We need to clean up FNMA and Freddy

[Terrel L. Shields]

I deal with both State and Federal Examiners, and they will tell you the "Guidelines" are law.

Any regulated bank is subject to the guidelines (as I read it) even if selling into FNMA and other secondary markets.

I still prefer it to those slimeballs.

I agree that loan originators and mortgage brokers were selling a deal and pressured appraisers. OTOH, real bank loan officers get fired for making bad loans. Their bonus money depends upon loans performing, not simply how many loans they make. And when you have a big loss, you might be asked to find employment elsewhere. I know a son who was asked by his father (the loan VP) to exit the bank after a really bad deal fell through.

I know LOs who made loans they didn't want to because the owner of the bank told them to anyway. The result was a Mennonite farmer (usually very reliable borrowers) who injured his back let a huge farm go back - 3 million loan when (my) appraisal was not that high. The result was the one LO was asked to resign and the other was actually fined and banned for life from banking. But men were good honest men who worked 'for the man' who just happened to be 90 years old, childish, and misplaced his trust in his dopehead son in law. The bank had plenty of reserves in the form of bank stock in another bank, but when that bank went under, the FDIC-OCC wiped out the entire 50plus million of the old guys' reserves for his own bank. That's when the feds moved in and discovered this bad loan.

The banks using third parties rarely have a third party that knows come here from sic'um. These are often secretary level employees running a separate operation where the LO sends them a name and property type and these neophytes order the appraisal - either via bid system or solicitation. Do they know that appraiser A does only apartments and condos? Or appraiser B is a building intensive agricultural farmer? And having an MAI or ASA or ARA behind their name doesn't mean a thing to them. They are all the same to them.

 

[BRCJR]

That's why farm and poultry farm appraisers have stayed busy. There are only a couple of them in the region that specializes in agri properties.

We deal with that on a daily basis. We are, other than Farm Credit, the largest ag lender in Virginia. We are on our way to become the same in NC, too.

We have found there are only a few really good Appraisers that understand poultry (broiler, layers, and pullets, for example), swine and grain operations.

We keep them really busy!

 

[Zoe]

Any regulated bank is subject to the guidelines (as I read it) even if selling into FNMA and other secondary markets.

I agree that loan originators and mortgage brokers were selling a deal and pressured appraisers. OTOH, real bank loan officers get fired for making bad loans. Their bonus money depends upon loans performing, not simply how many loans they make. And when you have a big loss, you might be asked to find employment elsewhere. I know a son who was asked by his father (the loan VP) to exit the bank after a really bad deal fell through.

I know LOs who made loans they didn't want to because the owner of the bank told them to anyway. The result was a Mennonite farmer (usually very reliable borrowers) who injured his back let a huge farm go back - 3 million loan when (my) appraisal was not that high. The result was the one LO was asked to resign and the other was actually fined and banned for life from banking. But men were good honest men who worked 'for the man' who just happened to be 90 years old, childish, and misplaced his trust in his dopehead son in law. The bank had plenty of reserves in the form of bank stock in another bank, but when that bank went under, the FDIC-OCC wiped out the entire 50plus million of the old guys' reserves for his own bank. That's when the feds moved in and discovered this bad loan.

Yeah.

I hope and pray CFPB will separate appraisal management fees and appraisal fees.

My dreams would come true. CFBP literally has authority over all the players.

Congress would be a piece of cake for CFPB.

Think about all the people that appeared before Chopra. Some were sweating. Chopra always spoke last.

 

[BRCJR]

Any regulated bank is subject to the guidelines (as I read it) even if selling into FNMA and other secondary markets.

.....................................................................................................................................................

Loans sold to GSE's and others may be exempt from the guidelines:

Transactions that Qualify for Sale to, or Meet the Appraisal Standards of, a U.S.
Government Agency or U.S. Government-Sponsored Agency

This exemption applies to transactions that either (i) qualify for sale to a U.S. government agency
or U.S. government-sponsored agency,⁴⁴ or (ii) involve a residential real estate transaction in
which the appraisal conforms to Fannie Mae or Freddie Mac appraisal standards applicable to that
category of real estate. An institution may engage in these transactions without obtaining a
separate appraisal conforming to the Agencies’ appraisal regulations. Given the risk to the
institution that it may have to repurchase a loan that does not comply with the appraisal standards
of the U.S. government agency or U.S. government- sponsored agency, the institution should have
appropriate policies to confirm its compliance with the underwriting and appraisal standards of the
U.S. government agency or U.S. government-sponsored agency.

10(i) An institution that relies on exemption 10(i) should maintain adequate documentation that
confirms that the transaction qualifies for sale to a U.S. government agency or
U.S. government-sponsored agency. If the qualification for sale is not adequately documented, the
transaction should be supported by an appraisal that conforms to the Agencies’ appraisal
regulations, unless another exemption applies.

10(ii) To qualify for this exemption, transactions that do not conform to all of Fannie Mae or
Freddie Mac underwriting standards, such as jumbo or other residential real estate loans, must be
supported by an appraisal that meets these government-sponsored agencies’ appraisal standards for
the applicable property type and is documented in the credit file or reproducible.

 

[alebrewer]

I agree that loan originators and mortgage brokers were selling a deal and pressured appraisers. OTOH, real bank loan officers get fired for making bad loans. Their bonus money depends upon loans performing, not simply how many loans they make. And when you have a big loss, you might be asked to find employment elsewhere. I know a son who was asked by his father (the loan VP) to exit the bank after a really bad deal fell through. And

I know LOs who made loans they didn't want to because the owner of the bank told them to anyway. The result was a Mennonite farmer (usually very reliable borrowers) who injured his back let a huge farm go back - 3 million loan when (my) appraisal was not that high. The result was the one LO was asked to resign and the other was actually fined and banned for life from banking. But men were good honest men who worked 'for the man' who just happened to be 90 years old, childish, and misplaced his trust in his dopehead son in law. The bank had plenty of reserves in the form of bank stock in another bank, but when that bank went under, the FDIC-OCC wiped out the entire 50plus million of the old guys' reserves for his own bank. That's when the feds moved in and discovered this bad loan.

This is exactly why the MB model is not sustainable. MB's have no 'skin in the game'. Once the loan closes, so too does the extent of their liability. They didn't underwrite the loan, so the decision to fund cannot be laid at their feet. They didn't put up the loan $, so if a loan goes sideways it's not their risk. I see the risk scale - at least WRT the available models as having the MB's on one end of the scale, and the hard money lenders at the other end of the scale. The mortgage bankers, state banks, national banks, etc. all fall somewhere along the scale.

 

[djd09]

i feel bad for the appraisers who couldn't say no to the mortgage broker...

 

[Terrel L. Shields]

We keep them really busy!

I have a friend who are part of a small company of 4 (lost one appraiser last year - I attended his funeral) but they work in LA, AR, OK, MO, TN, KY, puts on 40-50,000 miles a year each and draw fees of 8k or higher. Like any good specialist, they collect data from any number sources because they end up doing so many sales. Another appraiser also runs a RE brokerage and he only operates locally but has a loyal following of local lenders. I've backed away since 2015 or so, because I have a client who doesn't lend much of poultry farms and they provided me so much work otherwise, I cut out the ag lenders.

 

[Zoe]

Think about all the federal agencies that let Chopra speak last for CFPB. All of them.

 

[djd09]

during the glory days of COD...i would not charge WWll vets...how about you?

 

[Zoe]

VA did not appear. You know why? VA needed no bailout.