Incorrect 1004MC Form Trend Reporting

Incorrect 1004MC Form Trend ReportingAppraisers,

I have ‘come in contact with’ an appraisal report, produced by a Certified appraiser and its Licensed Trainee – working in the area near my office.

It’s clear to me that these two appraisers do not understand trend reporting that this form indicates.

By the way, I’m no great fan of the MC form. However, since we are required to use it, we better darn well learn to use it properly. Report what the trends on it show and not something obtained from elsewhere, sometimes called “PFA.”

If we don’t, or choose to ignore what the form shows, then the ENTIRE report could be judged to be problematic, and certainly not credible.

Take a close look at this MC Form, and the comment on it…

1004MC Trend Reporting-1

1004MC Trend Reporting-2

Now that you have looked these over, can you explain how every line item is exactly and precisely marked as STABLE?

In fact, this particular report was put out by the lender for a FIELD REVIEW by a second appraiser. In my ‘observation’ of the entire report, there are other notable incorrect issues (including USPAP violations), which when compounded with improper MC form trends, makes the report very problematic for lending underwriting.

So, let’s look at the line items above.  When the left column is one number, and the far right column number is significantly higher or lower, the trend should be reported appropriately.

  • Line 1 is DECLINING
  • Line 2 is INCREASING
  • Line 3 should not be marked with an X because there is NO TREND that can be reported – minimum of 2 columns must have numbers before a trend can be determined
  • Line 4 same as Line 3 – no trend
  • Line 5 is INCREASING
  • Line 6 is DECLINING
  • Line 7 is INCREASING
  • Line 8 same as Lines 3 & 4 – no trend
  • Line 9 is the only one that is STABLE… ‘0.3’ between the left and right is not significant enough to call it declining (IMHO)
  • Line 10 is indicated as Stable, although technically there really can’t be a trend reported from this Yes/No question – but lenders want to see a trend box checked

With all this variability, how can the statement be written

Nearly all indicators Stable, overall market deemed Stable?”

That’s totally absurd.

Most knowledgeable appraisers DO NOT RELY ON this junky MC form for trend reporting, and they say so on it. They do have other, more credible statistical info in their reports they do rely on, and are able to use that other info to properly report market trends.

If, on the other hand, you choose not to obtain credible market information elsewhere, and use this MC form for your analysis, do us all a favor and report what it indicates correctly.

The other glaring inconsistency on this MC form example are the 47 ‘comparable’ sold properties, and the 24 ‘comparable’ Active Listings. I work in the reported area and can categorically say that there are NOT that many truly comparable/competitive properties similar to the subject in this neighborhood area.

I wrote about improper ‘comp’ reporting process in a WorkingRE article that came out Nov. 18.

I’ve also done some reading in Fannie Mae’s actual documents (FAQ’s) about this form.

Read this one very carefully:

Q. Is the Median Sale Price as % of List Price determined by dividing the Median Comparable Sale Price by the Median Comparable List Price from the preceding data on the form, or is it based only on comparables for sold properties?
A. The Median Sale Price as % of List Price is to be determined by analyzing the comparables that have sold and settled during the specific time frame, not by using the data from the lines above this section on the form.

So, Fannie Mae is mandating appraisers to use their own form, but ignore data on it! How absurd is that??

The whole, entire and all-consuming function of this stupid MC form is to concentrate and focus on COMPARABLES. If that’s what is supposed to be on the form, how is it logically possible to ignore that data, as the above FAQ response says?

Is it any wonder there is so much misinformation and confusion about the mandated MC form that is supposed to be the ultimate revealer of market trends?

Another FAQ response concerning the MC Form says if certain column numbers are shown to be INCREASING, the reported trend should be shown as Declining, and vice versa!

Then we have other users – reviewers, underwriters, borrowers – who don’t have the time or knowledge to decipher this crazy form and our responses, criticize us. Remember, the form is telling us to report OVERALL TREND, not just the trend from two columns.

Someone who’s been in this business for 40 years, whose opinion and background I greatly respect, wrote to me earlier today. I’m clipping and pasting some of what that person wrote:

“Two appraisers completed/reviewed this appraisal and the 1004MC and they got it wrong? Did they get it wrong because of poor form design or because they didn’t know how to correctly fill out the form?

Was it Fannie’s poor form and instructions or lack of comprehension of fundamental housing market analysis? Appraisers nationwide continue to get it wrong, not just this form, but also the URAR and the value opinion.

These same appraisers repeatedly ask for help with fundamentals (basic things, FHA requirements, etc.) while posting on the forum and signing their names with “Certified Residential or Certified General” credentials.

Someone trained the appraisers who completed the 1004MC you posted. They were not trained well. The people that taught the people that trained them perhaps did not do a good enough job. Someone did not train the appraisers who taught the appraisers at Fannie Mae.

