Data Cancer Infecting the Real Estate Market
The ability to do an appraisal for Fannie Mae or Freddie Mac is getting rarer these days now that the GSEs are waiving appraisals on the majority of transactions. Despite drones being everywhere and the GSEs being in receivership, the latter is desperate for higher loan volumes to feed their origination infrastructure. Higher mortgage rates have crushed refinance loan volume and slowed sales volume. What can the GSEs do to increase mortgage volume? Remove appraisals from the majority of first mortgage transactions and relegate appraisers to mere data collectors. During the pandemic, the share of appraisal waivers used in mortgage lending went from 12% to about 60%. They have created the phenomenon known as “data cancer” which reduces an appraisal to a rubber stamp that contaminates the comps used for future sales. No one has focused on this issue more than my friend Phil Crawford of Voice of Appraisal: A Waiver in Phil’s Backyard!!!
Phil provides an explanation of the Data Cancer phenomenon using 2024 data within a subdivision of Cincinnati. He has been talking about this issue on his show for at least five years.
During the pandemic, FHFA, the federal regulator of the GSEs, waived interior property inspections by appraisers under the guise of protecting us. I was on that call, along with Phil when FHFA made that decision. I remember discussing with him afterward that while I appreciate their concern for our safety, this waiver policy seemed like a test run to standardize waivers, exposing consumers, taxpayers, and real estate agents to significant liability. Fannie Mae announced these changes recently expanding the loan to values (LTVs) from 80% to 97% on first mortgages! First mortgages used to be off limits to appraisal waivers. Fannie Mae is guaranteeing a purchase mortgage with 3% down and no interior inspection performed. What could go wrong?
Freddie Mac follows nearly all policies issued by Fannie Mae. Perhaps to confuse the public against the stigma of “Appraisal Waivers,” which were created in 2016, they were rebranded as “Value Acceptance.” They are being marketed by Fannie Mae as a way to save the consumer money. This is completely disingenuous since appraisals are the least expensive part of the mortgage process and appraisers are the last remaining individuals before the closing, that aren’t paid a commission. In other words, appraisal waivers gut the concept of consumer protection. The institutional culture at the GSEs, particularly Fannie Mae is quite arrogant, despite being in receivership.
Trillions of dollars of RMBS in the bond market are backed by appraisal valuations and now that is going to be turned on its head. The higher risk and flight from quality will raise mortgage rates in the long run due to the higher risk as investors learn about this. I’d love to know what Moody’s thinks about this development. I have heard their analysts speak at several events extolling their reliance on appraisers.
What Is Data Cancer?
“Data Cancer” is created when Fannie Mae or Freddie Mac waive the appraisal inspection and a homebuyer pays a price that is above the current market or has an amenity defect that would result in a lower value than the price paid. That inflated sale becomes a “comp” forever and can impact the entire submarket.
Remember that up until closing, the only person that is not compensated based on the buyer being able to close the sale is the real estate appraiser (ok, ok, usually lawyers too).
Looking At The Sales Data
These was a steady flow of sales in this new subdivision of similar sized properties. Another way to look at the sales in this market is price per square foot given the homogenous lot and home sizes.
The peak price per square foot was observed in May at $213.67 based ginned up by the $195.10 sale that had an appraisal waiver the month before. The remaining sales from June through November didn’t have appraisal waivers but remained at a consistently higher level enabled by the earlier sales. There was no appraisal done for the first sale. It’s multiple bids suggested that the $184.86 price was at market or a little on the high side. The second sale of the year was consistent with the first and had an appraisal but had no Tidewater process which means the appraiser’s value supported or exceeded the price. The third sale had an informed cash buyer. The fourth sale had an appraisal waiver leading to the higher price for the fifth sale that appeared to set the market price for the remainder of the year. This is unfortunate for all the buyers and illustrates “data cancer” in action.
Fannie Mae contends they saved the home buyers an estimated appraisal fee of $625 but this appraisal waiver methodology placed an inflated sale as a comp used in subsequent appraisals for the rest of the year. The unfortunate buyers in May and June were particularly screwed by the Fannie Mae waiver policy. There is no such thing as a free lunch.
