Rumor – GSE Forms Revisions Coming?
GSE’s “really want your input” on the proposed revisions…
Rumor has it that the GSE’s are ‘finally’ considering making revisions to the current appraisal report forms. I suspect there have been draft forms already produced, and possibly are actually being tested in a cave somewhere in the Appalachian Mountains wilderness or perhaps inside Yucca Mountain, Nevada. But rumor has it that the GSE’s “really want your input” on the proposed revisions. But how to do that is not revealed in the rumor.
This is something to keep at least one eye observing over the next many weeks, months,or maybe even years.
The current URAR was originally mandated in 1986, when the GSE appropriated that function from the Savings and Loan Associations who had the ‘Green Hornet’ appraisal form in place then (originally designed by an appraiser) – which was the defacto report form used by most entities.
The next update was in 1993, only 7 years later.
Then the ‘current’ form versions were implemented in 2005, after 12 years. The MC Form, as an additional required page, was mandated in 2009 (and had a correction made to it). The UAD was plopped on top of 4 GSE forms in 2011, leaving several others non-UAD. Collateral Underwriter was enabled by UAD not long after.
Here we are in 2018, 13 years after the actual initial revision in ’05, driving the Yugo of appraisal report forms.
Quite frankly, from my perspective, revisions to all forms are long overdue. But they have not been revised up to now because the GSE’s have been hyper-focused on getting UAD, CU and their Appraisal Quality Monitoring functions to work after they got their hands (and cheeks) slapped by Congress after the 2008 world-wide financial meltdown.
So keep watching appraiser media, magazines, forums, blog posts, appraiser newsletters, etc. Just like the tulips soon to bloom here in the Skagit Valley, WA, something might be moving the ‘soil’ around appraisal forms we currently use.
- Speed Regardless of Accuracy Under the Banner of Modernization - March 8, 2023
- Marin City Discrimination Case Settled - March 7, 2023
- Exactly How Are Property Data Collectors Professionally Trained? - March 3, 2023
Toyota Motor Manufacturing lives by the motto:
Ittei no kaizen (constant improvement)
The appraisal “profession” lives by the motto:
Henko no tame ni henko (change for the sake of change)
Don’t be naive Dave. They’re not interested in our input. When was the last time they asked for it?
Agree. If they wanted our input, we wouldn’t hear about it in a rumor.
No that’s not right. FNMA I believe has an individual person who manages for each and every state. They handle reo, other safeguard requests. I’m not sure what they do exactly but it’s a real position and you will end up talking to that person if you apply for the FNMA REO direct panel. They have known form change is scheduled, I heard that discussed at the NCAREA meetings like years ago. It only seems like the door for input is closed, but what is really going on is there is a plethora of advocacy from related interested parties all shouting at once. The power of the pen.
If the advocates (lobbyists) have their way the only change needed is an additional line at the end of the form saying “Value conclusion is over ridden, and concluded at 115% of appraisers value. Signed Crack-lips Lipschitz, Parking Manager, Fraudvale Community Bank.”
Add additional required lender entry points after appraisal completed; (to be filled out by lender.) per my below long commentary; Amount of loan. Amount of cash out. Final funded rate. In house or saleable.
FANNIE MAE REO Direct panel!!?? They use AVMs (alternative reports in their words) for REOs in my state. Since we own FANNIE – we use AVMs on the properties we own.
There are two types of appraisals that an AVM should NEVER be considered for:
1. ERC (Relocation)
2. Foreclosure or REO related decision making.
In order to save $400 or $500 or say even a $1,000 for an appraisal, FNMA is going to use an AVM that may well leave HUNDREDS OF THOUSANDS of dollars on the table!
Eight years ago I was going to buy a legal 4 unit (previously bootlegged as a five) at full asking price plus 8%. FHA 203K. Prior sale $960,000. (Then) Current asking price $640,000 [loan balance owed plus costs]. Ten blocks to the beach in decent up and coming area of Long Beach.
Front house (units attached at rear) had broken glass on carpet and misc. minor repair needs. (Keep in mind I was an FHA approved appraiser). Agent was afraid it wouldn’t appraise FHA or it would take too long. He was from a very exclusive out of area neighborhood that hadn’t done anything FHA in 40 years except to spread uninformed rumors about it. Also a 5%/split commission broker.
Offer denied [we don’t think it was ever presented]. Cash deal sought. Price reduced to $600k; then $575k then $500k and each time we repeated offer. Full LP plus 8% with credit in escrow for that 8% back to us. After 6 months they obtained a $450,000 all cash offer. Deal fell through. Second offer finally obtained and eventually closed.
