Why Are Fannie And Freddie In Such A Hurry?

[hastalavista]

Duplicate post

 

[J Grant]

(my bold)

Explicit in your question is that there is some nefarious reason for Fannie to upend prudent lending policies to facilitate companies to grow their market share.
If that is your position, that's fine. But the response to your question is,

"We are testing and continue to test these ideas, and we are monitoring the ones we've adopted. We don't see the risk-threat that some others do, and so far, neither do our regulators. As far as adopting technology to speed up the process, that is very important to the borrower and to the lender. So, for those things that technology can speed up without adding undue risk, we'll take a look at it."​

As I've said over and over again (not directed at you): If one thinks any changes the GSEs or lenders in general create undue risk, then organize and make the argument to the regulator. So far, the regulator (whose primary responsibility is to ensure imprudent risk and lending decisions are contrary to lending policy) don't see the same risk-threat as many others. At least not for those programs that are in testing or have recently been adopted.

Naturally, some will argue that regulators cannot be trusted either. Ok:
Cannot trust Fannie/Freddie.
Cannot trust their regulators.
Cannot Trust TAF.
Cannot trust the public to know any better.
Cannot trust politicians to make necessary changes.
Cannot trust lenders who sell to Fannie/Freddie.
Cannot trust real estate agents, as they are all about closing the deal.
For a fact, cannot trust AMCs.
But, of course, you can trust appraisers.

I'm surprised as many appraisers stay in this profession considering how nearly everyone else in the process cannot be trusted.

EDITED (to add "TAF")

I take it some of your comments are tongue in cheek...others not. In terms of appraisers "organizing" and bringing concerns to regulators attention, how'd that work out the last time ( appraiser petition and ongoing efforts for years prior to the crash about mitigating lender pressure/influence/selection of appraisers...it fell on deaf ears until AFTER the crash, and then the solution of HVCC and then DF with the legislation about AMC;s changed from original had adverse results for appraisers and the problem still exists about value pressure in some segments of lending where the AMC was supposed to be the firewall. So why would appraisers now undertake a similar exhaustive effort for fruitless results ? Fannie clearly wants to serve the profit interests of lenders and as long as the pilot test does not show "increased risk" ( on whatever terms they determine that to be ) they will proceed with changes. The fact that the changes favors a certain lender who has a speed model as their brand , I don't know if I'd use the word "nefarious" but that lender brand certainly benefits. How much "risk" can be assessed after a 2-3 year period whether that holds true longer term is unknown. Any of us might find we like or dislike the changes once (if) they happen of course. .

As far as your definition about trust/mistrust, it's more that most of the entities you list have an agenda that counters that of the appraiser and/or the public trust. Borrowers themselves may favor certain changes that may make them short term "happy" (whoop I got a faster mortgage approval using an app! ", but may regret it later long term. The no money down/no docs and teaser rate mortgages were popular with borrowers...with 40% of them estimated under water on mortgages after the crash... So what is "important" to borrowers or convenient or popular with them may or may not be sound long term ..

Individual RE agents may range from very trustworthy to mediocre to not trustworthy. ( as can individuals in any profession). But that is not the point, the point is, RE agents have an agenda to close deals and push prices up. The appraisal, one assumes is in place using a MV definition to ensure lenders are lending on properties at their "market value" - the appraiser's opinion of market value" to be precise . RE agents are not interested in that , their goal is to close deals and get a high price whenever possible. Which is fine, they are sales people and that goal moves properties. The point is, so many in the market have a goal of making deals no matter what and raising prices (unless they want to see a sale to an investor/flipper then they push for a lower price. So its not a matter that they can't be trusted, it's that they have an agenda which may not align with the appraisal purpose.

Appraisers were supposed to be the neutral, unbiased party , the one party without an agenda other than to do the appraisal fairly. Contrasted with the all the other more organized, numerous and influential people and entities with an agenda of making a deal work... Their agenda now includes speed because it profits them greater and locks borrowers in with less chance to change mind about a loan or purchase or change lenders.

These are my vews as Denis has his views...the BB is for an exchange of views which is good even if a few people abuse it .

 

[Terrel L. Shields]

why is Fannie upending their prudent lending and evaluation policies to facilitate companies like Quicken grow

Because the taxpayer will bail them out. CEOs are paid on the basis of short term gain. They will be retired to Barbados long before the **** hits the Fannie.

 

[J Grant]

[

Because the taxpayer will bail them out. CEOs are paid on the basis of short term gain. They will be retired to Barbados long before the **** hits the Fannie.

If the motto for lenders is "too big to fail", the motto for appraisers is "too small to matter."

 

[NC Appraising]

I guess VA is joining the hybrid game:

This provision, which allows appraisers to engage a third party to perform the property inspection, originally was part of HR 3561, a larger VA reform bill that may be taken up by the Senate later this year.

