Appraisers' Free Forum

No, Edd. I just reconcile the data according to what the market states. I'll note the overall trends, local and even, since you posted it, the OFHEO information for the state. I have another link that provides the foreclosure rates by counties, and it helps to give the macro view.
For an example, did one yesterday, and the neighboring community is about fifty percent short sales and foreclosures.
I noted that in the report. Why? Because, even though there were no foreclosures or short sales in the neighborhood I was working in, the other is close enough, to give them a possible indication of what is happening. I cannot see the future. Our work is historical, but I can provide a bit more data to assist in making their decision.
Adjacent to this neighborhood of thirty year old houses, there is a brand new upper scale housing development consisting of over 1,000 homes being built in it.
I noted that as well. No landfills or other detractions. But data depends on the particular part of a community one is working in.
How do you define? I am sure that working commercial is an entirely different beast than residential, and thus, I think specializing in either field is, in it's own rights, good.
However, what are some of the other folks answers to these questions?

Otis wrote:Okay - who in these markets is NOT (and has not) been marking declining?

Well, I'm not operating in one of those markets. Last time I did an sfr, I marked it "stable" (might not be the same now). IMHO, whether it should be "declining" is simply dependent on sale prices. If average and median prices are stable or increasing, then the "declining" box for "one-unit housing trends" "property values" should not be the box checked. I think that it is neighborhood by neighborhood, but I use the MLS area, rather than the tighter, defined neighborhood because that is the smallest area for which I can get accurate statistical data.

Now, that being said, whether a market is declining might have to do with more than just prices. That is why there is also a "demand/supply" line. Again, IMHO, this is a more important, and more difficult item to track than prices. It is relatively easy to determine, on the next line, whether typical time on market is over or under six months. From there, it is not too hard to figure out how many properties are currently on the market, what the absorption rate is, and whether those properties being offered can be sold, if reasonably priced, in less than six months. I would be surprised, at least from what I have seen in my little market, if the over six month box was checked for marketing time (remember that this is a projection) and "over supply" was not also checked on the demand/supply line. Now, ask yourself this question: if both of those factors exist (over supply and more than six months typical marketing time) and if prices are not already in decline, is that situation sustainable? Probably not, and therefore, if I had that situation for a property I was appraising it would, at a minimum, require a comment that property values while stable (or increasing) as of the date of appraisal would be expected to decline in the near future.

I cannot count how many loans we have lost lately to values coming in lower than they were a year or 2, 3 or 4 years ago. New construction loans that come to the point of the end loan and they are close to if not underwater now. Refinances we did 2 or 3 year ago that have lost $20,000 in value - and so many because foreclosures in their area were most of the sales. I look at 95% of my appraisals as being in declining areas, no matter what my appraisal says. Sometimes I know they think they are saying what I want to hear - they aren't. Freddie holds me responsible - not my appraiser, for knowing what's going on in my market and how I need to treat this soft market.

This is so unusual with most of us in the business never having to face this before. I pressured my last boss into putting a policy into effect months ago that we would across the board view the market as declining and as such use lowered LTV's except in extraordinary circumstances. Of course the LO's still pretend they never read it sometimes!

Yes I know this was an old thread - I am just catching up!

Phat Underwriter wrote:Freddie holds me responsible - not my appraiser, for knowing what's going on in my market and how I need to treat this soft market.

NOT TRUE!!!

Fannie and Freddie hold the appraiser to be primarily responsible. Federal regulations have given the appraisal profession the responsibility for protecting the banking industry, through FIRREA and other federal regulations. Freddie may hold you responsible for the quality of the appraisal you ordered, particularly if there is evidence of fraud or pressure on the appraiser, and they may also hold you responsible for dealing correctly with the market in your area, but the primary responsibility for determination of market value of the collateral, which requires knowledge of the market, falls upon the appraiser.

Steve Owen wrote:

Phat Underwriter wrote:Freddie holds me responsible - not my appraiser, for knowing what's going on in my market and how I need to treat this soft market.

NOT TRUE!!!

Fannie and Freddie hold the appraiser to be primarily responsible. Federal regulations have given the appraisal profession the responsibility for protecting the banking industry, through FIRREA and other federal regulations. Freddie may hold you responsible for the quality of the appraisal you ordered, particularly if there is evidence of fraud or pressure on the appraiser, and they may also hold you responsible for dealing correctly with the market in your area, but the primary responsibility for determination of market value of the collateral, which requires knowledge of the market, falls upon the appraiser.

So there we have it. Steve, you gotta tell 'em what they want to hear, the way they want to hear it. When will the appraisal industry offer credible appraisals and when will the lending industry accept them?

That's a good question, Edd. However, help is on the way.

http://appraisers.freeforums.org/two-th ... html#21965

The investigative agencies are actually being much more active than I realized. Perhaps, that day will come sooner than we think. We can only hope that the heavy hand of government does not also crush too many good appraisers while they are ferreting out Skippy.

After some very disappointing conversations, I am just not sure that there is all that much difference between Skippy and 95% of fhe rest of the SFR ,or for that matter commercial, mortgage appraisers. Every appraiser seems to making up stuff as fast and furious as they can to meet some expectation or another.