Deutsche Bank lost a full $190,000 on that one; potentially as much as $300k. Relying on a bad BPO and an out of area agent that sold million dollar SFRs. Property was easily worth $700k to $750k+ when we made our first offer.
This is truly a case where a good BPO; coupled with an informed marketing strategy specific to that property, supported by an actual appraisal could have put another 1/4 million in their pockets.
FNMA, Freddy and all the others have forgotten what a BPO was created for. But-because they NEVER gave the listing to the brokers that prepared sound BPOs and marketing strategies, brokers stopped wasting their time preparing them. They either gave them to the trainees or simply declined to do them. BPOs morphed from a marketing PLAN to a price guesstimate.
AVMs, hybrids and evaluations (as they are ordered and performed) are no different.
This sub-thread running long. On that subject, didn’t tarp provide financial incentive to push the number down? On a buyer level, I dealt with all sorts of agent trickery if seeking to get ahead on shorts and discount buy plays. I watched my legitimate offers get ignored, then price push down, then cash buys, then w/ clever additional follow up research, noticed positive trends of agent collusion with investors. By denying distressed sales agents routinely double dipped with fresh listings via investor resellers. As a hud appraiser, I’m positive list agents damaged some homes w/ the intention of them being noted uninsurable. Then the home would not go good neighbor, sit 2 weeks in non-investor prohibited purchase status, and move to an actual sf live in buyer. Far less commission if dealing with financed buyers. Also some high level taxation vs income difference which played into tarp funds access. Some made fortunes on the downturn, they want to recreate the event.
Listing agent collusion with investors on REO sales? SAY IT AINT SO Baggs! *g* It just wasn’t worth my time to follow up on. Not even in indirect communication with a 1/3 equity owner (then) in DB. The decision makers just do not care about what is to them ‘very low level’ malfeasance in an area they already assume they are being cheated in. Truly baffles me. Can’t imagine any stock holders knowingly accepting being screwed. Then again, people that make decisions involving $756 Million potential portfolio purchases in less than 15 minutes baffle me. They live in a very different world than I do.
Fannie Mae – Suppliers
Procure One – Fannie Mae’s Procurement Portal for Suppliers, Vendors, and Real Estate Professionals…
On it for years. Last year they decided to use “alternative reports” in my state. I would like to see the results but I am sure they are not available to us (kinda like all of the UAD data).
Let’s eliminate the very helpful and cost sensitive “Garbage Disposal” Box. For $89 a Badger can be had at any Big Box Store and a guy with his Ass cheeks showing, can install it for say$ 100. Now that is a very important feature not to be missed in future reports..
Not looking forward to it. Last time they revised the form, they added more pages and we had to deal with more nonsense crap which we were never compensated for. Common sense went right out the window with the UAD overlay. You tell me, how 1gd2gbi2cp4dw makes any sense to the layperson?
Like I said, I’m not looking forward to it. Counting down to my retirement…soon…but not soon enough!
Proprietary coding has a more nefarious benefit. One could not litigate from the outside in, unless one participates with one of the monopolistic gatekeepers to gain proper data dissemination protocol and understanding. Actually that worked to my benefit once. This mother in law of a borrower whom is a senior investigative appraiser in my state actually picked my report apart. She railroaded the non accountable unlicensed but formerly licensed panel manager and was in direct communication with me. Completely out of the proper chain of review services. The home backs to a park it’s not adjacent to a park! And other such language detail. She’d obviously been insulated from this in her ivory tower legalese world and had never completed a UAD compliant report. I rebutted with my limited array of choices, educated her that there is additional subtext note information which I had entered for clarification in those fields only accessible via XML extraction, and then told her to take up her concerns with FNMA directly because there is nothing I could do…
Oh yes, forgot to mention. Now which document form would a litigation or dispute focused person reach to first, the pdf or the xml? Insulation from litigation via proprietary coding. That seems in my opinion to be the primary benefit of the CU system. Second and possibly soon to be first place goes to the ability to monetize the data. Third place goes to the ability to monopolize the market, restrict competition, and eliminate accountable licensed checks and balances personal. I really am just a form filler. But I bring it, and manually type into every single line some form of unique content. We’re all bureaucrats now.
Nice “Heads Up” But, like in the past appraisers will probably not be involved in putting together anything in new forms. The lenders, FNMA, FREDDIE, AMCs, and all other stake holders will probably be involved in the modification process. Even the Appraisal Institute will put in their 2 cents. (God forbid).