The Appraisal Institute has advocated for the bill to impose limits on inspection allowances, including requiring appraisal trainees to operate under the supervision of a VA fee appraiser and limiting the application of the program to rural areas, consistent with the intent of the original provision.

 

[George Hatch]

This may seem counterproductive, but from a purely economic standpoint...

If hybrids are going to turn out to be the unstoppable juggernaut in our business we might be better off *economically* if the inspections were performed by semi-skilled workers that have no path towards licensure.

If the long term demand for services is going to significantly decline then we need to shrink the tribe, not grow it.

 

[Thomas Holding]

I guess VA is joining the hybrid game:

This provision, which allows appraisers to engage a third party to perform the property inspection, originally was part of HR 3561, a larger VA reform bill that may be taken up by the Senate later this year.

The Appraisal Institute has advocated for the bill to impose limits on inspection allowances, including requiring appraisal trainees to operate under the supervision of a VA fee appraiser and limiting the application of the program to rural areas, consistent with the intent of the original provision.

It looks like the VA has already started rolling this out. I had a taxpayer call me mad as hell yesterday ranting about the value of his house he was trying to sell. When he finally calmed down enough to talk he informed me that he had listed his property for what the tax office showed as the assessed value (effective January 1, 2015 BTW). The couple purchasing the property offered just below the listing price and the seller accepted. The VA evidently ordered a hybrid appraisal of some sort from an appraiser out of the area. Apparently the appraiser never even set foot on the property and his opinion of value came in significantly below the contract price. The property owner was convinced that a fraud had been perpetrated upon him and he was going to sue everyone. The interesting thing is that our 2015 assessed value appears to be quite a bit below the current market value of his property. I didn't tell him this because we can't discuss property values until after our reval is complete, but it does illustrate the potential dangers for appraisers performing these types of analysis.

 

[Evincere]

It looks like the VA has already started rolling this out. I had a taxpayer call me mad as hell yesterday ranting about the value of his house he was trying to sell. When he finally calmed down enough to talk he informed me that he had listed his property for what the tax office showed as the assessed value (effective January 1, 2015 BTW). The couple purchasing the property offered just below the listing price and the seller accepted. The VA evidently ordered a hybrid appraisal of some sort from an appraiser out of the area. Apparently the appraiser never even set foot on the property and his opinion of value came in significantly below the contract price. The property owner was convinced that a fraud had been perpetrated upon him and he was going to sue everyone. The interesting thing is that our 2015 assessed value appears to be quite a bit below the current market value of his property. I didn't tell him this because we can't discuss property values until after our reval is complete, but it does illustrate the potential dangers for appraisers performing these types of analysis.

But...but...don’t you know that because of the hybrid disclaimer certifications the appraiser (per USPAP current position) is insulated and cannot be held accountable?

I wonder..is a (modernized or not) hybrid (like most reports) sent along to the Borrowers which eventually end up with the Sellers seeing (esp when the deal tanked and borrower needs the report to get out of the contract) with the Appraisers E&O embedded in the report?

 

[J Grant]

It looks like the VA has already started rolling this out. I had a taxpayer call me mad as hell yesterday ranting about the value of his house he was trying to sell. When he finally calmed down enough to talk he informed me that he had listed his property for what the tax office showed as the assessed value (effective January 1, 2015 BTW). The couple purchasing the property offered just below the listing price and the seller accepted. The VA evidently ordered a hybrid appraisal of some sort from an appraiser out of the area. Apparently the appraiser never even set foot on the property and his opinion of value came in significantly below the contract price. The property owner was convinced that a fraud had been perpetrated upon him and he was going to sue everyone. The interesting thing is that our 2015 assessed value appears to be quite a bit below the current market value of his property. I didn't tell him this because we can't discuss property values until after our reval is complete, but it does illustrate the potential dangers for appraisers performing these types of analysis.

I can't comment on above as a value, but if anyone throws a monkey wrench into the "efficiency" and "cost savings" of bifurcated/hybrids for origination work ( sales and refinance) it will be the property owners, borrowers, buyers and sellers and RE agents who rightfully may react to the fact that the lender sent a non appraiser out for inspection part. Borrowers or sellers can still complain when an appraiser did the inspection of course, but at least the appraisal process can be well defended

 

[J Grant]

But...but...don’t you know that because of the hybrid disclaimer certifications the appraiser (per USPAP current position) is insulated and cannot be held accountable?

While the appraiser is not directly accountable for the inspection as an inspection, the appraiser is still accountable for the results of the appraisal....and since the appraisal results incorporates information from the inspection as a basis for value and other conclusions, guess what, we end up being accountable...which is the Achilles Heel of hybrid with inspection by others appraisals.