Had they been better trained, we would have a better form. If they were better trained, we would have better instructions and better appraisal guidelines, wouldn’t we?”

So you see, it’s not just me who is frustrated.

But…with so much contradictory information coming from Fannie Mae (& Freddie Mac), how is possible any of us can be properly trained?

The people who took over the ‘forms’ in 1986 can’t even get it right. Yet we appraisers are supposed to have a polished crystal ball always at our side to decipher all the contradictions.

Frankly, it’s a ludicrous position to be involved with.

Dave Towne
Image credit freeimages - Jason Staten
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on

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22 Responses

  1. Avatar Gayle says:

    Line 1 is INCREASING!!   it’s a 3 month period for the current quarter while the prior 7-12 months is a 6 month period thus overall more sales per month in the current quarter.

    • Avatar Koma says:

      I agree and because of that first 7-12 months is a six month period you have to take into consideration how the absorption rate is trending. How about we stop bashing the persons filling out these forms, maybe advise them on the process, but start getting the people who make up these ridiculous forms to get out in the field and see if they actually work.

      Hey Dave you might want to take up a refresher course on this one, just saying.

  2. Ross Grannan on Facebook Ross Grannan on Facebook says:

    More often than not when I “fill” the MC form I usually do not have enough data to determine trends as I work in rural areas with minimal sales. The reviewers for the bank will not allow me to leave anything blank, I by default fill in the blanks marked stable stating that there is the assumption that market is stable. Basically I am contradicting myself, form over function. The MC form in my opinion is half baked statistical analysis in my opinion, in most markets there never is enough data and as well there are no parameters to work within that should be determined by the creators and enforcers of this form. How much bad data driven trends have measured by this form ? With all the data mining software out there and MLS access there should be a better way to do this.

  3. Avatar Tom D says:

    Dave,  if the 12 months on that 1004 were seasonally identical then i could see your point, not that it was explained adequately by the appraiser.  i would have liked you to show a 1004mc with 10 sales & 5 actives in a seasonal market.  also, if there have been no sales/listings in 2 periods is that not a trend?  i never though of leaving a blank.  should try that and then spend 20 minutes explaining why it was left blank.  yes, we now how to explain not only why, buy why we didn’t do something.  i find it difficult to say something is declining because of 1 or 2 sales/listings more or less.  and yes, i have other market condition pages, provided mls free & graphically interesting, to show the actual trend.  i think most appraisers should have more of that so that when 6 years later your’re sued you can show that your assessment of that market was correct.  this isn’t a knock on your article. i enjoy reading and contemplating another intelligent view of how information could be interpreted.

  4. Avatar Robert Pasacrita says:

    I disagree with your opinion that LINE 1 is declining. In fact the “trend” is increasing. Somewhere in the instructions for that form is the direction that the time periods should be considered when determining the trend.

  5. Frank Cox on Facebook Frank Cox on Facebook says:

    How can you call Line 1 declining. There were 20 sales in the first 6 months and a total of 27 sales the most recent 6 months. If anything you should call it increasing. There number of sales has increased by more than 30%. The big problem with the MC form is you are comparing 6 months data to 2 sets of 3 monts worth of data. Not sure what genuis thought that would ever be a good idea.

    • Ross Grannan on Facebook Ross Grannan on Facebook says:

      I think the appraisers analysis is accurate within the lack of guidelines that we all have to work within. Overall all trends are for the year stable, do they vary on a percentage basis sure, that doesn’t mean the market is not stable.

  6. Avatar cre says:

    This is ridiculous the author slams the appraiser’s MC form and does not respond to any comments. Clearly the first time period on the MC form represents 6 months and the later 3 month periods. Of course in most every market there will be more sales during in 6 months vs 3 months. I really think the author needs to address these comments and explain their thought process seeing that they are slamming another appraisers work. Also, I have personally had clients state I can not leave a box unchecked.

  7. Avatar cre says:

    The other question I have on this would be what would constitute a stable trend? Do the figures need to be exact? If there is a minimal difference between the numbers would the trend not be stable?

  8. Desiree Mehbod Desiree Mehbod says:

    I don’t think we can determine a trend just by looking at the information provided above. We know that the Total # of comp sales for prior 7-12 mos is 20 but what if the 20 sales are from 10-12 mos period and 0 sales from the 7-9 mos? Wouldn’t then Dave be correct stating that line 1 is declining?

    And how is the appraiser determining trends for line nos. 3, 4 & 8? Did he/she include a search criteria so that others could duplicate the data? Were graphs showing trends included in the report?

    As for checking boxes in the 1004MC form just because clients tell appraisers that they cannot be left unchecked, that’s BS. No one can force you to provide a misleading report. When clients tell me that, I tell them there wasn’t enough data available to identify a trend and that they are asking me to provide a misleading report/analysis which is a violation of USPAP. I usually include a comment as to why I couldn’t identify a trend and that’s the end of it.