Final Thoughts
Think of “Data Cancer” as a sale that is allowed to close without an unbiased party given a chance to carefully review the property and the local market. The sale closes and is relied on during future appraisal assignments in the market. The arrogance of the GSEs is such that they think they can model this with their software yet they can’t. It appears that they are more interested in goosing up market activity to keep their mortgage pipelines full than protecting the consumer even while they are still in receivership. The GSEs firmly believe their software analytics can replace human beings walking through the property for it to be used as collateral for a mortgage they guaranty. I believe that there will be future litigation against real estate agents/brokers and mortgage brokers by consumers that over paid for their properties. I remember making a presentation in Dallas a few years ago with a local real estate broker and she said that the vast majorty of sales during the pandemic housing boom had appraisal waivers. Wow.
- Data Cancer Infecting the Real Estate Market - January 31, 2025
- GSE Exec Boasts Scheme to Slash Appraiser Numbers - May 2, 2024
- Valuation Connect Demands Licenses, Denies Fair Pay - April 9, 2024
From what I’ve read, 97% of GSE appraisals hit the number on purchases. It makes sense to give waivers. As a former appraiser, now retired abroad, it’s obvious appraisers think too much of themselves.
I disagree. Appraisers, especially those who have been beaten down by AMCs who cheat and don’t know the difference between appraisers’ experience and qualifications for a particular assignment so they select the one with the least expectations of fee and quickest turn-around. The untrained will bend more, while they just may not have any incentive to do the real work we have been taught.
Bragging about being retired and living in Europe you may be the one putting on airs! Now that you don’t work in this profession I think making disparaging comments about working appraisers is disrespectful! We are over-regulated and there are so many bad policies made by the GSEs that is why they give waivers! They have never been very sharp about our role. Our role is quality and they are messing with our role in being ethical too! Every time someone wants my appraisal fast, there is usually something they want me to miss, trying to rush! That is when I slow down and work until I figure out what they are hiding..
You’ve most likely read wrong.
You, and other ‘retired’ appraisers should channel your energy into more fruitful pursuits.
I “resemble” that remark Eric. ?
I dunno….does the shoe fit?
Yes sir…my non appraising shoes fit so well I ran like Hell from the profession 15 years ago and kept on running. I still get quite a kick from listening to the wailing and gnashing of teeth however. Priceless!
That explains a lot. What a miserable existence it must be to constantly remind the profession you left how terrible it is.
Again, if it appraising is so bad you should channel your efforts and energy into something more productive than mocking those who wish to make it better.
Oh no no no…I couldn’t do that. Watching you guys gin yourselves up each week and twist yourselves into micro pretzels (yet do NOTHING) is better entertainment than Seinfeld, Monty Python, and I Love Lucy combined.
Key Words: “WISH to make it better”.
If wishing is your solution to this 16 year nightmare, I suggest that you organize a huge group of appraisers and visit the Fontana di Trevi. I promise all of your dreams will come true. Just toss in the remainder of your savings.
I’m so glad you continue to haunt Appraiser Blogs with your astounding insights and mindless drivel. This place is leaps and bounds better with you here.
I once used to have it out with Baggins on a regular basis before he became more of a realist and came to the conclusion that lawn care paid better wages. I also came to admire the guy because of his research, recall, and writing talent. I don’t have a great deal of respect for wishers and dreamers but I do have sympathy for you guys. I tossed a silver dollar into a wishing well for you yesterday Eric. Clear your calendar…those $200 appraisal orders should come flooding in within a week.
The Realist
Retired:
So everyone should think like you and be a quitter and stop appraising like you did? Maybe go to an appraisal board, talk nonsense, and troll people?
Myself, and I’m sure others here don’t need your respect, sympathy, or well wishes.
What we don’t need is a troll simply posting because it makes make them feel better about themselves.
For clarity – “wishing to make it better” is really appraisers still appraising, and sending letters to their elected officials, going to local and state board meetings, fighting the AMC machine, and actually putting in work for the changes we need. If you actually looked took the time to read instead of insult people, you’d see others are putting in work and are fighting for the profession.
What did you do for the profession before you quit?
Colorado had 20%+ of their appraisers no-renew for 2025. Thats opportunity and optimism, brother. You should try that on and see if it fits.
The history is complicated. Passion for the American dream of home ownership and consumer protection only goes so far. Retired was just as motivated to save the profession many years ago. Now he’s the constant protagonist, the devils advocate. Regrettably a continuation of the effort these many years later did not yield positive results.