Why would the ground troops be asked to help devise new forms? What we might suggest may not be UAD/XML compliant. Changes we suggest that make some real sense may not fit in those little boxes.
Plus, they will want all but a “self contained” report mandatory in any new edition, with no thought it might trigger an increase in fees to prepare the new URAR or 2055 forms. Oh “Green Hornet” where art thow? You were a pretty good form in your day.
I cringe to look in the future of this fiasco. “Lord save me from my “friends”, my enemies take care of themselves.”
Appraising was once a great, respectable profession, those days are long gone. Oh well.
The MC form is junk and they know it with some of my local clients say do not or not necessary to include it. GSE’s are not going to want our input. These new forms are going to be focused on computers (UAD) not us. And I agree with IMJSAYN about retirement…Can’t come soon enough!
Dave, can you provide contact information so we can actually share our ideas?
The “rumor” was published in one of the national e-newsletters sent out to appraisers across the country. The owner of that publication raked me for calling it a ‘rumor’….when in fact very little detail was provided in their pub. The actual story had to do with a FNMA staff member who would appear at an upcoming appraiser conference (associated with the e-newsletter publication) to discuss the pending changes. And the ‘we want your input’ was one of the lines in their story with no way to provide any comments. I just repeated what I saw, and other than that, don’t have any specifics, and have not seen anything more about this item.
Then it’s entirely fair to call it a “rumor”. Thanks Dave
My input. 2 pages. 3 comps max. No comp photos (not even a page for them). Addresses and all specific data straight from USPS and Assessor websites (drawn from them). No “Please revise report to read Suite blah blah blah and add a comma” BS! Want BIG DATA – here you go! Can’t trust Assessor sites – fix the government. Time to start a “Title Management Company”. Have you seen the fees they get for title work!! I’m sure it should be $10.00 less. And why can’t we put EMOJIs on this page and reports – let’s get with the times!!
They haven’t had a decent form since the mid 1980’s. Since the URAR was such an abysmal failure maybe they should just go back to the old pre-URAR 1004s and 1073s and 1025’s? As for hybrids and BS reports they could just reinstate the original 704. At least it doesn’t pretend to be something that it isn’t.
The real issue is whether FNMA should be the one to decide what needs to be in an appraisal, or should the major professional appraisal organizations? While a form is not supposed to drive the appraisal-merely report the fact is too many time-pressed appraisers tend to think filling in the boxes of the form constitutes a good appraisal report.
Maybe a better solution would be to go to full narratives much like the Narrative1 software facilitates (No, Im not a big fan of it due to difficult learning curve but it IS an option – but it does produce a decently layed out report). Downside is narratives also enable crooked appraisers to disguise or hide the steps they did not take, more than forms tend to.
One thing is certain – no matter what any new forms look like the FNMA ‘tamper proof’ limiting conditions will certainly take away more control from the appraiser and extend liabilities even further.
Do crooked Form reporters use better articulation than crooked narrative reporters.
The key word is krooked, any form acceptable to the user is acceptable. The appraiser is not required anything but his file , USPAP and a non misleading report
FHA, FNMA, Freddie and several others have separate standards which independent appraisers agree to or not. These independents also agree to a fee.
Knowledge of income streams can be manipulated due to non understanding reviewers as well.
They just want to keep on making a mockery out off of this dead end profession.
