Truth or Dare

[Mejappz]

or are they our competition.

According to Dr. Mark Calabria, they sure are. As far as writing standards are concerned, they write their own set of appraisal standards. It's one reason I suggest we do away with USPAP for secondary market work.

The recent discussion hosted by the Appraisal Regulation Compliance Council (ARCC) with Mark Calabria, the former Director of the Federal Housing Finance Agency (FHFA), offered a rare and illuminating glimpse into the inner workings and mindset of the nation’s housing finance regulators. During the engaging conversation led by ARCC Chair Josh Tucker, Dr. Calabria shared his expert perspective on FHFA’s controversial decision to significantly increase the use of appraisal waivers, which allow mortgage lenders to bypass the traditional home appraisal process. According to Calabria, this shift represents a concerning trend where the government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac are openly viewing appraisers and the appraisal process as an unnecessary “friction” that impedes their ability to gain greater market share. The former FHFA Director’s candid admission that the GSEs have explicitly stated this sentiment to him was a shocking revelation, essentially confirming what many in the appraisal industry have long suspected – that there are concerted efforts underway to systematically diminish the role of professional, independent real estate appraisers. This marks a troubling development, as appraisals serve as critical safeguards to protect consumers, lenders, and the broader housing market from the risks of inflated property values and predatory lending practices.

 

[George Hatch]

The GSEs write their own appraisal policies, just like most other lenders. They have no control over what is/isn't an appraisal standard outside of their own internal usage. Nor do they dictate terms to any lenders outside of their pipeline. The way they say it is in terms of what they'll accept and which loans they'll buy; not in terms of what other conduits must require.

We could say the GSEs too big to ignore and that they set the example that a lot of other lenders follow and that would all be true. But they are not an appraisal entity and they have been wrong in the past about what is/isn't WRT an appraisal as a whole.

Nor is any licensing entity going to cede that space to the GSEs unless directed to do so by Congress.

Heck, you're currently in dispute with the GSEs over whether a PDC is contributing significant professional assistance to a desktop SOW. YOU don't think they're always right about appraising, and you still hate being told what they require for their assignments.

Just think, if the AI had been willing to enforce their own appraisal standards more effectively then they might have ended up controlling appraisal standards and you'd be complaining about revisions, paying for materials, allegations of personal politics and such there instead of at TAF. Or anywhere else that got tagged with these responsibilities.

All deferring to other alternatives for establishing a UNIFORM standard would result in would be more frustration for you. You could wind up being 0-4 instead of just 0-1.

 

[Tiffany Gibbons]

The GSE's are running appraisers out of business, but they are offering free valuations ( not a free appraisal )

By offering a non regulated valuation, they avoid the regulations placed on appraisals like a target value and such.

I

And they don't have to take USPAP, any licensing education, fees for MLS access, etc. Whatever value makes the deal work. American dream. Bailout, rinse and repeat.

 

[Tiffany Gibbons]

RE appraisers should not get the idea that they own the word "appraiser". More accurately perhaps we should deploy the British or Canadian use of Chartered Surveyor or Valuer. So, the definition below isn't valid in light of the numerous "appraisers" of other things than real estate.
View attachment 94027
Human Resources evaluates employees with "appraisals". Personal property has "appraisers" - think Antique Roadshow. Marine surveyors are appraisers. Geologists and petroleum engineers are evaluating drilling prospects are appraising the company assets. Assessors are appraisers. Appraisers can apply to opinions of value, of service, and a host of other attributes.

We do not own the term "appraiser".

Many of those types of appraiser/assessor examples follow USPAP, Standard 6 though. Loan officers getting paid on commission as a percentage of the loan making up a non documented value are not following USPAP. But that's fine. Everything is fine. A jump for 80% coverage to 90% LTV is not peanuts in today's inflated real estate market. They are actively trying to blow a bubble.

 

[George Hatch]

It is one possibility. Among several.

 

[Tiffany Gibbons]

And yet the GSEs are still using and relying upon the output of their internal AVM to make that decision. Not what the loan application is requesting. Submitting the application doesn't automatically result in the acceptance. Some applications for the waiver get refused.

Waivers aren't used in even 50% in any of the purchase or cash out tranches of the low-LTV transactions. Not everyone who wants one can get one.

How many times have you completely ignored a borrower when they told you how much they think the property is worth? Always, that's how many. You have always just proceeded to do your thing.

More borrowers will get waivers at 90% in January. And the reason appraisers can ignore the borrower's opinion is because we are licensed AND we are the only unbiased party in the transaction. The loan officer paid on commission is not.

 

[Tiffany Gibbons]

It is one possibility. Among several.

Yeah, that's what everyone was saying in 2003-2006, when I could see it coming way back then in the foreclosure capital of the south. The GSE's and "stakeholders" are going to work ever day thinking "Can you believe we're getting away with it AGAIN?!" Pick your hedge funds now!

 

[djd09]

According to Dr. Mark Calabria, they sure are. As far as writing standards are concerned, they write their own set of appraisal standards. It's one reason I suggest we do away with USPAP for secondary market work.

The recent discussion hosted by the Appraisal Regulation Compliance Council (ARCC) with Mark Calabria, the former Director of the Federal Housing Finance Agency (FHFA), offered a rare and illuminating glimpse into the inner workings and mindset of the nation’s housing finance regulators. During the engaging conversation led by ARCC Chair Josh Tucker, Dr. Calabria shared his expert perspective on FHFA’s controversial decision to significantly increase the use of appraisal waivers, which allow mortgage lenders to bypass the traditional home appraisal process. According to Calabria, this shift represents a concerning trend where the government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac are openly viewing appraisers and the appraisal process as an unnecessary “friction” that impedes their ability to gain greater market share. The former FHFA Director’s candid admission that the GSEs have explicitly stated this sentiment to him was a shocking revelation, essentially confirming what many in the appraisal industry have long suspected – that there are concerted efforts underway to systematically diminish the role of professional, independent real estate appraisers. This marks a troubling development, as appraisals serve as critical safeguards to protect consumers, lenders, and the broader housing market from the risks of inflated property values and predatory lending practices.

the gse's are the largest appraisal firm in the world...and hardly a license amongst them

 

[djd09]

An appraisal per AI and USPAP is an opinion of value - regardless of what some random dictionary says.

When a DU loan casefile receives a value acceptance offer and it is exercised by the lender, Fannie Mae accepts the value estimate submitted by the lender as the market value for the subject property

https://singlefamily.fanniemae.com/media/5916/display

any questions....

 

[George Hatch]

No matter how many times we point it out to you within the same document you reference, you always skip the explanation of how the decision is made which appears right before the artfully curated quote you use. At this point I assume you're doing so deliberately, dishonestly and in bad faith.

The operative term in that sentence is "using". They're using their database in conjunction with their analytics. There is no mention of the broker's estimate in this explanation of their process. For obvious reasons.