You are not thinking ahead Jon, you should have a huge problem with the very thought of this product ever being used due to the fact this product opens the door to anyone writing a report from anywhere … if you want to see how fast they can move your job to india keep doing the bifurcated appraisal work.

Susan Layne not sure what you are talking about. I don’t do hybrids.

Totally agree!! Who would have taken this job in the first place if that is what it was going to be. Not me. Although I do get tired of staring at my windshield from time to time, I do appreciate being out.

Quality of life is a primary draw for real estate appraisers. We trade a great many other benefits away for the liberty to decide how our time is spent. If I’m going to be told the only way to make money is to sit at the desk all day long, I’m immediately demand a 401k, paid days off, and other beni’s. Totally relevant. If these products are so awesome why haven’t lenders built up internal departments with staff employees whom churn out the products day and night?

Jamie Humphrey That’s nice, but Irrelevant

http://ronpaulinstitute.org/archives/featured-articles/2019/october/07/federal-reserve-s-latest-bailouts-more-proof-bad-times-ahead/

Fed continues to pump up the lenders economy. 75 billion digi cash injections a day while appraisers are told our greed and holding to traditional full fee service is hurting the lenders economy. How many full fee orders would 75 billion dollars buy? How many would that buy again tomorrow? Deminimis, waivers, hybrids, evals, it has nothing to do with cost and everything to do with control. People are starting to ask too many questions.

Great read. Thank you.

But you know how it plays out.

Banksters get what banksters want.

They are above the law and nobody will ever go to jail for mortgage fraud.

We’re on our own.

Picked the wrong career again.

Mike Ford, thank you also for your comments. There are so many issues with this concept, I hadn’t gotten as far as USPAP in my thinking- also since I am 100% resolved to Just say NO!

100% absolutely agree! Imho, none have said it better.

As an aside; the Head of the Georgia REA Board (appraisal section) D.S. Murphy recently cited a past common occurrence (re comp checks) “I need to get $250,000 for this property, can you do it?” “– We would be expected to answer then on the spot or at best get back to them within the hour. No amount of desktop research is possible for an appraiser to be able to answer that question. ”

If it is virtually impossible to provide credible, compliant information in an hour from a desktop, then how is anyone going to do it in the 15 minutes most often cited by promoters? Especially in proprietary formats that may limit one’s ability to add necessary data?

If promoters lie about the most fundamental aspect of these phony products (how long they take to properly compelte), then what else are they lying about?

Hey Herb,

Remember when the latest fads were: telephone jacks in every room of the house, speakers built in to walls and ceilings, Internet jacks in every room in the house, Shag carpets, Autumn gold appliances, All “quality” upgrades. How many exist as quality upgraded data in the databases today? All of them, because once there, the data isn’t changed.

How quick will the next fad of internet wi-fi appliances, heat, doors, window and alarms fade away? They will, just like all other fads.

How long will those quality upgrades remain in automated valuations after the fads have faded?

Forever.

But heck, no better way to get to feudalism 2.0 than government sponsored private entity monopolies telling you what your investment/property/shelter from the weather, is worth, and what someone else can borrow to be able to buy from you.

Herb the analytical part absolutely cannot be done by a computer. There is not one single example of any AVMs being cross-checked with other systems AVM where the results come within 10% of each other on the same atypical subject property. Not one.

I have used 4 different AVMs on such a property and got 4 extreme range results of a $630k property. They ranged from $430k to $790k. 1 came within 10% but not 5%.

The first problem with automated analytics is they are only able to analyze about 70% of value related characteristics. It means that 30% is simply reapportioned among the factors they can analyze thereby tainting those factors as well. The next problem is that every such system relies purely on unscreened, “public record data from assessors; OR from Corelogic which reinterprets data and misses hugely important items such as site size on a consistent basis. Zoning is usually wrong, as are site influences.

No such system can yet analyze the degree of view as perceived in a market or its impact. The same applies with external factors. These systems are currently in use as so called value verifiers or fraud preventers, resulting in numerous appraisers being turned into state agencies WITHOUT ANY BASIS IN FACT of having violated USPAP. When carefully reviewed, based on AGA’s cases reviewed every single such alleged non-compliance of the appraiser by the AVM was found to be unsupported.

We have already been replaced by such systems for PIWs and appraiser review. They factor in hybrids as well. That’s one of the many reasons hybrids are so poorly considered.

That we will be replaced by such systems is not surprising. FHFA already signaled in their original white paper on the topic that despite their own evidence to the contrary, that AVMS will be the future. This isn’t the first time the Feds and GSEs have micromanaged appraisals to the detriment of the public trust and the profession. The UAD itself; HVCC and 1004MC are only the three most recent examples.

FNMA has a long history of turning market values into some other form of value. Remember 155 and 25% net and gross adjustments? Nonmarket limits imposed by FNMA until February 2015 Lender Letter. Same with the perceived 10% line item limit and the perceived 1-mile distance “rule” that was imaginary but never definitively refute by FNMA until 02/2015.

Real appraisers may be replaced by GSEs as you note, but that’s only about 40% of total appraisal work. Those of us that adhere to principles will shift our business to consumer side purposes and litigation.

I’m guessing one of the most common cases will be refuting AVM results in court in growing instances of systemic deception involving values.

Herb speak with real experts on the topic such as George Dell. Even George will tell you AVMs are only a tool in the arsenal of an appraiser. A tool that one has to know both how and when to use. It’s not universal.

Jon when you did uninspected property appraisals I’m guessing you disclosed what you did and did not do along with why. Something other than an SOW placebo comment.

We have all done desktops, no interior inspections etc.. It is the manner in which we do them; our HONEST disclosures and our property-specific assumptions coupled with other sound appraisal practices that produced credible results.

Not one of which was advertised as ‘taking from 10-15 minutes’ on average. Nor were we limited by proprietary software constraints about what we could or could not include.

https://www.nclc.org/images/pdf/foreclosure_mortgage/mortgage_servicing/real-appraisal-comments-83-fed-reg.pdf

It is a comment to raising the deminimus, but it shows that “the people” do care about appraisals,

Here’s some highlights:

The agencies need data comparing the foreclosure rate for loans originated with appraisals versus evaluations.

Without independent data on the actual cost of appraisals and evaluations, cost savings cannot be a rationale for increasing the threshold.

There is a dearth of independent data on how often appraisals delay mortgage transactions and whether using an evaluation instead would have eliminated the delay.

There is no data comparing the accuracy of appraisals, AVMs, and evaluations.

There is no data on the impact of the recent adoption of 12 U.S.C. § 3356.A 2018 amendment to FIRREA created a new exception to the appraisal requirement for loans of $400,000 or less. It appliesonly to properties in rural areas if the originator cannot obtain a timely appraisal after contacting at least three appraisers in the area. The agencies cite an appraiser shortage in rural areas as one reason for the threshold change,37and the new statutory threshold matches the threshold proposed by the agencies. Therefore the impact of section 3356 will be directly relevant to the proposed rule. The agencies should collect data on the loans made under section 3356 before granting a broader exemption to all regulated lenders.

Reliable appraisals are important for consumers and the economy

None of the factors underlying the 2017 conclusion have changed.

Consumers should not be expected to buy their own, separate appraisals.

and more.

It’s a good, easy read, and should alert appraisers there are consumer groups that value the work of appraisers.