    • Hi Des!

      I’m also found of using the following typed characters to “mark” boxes that I don’t want to mark.

      These are [-, *, N, 0, NA, Cmmts] and this will come as a  complete shock to many that know me for my brevity; but I’ve been known to expand on comments from time to time.

      I do that for three reasons:

      1. to explain my thinking

      2. to circumvent form constraints

      3. to drive reviewers batshit.

      They KNOW up front if they nit pick me, they are going to have to respond to the Great American Novel in return.

    • Desiree Mehbod Desiree Mehbod says:

      Hehehe I love it Mike! Number 3 is my favorite… you’re too funny.

  9. Colorado Colorado says:

    Personally, I don’t see a problem with the trend fills, streamlined in general consideration, as all stable.  The data is mostly congruent, and the trend stable enough, to be called stable. And I double dog dare you to try and pass an MC with unchecked boxes through a wide variety of amc’s, underwriters, and the likes.  These people just use the data review programs and drop in the xml there, and then order stips based on every indication of unchecked box, and the likes.  It’s gotten so bad, I’ve got supposed hud de underwriters demanding such silly things as removing no contract checkboxes and no contract statements, because ‘there is no contract’.  They’re like walking zombies, devoid of logic and operating on autopilot like monkeys pushing buttons in response to computer stimuli.  /  But yes, the MC is very problematic.  I’ve been in a few tough scenarios where regardless of what data set I acquire, I cannot get an MC form which gives meaningful indicators.  The median can be rather random.  So sometimes I’ll check in contrary to MC data, and then post whole market data sets in reports to compliment. /  Want to complain about MC?  Talk to Corelogic Matrix providers.  In Colorado, the MLS persons have actually set up the MC so that the indicated percentage is not a direct result of dividing sale and list.  Appraisers are blindly copying this data, and could not even recreate the active side data and subsequent percentage if they tried.  As I state specifically in the MC text;  I’ve tracked sold data only, and have not used this affixed method where I’m comparing as of yet unsold, vs sold for that analysis.  I’ve heard this argument before;  systemic under training.  And with no central authority to turn to for help, and major GSE’s devoting all of their money to these systems rather than operating a FAQ or help desk phone line, there is no relief in sight.  The easiest way to pass an mc, is to mirror the checkboxes used on front page 1 unit trends section, and compliment inconsistency with posted raw and filtered market data in the report elsewhere, with associated commentary. / It’s not very nice to pick on forum posters for asking questions, especially considering there is no easy avenue to get answers with these companies, and central authorities are either biased or hands tied. Plus, sensible people are not even able to post on the AF anymore, on account of how the admin blocked adblocker. View our advertisements, or don’t participate. That’s more embarrassing to willingly accept advertisements, than to ask a silly question online.

  10. Avatar Dan Williams says:


    Line 1 is the number of sales during the periods. Line 2 is that number divided by the #months in that period. How can 1 be declining and 2 be increasing? Please say your comment was a typo. I would think someone interested enough to write an article would not make this kind of fundamental mistake.

  11. Dave, respectfully we are NOT required to “use” it. What we ARE required to do is complete it and VERY SPECIFICALLY if we do not believe the information it contains is reliable and a credible indication of what is going on in the marketplace, then we ARE to use ‘some outside source’ and explain our reasoning for doing so.

    It may be inadequate due to too small a sample size; or contradictory results or any number of reasons other than the form itself being a piece of crap.

    It is a violation if USPAP to provide a misleading report or to report misleading information as being reliable. Again, it is NEVER the form that dictates an appraisers obligation. IF the form is inadequate (in any area) then it is OUR responsibility to augment it with sufficient data to be reliable.

    I almost NEVER use “neighborhood” to describe anything. I use competitive market area and explain what that is. I am still a real estate appraiser-not just a form filler and I can only be guided by what the client asks me to do (or not do). I cannot be required to ‘use’ only data they tell me to IF I believe THAT would result in an erroneous or misleading conclusion. If I DO use a reporting format such as a 1004MC Trend data as a (trend) conclusion and that data is wrong then the appraisal and the report are more than problematic. They are outright violations of USPAP. SRs 1 AND 2.

  12. PS It is SO nice to see new posters here! Commendations to Dave for stirring up interest.

    If migrating from AF, then double welcome! You will find our hosts READ the posts here but do not interfere with them. They are appraisers and if you are having a problem with the site just describe it and when possible they will either fix it or help you to solve it. Most here are pretty nice people… even if/when we get ‘testy’ with each other once in awhile.

