Fix It Before Replacing It!
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Yesterday was the National Association of Realtors Real Property Valuation Forum: Rethinking Real Estate Valuations: Alternatives to Traditional Appraisals.
First, VaCAP was well represented with 8 members present from all over the state. There were many of our Network colleagues there as well from all over the country.
Thank you for taking the time out of your busy schedules to attend.
The forum was moderated by Michelle Bradley and the panelist consists of Julie Jones, Credit Risk Analyst with Fannie Mae, Lima Ekram, Assistant Vice President Moody’s Investment Service, Ernie Durbin, Chief Valuation Officer, Clarocity and John Russell, ASA Senior Director of Government Relations and Business Development.
Each Panelist spoke briefly on various topics:
She updated the attendees on PIWs and gave some background on the program. Some key take a-ways, PIWs are only issued if there is a prior appraisal on file and there are no flags/ errors on that prior appraisal. PIWs account for less than 12% of total loan volume at Fannie Mae. If an appraisal on file at Fannie Mae is less than 120 days old, the appraisal must be used and no waiver is issued. PIWs are not issued if there is an appraisal contingency in the sales contract.
Fannie Mae is aware there are a lot of misuses of the tools they provide and many issues revolve around the lenders and amcs. They are attempting more transparency to appraisers of the actual policies and requirements. A new page has been added to their website just for appraisers:
This page has a lot of information and a direct link to contact Fannie Mae on any issue. It is suggested appraisers utilize this link to express concerns over anything appraisal related. This would include any issues with appraisal management companies associated with a particular appraisal.
His presentation revolved around terminology and the misconception around it. He took us back to 2006 when the Scope of Work Rule was implemented into USPAP and the Departure Rule was removed. He stated all the products being offered are appraisals and just have a different scope of work than a traditional 1004. He also reminded those in attendance no form is USPAP compliant: The appraiser is USPAP compliant. The key take way from his presentation, the ultimate responsibility lies on the appraiser to determine if the product being offered has the appropriate scope of work for the property.
Lima discussed the analysis being done at Moody’s on the valuation products being used in today’s loan pools. The pros and cons of each and the risk involved with each. Moody’s has concerns over the vast differences in the models for AVMs and other products that use big data and the accuracy / source of the data. There is no standardization between the products and a greater risk to investors exists as a result. Moody’s has an obligation to their investors to report the risks associated with each pool. Lima pointed out that what Moody’s is seeing is familiar to the build up before the crash and investors are taking notice.
John’s presentation was a bit different approach. Fix what is broken before replacing the product. Appraisers are talented professionals that know how to take mass amounts of data, filter through it, analyze and make sense of it all. Utilize the talents of the 70,000 plus experienced, licensed professionals and don’t short change the consumer.
Somewhere down the line more emphasis is placed on pictures of running water from a kitchen faucet that the true reason for the appraisal
John also touched on the responsibility agents and brokers have to their client. If a PIW or product less than a traditional appraisal is used, protect the interest of your client and advise them of the short comings of the product and the risk associated with them. Appraisers, utilize this as a revenue stream for more private business.
John received applause during his presentation and a standing ovation when he was finished!
VaCAP thanks all the Panelist and members of Real Property Valuation Committee for this informative forum.