Checkbox requests: Did the appraiser inspect personally or use an assistant? If assistant used please name and check yes or no if they carry an appraisers license. Did the appraiser use any data typing or other outsourced assistant services? If so, please enter name of company, time of service, and fees paid. Please enter your billable service amount charged to lender for appraisal services. Appraiser to fill estimated time of report development here. Previous service in 3 years? If a sale, enter how many competing offers? If sale, was appraiser provided a copy of home inspection report? Add solar checkbox with leased vs owned additional checkbox. Borrowers rate and term of loan mandatory checkbox and fill slots. Realty agents commission mandatory fill slots and checkbox points or flat rate. Checkbox for individual buyer vs company or investment buyer. (better ability to track fraud and purchase activity via CU central data.) Other; Mandatory new line sections to clarify exactly the lender, exactly the distribution company if present, and exact method of the appraisal order assignment, quote fee, direct, otherwise. Requesting mandatory distribution company fee disclosure which must disclosed to then entered by the appraiser. (force appraisers to be required to know the fee splits and also report on that.) Mandatory line on technology fee if paid to complete this report. Mandatory line on estimated amount of appraisals the appraiser completes yearly. (vital differentiation between appraiser types!) Requesting special loan number lines and fha line which is incorporated into the primary report. Line for estimated market costs of improvement effort in 5 and also 10 year periods. (tracking cash investment into improvements for better comparability factors.) Requesting special line in grid for shed and outbuilding comparisons apart from other lines. Requesting an uc slot in MC for proper absorption time. Requesting UC slot in above grid figures for better portrail of active vs uc listed properties. Requesting environmental disclosure form become mandatory. (Form 69F in wintotal software.) Requesting clarification on disclosure disclaimer issues for signed pre printed certification points, and per popular guidance on FNMA forms, conflicting clarification notices, via McKissock educational classes. Requesting all subtext entered in special UAD fields be visible within final printed pdf report. Requesting automatic spell out of UAD coded entries into terms laymens can understand immediately below their entry points. Requesting departure from illogical .1 bath counting approach. Requesting new line to differentiate between queen, full, and larger 5pc deluxe baths. Requesting removal of stylistic guidance as mandatory unless actually dealing with unique property. Nobody does it and a 70’s tract home which is a brick ranch or two story is just that and does not need to be referred to as any other property or design type. Requesting mini box to include copied license photo in a block next to signatory area. (attaching as single page addition is not preferable to an incorporated paste of license photo within the report itself, as well as an automatic watermark tool to show it’s a copy.) Additional lines which are filled after appraisers complete the report. Noting the exact name of the reviewing company and persons whom reviewed and approved the report. (Accountability in review is severely lacking!). Also detailing documentation sent to the appraiser. (safeguards if distribution does not include counters, other docs, clearly discloses if appraisers were sent copies of home inspection reports or not. A severe lack of accountability in these realms of disclosure and proper paperwork and informational sharing.) Last but not least, the most important emerging health and safety issue we will face in our lifetimes but will be ignored until it’s too late for most; Checkbox; Is home within a thousand feet of any industrial wireless transmission towers or devices? ( easy research online, via antenna search dot com )
Oh man I could go on all day with this. Suggesting changes is as simple as pointing out current deficiencies in process and asking for clarification entry points to cure.
The latest addition to the ‘rumor’……misspelling included:
Fannie Mae/Freddie Mac Panel (CE Session) provides you with an update and clarification on the most recent policy changes.
Touching base on selection of comparable sales, supporting adjustments and data verification.
And finally, learn if the rumors are true – are they discussing about designing a new forum? Speakers: Julie Jones Scott Reuter Fannie Mae Freddie Mac Gary Skinner Freddie Mac
They need to throw away all of the forms and start from scratch. We should be able to upload years of data in a neighborhood or market area directly from MLS and public records and analyze it. Instead of form filling the appraiser should provide a meaningful analysis of the market and the subject property’s relative position in the market. The GSEs have been successful in creating a generation of formfillers. Technology has come a long way since the 1980s. Train appraisers to be analysts and to be adept with the latest technology. We don’t need another generation of formfillers.
100% agreement from me Tom!
The fnma form as developed over the years has become so bad that many new appraisers think neighborhood description is adequate merely by putting in n,s,e and w boundary streets. Even FNMA screwed up its intent by the 1004MC which now has people thinking in terms of marketing conditions ONLY for property that is purportedly ‘similar’; with the not illogical assumption that neighborhood too must only include similar property (same subdivision).
Neighborhoods are not made up of “comparable” sale properties. They can and often do cover a vast range of properties that collectively comprise that ‘neighborhood’ or competitive market area. We now have appraisers in some parts of the country contending that a ‘neighborhood’ is only the subdivision that a subject property is in. In many other parts of the country a neighborhood is defined by half a dozen or more compatible subdivisions. While these used to tend to be homogenous, over the years greater extremes developed (through gentrification or renewal).
A neighborhood description used to be a narrative story that provided context for how the subject ‘fit’ within that area. Unfortunately, computers lack the analytical agility to discern or quantify the subtle differences in such real world neighborhoods & or competitive market areas.
But THAT is an inconvenient truth that no one in regulatory power over banks or GSEs wants to admit. It’s a paradigm of modern business and management that when data doesn’t ‘fit’ it’s easier to just throw it away or ignore it rather than finding out WHY it doesn’t fit.
But that would take human computers rather than ones that only see 1’s and 0’s and an admission that “Big Data” isn’t all that its cracked up to be.