  13. Bubba Jay / Retired Appraiser II Bubba Jay / Retired Appraiser II says:

    i also disagree with much of the authors analysis, including his conclusion that line one is “DECLINING” for example. i always pictured the three line item numbers, as three numbers in a graph. line one shows a 20, 11 and a 16, and in that order. if a line in a graph is drawn between those numbers, we would see a line moving down from 20 to 11, and back up from 11 to 16 moving L-R. moving R-L, we would see a line moving down from 16 to 11, and back up from 11 to 20. looking either way, the end of the graph line is moving up from center. if a horizontal line is drawn between all the points, the end numbers 20 and 16 would be extremely close to hitting that line.

    both ends of the line are moving up. (INCREASING). the first and last numbers hitting the same horizontal line indicate a movement back to the same plane, or stability. declining? i dont see it at all.

    line five and seven show an increasing trend? dont see that either. those numbers have barely budged and a line drawn between the points in my imaginary graph would remain virtually perfectly horizontal. i would like to know what would put a stable conclusion in the authors mind? all numbers exactly the same? yeah, that will happen.

    knowing my market the way i do, i see more signs of stability, with all reports from local and national media and realtors associations/MLS, indicating nothing declining, but a slight and fragile incline across the board. i would have marked stable too.

    i think its the author who does not understand trend reporting, and accusing someone of violating USCRAP here is total garbage and completely unnecessary. (but hey, being completely self-centered and egotistical, and treating fellow appraisers like crap has always been the norm hasnt it?)

    i think we have exposed one of the many problems with this form – trying to determine market trends with only three line item numbers, within a very short period of time. there just isnt enough data to reach reliable conclusions. lets face it, we are way past time to retire this worthless document.
    looking at the form, i do however disagree with the use of the word “unavailable”. if no data is truly available, i would prefer to see a “0” instead, and think thats more appropriate.

    the bleeding continues . . . . .

    • Avatar Koma says:

      Well said Bubba Jay! Maybe the eggheads who come up with these forms will start listening to us. Nah you know that will never happen! Counting down to retirement!

  14. Avatar clint says:

    It should be really simple to fix.  Look at sales data over a 3 year period analyzing year over year instead of breaking it down into 6 and 3 month periods.  Have 3 years and 3 columns, comparing apples to apples.  This will account for seasonal trends and won’t be misleading.  Instead of comparing comparable properties it really should compare all properties with the same highest and best use within the market area that is directly competitive with the subject.  This will make things conform for underwriters and the neighborhood section of the 1004 will correctly correspond to the check boxes on the 1004 mc.  Also configure the appraisal software to check the boxes on the 1004mc based upon whatever results are shown in the grid.  Why have the appraiser decide what box to check.  Considering a computer is very capable of representing value trends with a simple line chart, and can easily use the same data to produce a linear regression chart, I think it would be capable of checking a few boxes based upon the interpretation of the data entered on the form.  That way there is no question, and we make all our jobs easier.  It’s a win win.

  15. Avatar Bill Johnson says:

    Not to get off topic, but I like to think of the MC form as a short term trend (past 6 months) and a long term trend (6 to 12 months) as it relates to values. My reasoning is that we have to determine if time adjustments are needed for our comps and with a typical off market date within 6 months from the effective date of the report, this short term trend needs to be determined. I often find the market to be stabilizing over the short term (no positive time adj.) while increasing over the long term. This long term explanation is often used to explain price increase over the past 36 months for the subject.

  16. Avatar Johnny says:

    Okay. I stopped reading when it saya Line 1 should have been checked declining as stable would be wrong. If anything, it shows a small increase in absorption.  You simply can’t compare 2 quarters lumped together against 1 quarter. By that measure the absorption rate would never show an increase. It would take a super extraordinary set of conditions to so do.

  17. Avatar John Pratt says:

    You may know that area however you do not know how to read the MC form. As other have stated Line # 1 is “Increasing” not decreasing as you state, 7-12 month period is 6 months, that comes to 10 sale each of the 3 months in that time frame, 4-6 months has 11 sale and 0-3 months has 16 sales. If you think that is declining you need to go back to the first grade. Line 3 & 4 , there is no box for “No Trend” and we all know that we must check a box, so it would be acceptable to check “Stable” and state that there is insufficient data to develop a trend for this area. The median sales and listing price lines show a # 7,000 change over a 12 month period, In some appraisers view this could be considered an insignificant change and call it stable. Who made you the “Judge & Jury”. Without more information those numbers coulld be very misleading. What if all the sales in the 7-12 month were in the 1400-1500 sq ft range, in 4-6 months were in the 1500-1600 sq ft range and the 0-3 months were in the 1600-1700 range… Could that support your claim that the values were increasing. If you are doing reviews you should get out of the business or go back to school.


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Incorrect 1004MC Form Trend Reporting

by Dave Towne time to read: 4 min