transfers, inconsistent information WRT other appraisals that have been submitted, possible alternative comps, etc. And those requests are always just that - requests. No one that i know is pressuring appraisers to do something they don't feel comfortable doing. At the end of the day, if the CU score is high, there are other collateral diligence triggers available to lenders besides trying to get CU scores lower.

 

[Mike Ault]

from one of the links in post 34- open the content in it
FHFA paper -- insanity IMO maybe will be addressed in the next admin- bring it to their attention -
This is practically telling us to over-value properties in certain areas and use time adjustments to do it. That is my take on it anyway

Underappraisal Disparities and Time Adjustments to Comparable Sales Prices in Mortgage AppraisalsWilliam M. Doerner and Scott SusinFHFA Staff Working Paper 24-07November 2024AbstractMortgage appraisal accuracy became a major concern following the global financial crisis in the late 2000s. Legislative standards and industry guidance have adjusted professional practices to improve inefficiencies and inequities. Nonetheless, systematic evaluation continues to be documented for single-family residential homes, which creates problems when appraisals are used by financial lenders to gauge the potential risk and an asset’s worth. Real estate prices have been appreciating continuously over the last dozen years, which means comparable sales and benchmark indices merit revision to reflect fair market conditions, but it only happens for around 10% of properties. Example from a uniform appraisal database of over 45 million records from “subject”single-family properties and 228 million records from “comparable” homes covering the entire United States from 2015 through 2023. This paper asks whether time adjustments are made, if they improve fair market measurements, and whether they fix neighborhood appraisal disparities. Results show these readily available corrections are underutilized, too small, applied less frequently in minority areas, and cure half of initial underappraisals. The limited usage of time adjustment accounts for as muchas 67% of the underappraisal bias in Black neighborhoods and 49% of the disparity inHispanic neighborhoods.Keywords: appraisal · mortgage · racial disparities · time adjust

I just loved the differential equation supporting their analysis in that paper. It reminded me of the ones supporting the analysis behind credit default swaps. If you torture the numbers hard enough, eventually they will tell you anything you want to hear.

 

[Surf Cat]

It will be interesting to see how many appraisers jack up their adjusted sales range by blindly following the GSE guidance without using any common sense in their application of the adjustments.

Even without the GSC guidance... looking over some of these appraisals where the adjusted prices are well below or above all the gross sales prices. It's "what the heck?"

Appraising is not an exact science as we all know. There's a degree of subjectivity and estimation. That said, there has to be some common sense in one's application as you say, in deriving an opinion of value. Making month to month, different percentage market adjustments, seems to defy common sense.

Don't throw the baby out with the bath water. Make the offenders whom are making no Market adjustments, get with it or get out.