Sorry, guys. But there's nothing wrong with HUD that just enforcing the existing regs wouldn't take care of. It would be nice to have people enforcing that actually worked in the field at some point in their careers so that they actually understood what the #$@%they were talking about, but that's probably dreaming.
The "watch" thingie is just the latest gotcha for appraisers. Let's face it. There's basically 2 kinds of "bad guy" appraisers as far as the watch thing goes.
1. The fraud promoters that ignore everything in proximity to subject to "make" the numbers and/or all the problems with the home (deferred maintenance) or site (i.e., toxic dump next door) to make the deal. You CANNOT legislate morals.
2. Or then the fools that in the typical mark et out there during the last 5 years, worked on manufactured housing. Makes no difference how many hours or skills you develop in your craft. If you get on the watch because the "numbers" are higher than acceptable, then you're in do-do.
Where does it say that the value proven based on all the available new home (legit not fraud) in your market area proved that value on THAT DATE; but since then, the trashed out and/or fraudulent deals crammed into that overall county has crashed the market, so now let's all hang the appraiser cause obviously it will be his fault for accepting that mfg home deal.
In the Greater Houston market area, one outfit has all but destroyed several counties because they were "able" to prove darn near any value a dealership wanted. Whether that buyer was informed or able to pay for it had nothing to do with the "number" that the appraiser came up with. No question he has tainted the market down here, but should everybody else then get hung out to dry because he tainted the market and now all the trash is coming home to roost? Plenty of appraisers with due diligence and great skills did honest appraisals, but if and when they go into foreclosure they are going to be put in the same bag as this jerk. The industry standard is somewhere around 30-35% foreclosure rate for manufactured housing. Where does that make it the appraiser's fault?
Any reasonable brain-working appraiser knows in MOST markets once it goes into foreclosure it is gonna take a dive. The degree of the dive depends on the market: 10%, 15%, 25%, 50% or worse.
Just did REO on one for HUD where nobody would expect the entire subdivision to go down a few years back. Now that seems to be the wave. Makes no difference whether the original appraisals were honest or not; all the difference is in whether it flooded? whether there is massive structural problems with setup done by developer/dealership? And no appraiser can overcome the "engineer's seal" of approval. So yeah, even good appraisers could get burned with this new setup.
We have all but run off most of our mfg work because of the fear of HUD and FNMA. We have watched the default rates climb, and the problems soar. We accept very few assignments and darn near drown ourselves in paperwork and proof prior to even going out to inspect the properties. We only want to work for a very, very few and are thinking about only working for one. Maybe if more appraisers refused to work for them, these dealers would get the message. No. Not gonna happen. We went from doing several hundred down to less than 10-15% of that a year. It is just not worth the risk. In our market, the last 3 years have proven they don't hold value. And please don't drown me with all the fraud crapola reports, ours were not part of that group. We just got tired of fighting. We don't make "equity" positions, nor are we gonna give the dealers a value $10k+- more than what the true market is for that unit.
The biggest problem down here has been the number makers, fraud, and greed of the dealers. But we can't blame HUD/FHA for that. Review the overall volume of the appraiser and the QUALITY of his work. Then review the sticks, then review the manfuactured homes. If you've got high rates and all you've done is sticks...there may be a problem either in your market or with the appraiser. Manufactured homes? If you do them, you're numbers are just gonna be higher. But if there are no good appraisers willing to risk doing them, then maybe FHA will get the message and look into the quality of the work just a little bit deeper. After all it is not the appraiser's fault if they don't pay for it. Was it an honest appraisal at that point in time...now that's the ticket.
