Appraisers' Free Forum

Otis · by **Otis** on Tue Oct 27, 2009 7:27 pm

http://www.businessinsider.com/fed-changes-appraisal-rules-deflates-home-prices-2009-10

It makes sense that the government wants to prevent home prices from becoming over-inflated again, but tut instead of helping out the now distressed housing market, recent changes to the way homes are appraised has actually lowered the value of existing prices:

Detroit News: At issue is the Home Valuation Code of Conduct for mortgages securitized or held by Fannie Mae or Freddie Mac, which deal with about 70 percent of U.S. mortgages.

The new rules, which took effect May 1, were intended to prevent cozy relationships between appraisers, agents and brokers that could lead to bias, fraud and inflated home values.

But a chorus of industry groups representing builders and real estate agents say the new rules have damaging, unintended consequences: Some appraisers, they say, are unfamiliar with communities and neighborhoods, so they undervalue property. And that can kill a deal when the agreed-to sales price was significantly higher than the appraisal.

<snip>

tel · by **tel** on Tue Oct 27, 2009 10:52 pm

Brings a few thoughts to mind.........

(1) Geez, maybe the most PROBABLE price is NOT what the purchase price is.
(2) Why the hell, would you hire an appraiser from 100 miles away when there are PROBABLY 20 appraisers within 15 miles of the subject? Are all 20 incompetent, or do they just charge more than the guy from 100 miles out????????????? Ya got what you paid for buddy...crap. Or maybe the 20 realize it is a complex assignment and they can not meet your 24 hour TAT. Again, you got what you paid for.
(3) For the most part the new rules and most places going FHA has pretty well stopped the appraiser musical appraisals until one comes in at the right value. Boohoo, cry me a river.
(4) There is no reason to cry the blues just because the appraiser's opinion of value does not include the furniture, closing costs, riding lawn mower, and a golf membership.

(Signed)
A cynical old coot

Steve Owen · by **Steve Owen** on Wed Oct 28, 2009 9:45 am

And yet...

Pressure from brokers has, to great extent, been eliminated.

Geographic incompetence is being discussed and highlighted because of the complaints of agents and homeowners. I expect to see a resolution of this problem (possibly through an enforcement mechanism).

AMC fees will be honestly reported starting the first of the year. At least they will be for FHA transactions. Watch others follow.

Appraiser fees from AMCs will be reasonable and customary for FHA appraisals. That's a start... I believe that the honest reporting requirement will mean the end of unreasonable AMC fees, which will go hand in hand with more reasonable appraisal fees.

Comp checks and estimated values have disappeared. Well, almost disappeared, I got a call for one last week. Either the dummy didn't know what he was doing or it was someone working for a private non-Fannie investor.

Several states have passed Laws regulating AMCs. Utah, among others, Missouri will take that issue up again at the first of this legislative session. Regulating AMCs could address a lot of other appraiser concerns.

All these things have happened because of awareness caused by HVCC. These things were not the intentions of the HVCC but they are the results of people looking at the process since the HVCC was started. I used to say, that HVCC was having unintended consequences and the moral to that was "be careful what you wish for." Now I say be careful what you wish for, we could head right back into the comp check days of Broker and real estate agent pressure.

Ter Shields · by **Ter Shields** on Thu Oct 29, 2009 11:27 pm

The bank regulators don't want to be left out and are pounding the small banks that did no wrong. They are dumping paperwork on them no end. One frustrated small town Bank Prez told me that they were thinking about not making another loan for a while, only rolling loans for existing customers and doing consumer loans.

They have pounded the appraisals, the appraisers, the loan documents, the lenders, and even told them that they would have to appraise one year balloon loans. Many of their loans are 2 year ballons but they had only been ordering reappraisals if the report was over 3 years old. Further, the examiner told them that they could get the appraiser to do a 'short' appraisal using only the sales approach to determine whether the market is down or not...duh? on a chicken farm? You gotta be kidding. He asked them what would happen if the appraisal was less than the outstanding amount loaned...."Call in the loan" was the answer. WHY? They are making the payments, have never missed one, so you want to call in the loan!!! Stupid. Really really stupid.

Steve Owen · by **Steve Owen** on Fri Oct 30, 2009 2:58 pm

Ter Shields wrote:He asked them what would happen if the appraisal was less than the outstanding amount loaned...."Call in the loan" was the answer. WHY? They are making the payments, have never missed one, so you want to call in the loan!!! Stupid. Really really stupid.

Government in action. This kind of stuff happens all the time. In fact, the original housing crisis, which caused the government to respond with TARP, could have been avoided to a large degree if the government had not required banks to re-evaluate collateral on loans that were still performing. I've never been a conspiracy theorist, but the timing of some of these things has to make you wonder.

Mako · by **Mako** on Fri Oct 30, 2009 3:10 pm

tel wrote:(2) Why the hell, would you hire an appraiser from 100 miles away when there are PROBABLY 20 appraisers within 15 miles of the subject? Are all 20 incompetent, or do they just charge more than the guy from 100 miles out????????????? Ya got what you paid for buddy...crap. Or maybe the 20 realize it is a complex assignment and they can not meet your 24 hour TAT. Again, you got what you paid for.

That's it in a nutshell.

AMC's want to charge as much as they can & pay as little as possible. Further, AMC's approved appraisers have been mostly the worst of the worst...the sweatshops owners.

AMC's were started by large lending institutions who were tired of writing checks to appraisers...they wanted a piece of the appraisers pie.

The HVCC has fallen well short of expectations.

Steve Owen wrote:Pressure from brokers has, to great extent, been eliminated.

A couple things came to mind when I read that;

1st - how do you know...you've said you haven't done appraisals for mortgage purposes in years

2nd - IF true (and I suspect it is) don't you think it's the result of the current economic environment & all the attention being paid to mortgage fraud.

Appraiser fees from AMCs will be reasonable and customary for FHA appraisals.

Steve Owen wrote:Appraiser fees from AMCs will be reasonable and customary for FHA appraisals.

You're dreaming.

There IS NO WAY a middle man can pay "reasonable and customary fees" and make the profit they're looking for.

I'd like to hear how you think AMC's are suddenly going to be able to pay "reasonble and customary fees." They're largely the ones responsible for NO cost of living increase for appraisers since the mid '90's...in fact MOST appraisers I speak to are earning less than I was a decade ago. Do you REALIZE what inflation has done to the remainder of an appraisers income in the past 10-15 years!!! :evil:

This is why soooooo many appraisers are soooooo unhappy & AMC's are a BIG reason the situation is what it is.

Steve Owen wrote:the original housing crisis

"The original housing crisis" began in the '80's & isn't slated to be paid off until sometime circa 2030's. :evil:

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