American consumers whom seek to utilize GSE lending services are now on their own. Alone in the fish bowl, a myriad of predatory interests running roughshod over any existing protection which interferes with the profit machine. A few licensed persons in the mix, far fewer effective checks and balances.
The reason the appraisal industry was worth saving, and has been systematically dismantled over decades, is because independent appraisers are among the most effective deterrents to institutionalized fraud and predatory lending activity. Our presence stopped so much fraud before it ever happened. Consumers have no idea what they’re in for.
Fair enough.
Truth be told I’ve got my escape plan. I’m working other ventures as I’ve waivered in recent years as to hanging up the clip-board or not. I’m not naive to the fact walls are closing in on the profession. The GSE’s hate us, and we have zero support or real representation anywhere. As Bags stated the public has no idea what we are up against and what’s coming for them. Who knows, maybe the gov’t can find $300B for Fannie and Freddie in the next 2 years which they will need.
But every day I keep grinding this out as a middle finger to the PTB, in hopes that maybe this thing can turn around. Its delusional, I know. I just hate losing, and I hate being told what to do by those who don’t know.
I can handle most of the bureaucratic BS, but the new 1004 form launch will be my personal line in the sand if I can remain profitable. If not, maybe I’ll concede and go flip houses like retired appraiser. Hell, maybe I’d even have a whiskey with him.
appraisal shills come in all sizes and shapes…some posters would be better off on the private amc forums where they can discuss how men are women and other woke jokes…im never rolling over because i annt no lap dog
Flipping is really hard without a real estate license to reduce the listing cost fee. I am a an appraiser, broker owner and manage my property rentals for income and write off. Rather than to risk your own capital, I am choosing to just join them on the lending side as a mortgage loan originator with passing a 20 hour course. Less risk and extra cash flow.
When the rates come down or not lending will get busy in 2025 and 2026 due to home owner home equity.
Our presence stopped so much fraud before it ever happened. Consumers have no idea what they’re in for.”
we, as appraisers, can see it but are not in any way formidable enough to stop the upcoming carnage
And how are 16 years of letter writing and meetings working out for you Eric? Do elaborate.
Retired, at least I’ve done something.
I pose the question again – What did YOU DO for the appraisal profession before you rolled over and quit?
You don’t need to answer because we know – nothing.
Your snark, insults, and weak trolling belong on reddit, not here. Quit living in the past and move on.
In other words, you’re just a troll. Congratulations on becoming a teenager again.
you talking to me…
appraisers are good lap dogs…rolling over to the whims of TAF and the unethical stakeholders…now they are reaping what they have sown
I did it for 30 years and did well. I only retired for serious medical reasons. So serious that I received SS Disability. The SS together with my investments is a pretty comfy retirement here in Spain. That being said, I don’t think the future of the business is good, only because 80% of all current mortgages are under 5%. As all I do now during the day is watch Bloomberg, I can tell with certainty that mortgage rates are going to be high for a while.
There are many reasons for such a high percentage Kazys, but the question remains, how many full appraisals need to be done to find the outliner properties? The answer is 100%. On a side note, although it doesn’t happen often enough, I received a phone call from a veteran yesterday thanking me for my appraisal which after the price negotiation saved him $40,000 dollars.
Considering he was in the 3%, something tells me he could care less about the other 97%.
Additionally, in regards to the article, who knows how much more he could have saved if not for the value cancer the author speaks about.
Seek the truth.
I did mostly VA and private business. Very little GSE. VA loans are usually 100% LTV, so of course an appraisal is needed. The US is such a clown show now anyway. The Orange man is a lunatic. It’s breathtaking so many voted for him.
You sound like fun! Complaining about your profession and country… while sipping cocktails in paradise, made possible by both. Retirement goals!
Ooooo, you sound like a mortage lender AND a leftist.
You actually swallow the Kool Aid that he received that percentage of the votes. Check “Russian Tail”.
You could not be more incorrect. Appraisers have more liability than ever. If the value isn’t there (IE cannot meet the contract price) it just doesn’t make sense to risk one’s certification or license on rubber stamping. The Market determines the value, the appraiser just analyzes all the data. Keep on believing all the trash stats from GSEs, explains a lot.
You sound like a mortgage lender.
The appraisers are close much of the time because everyone knows there will be an appraisal. So, much of the shenanigans are constrained. If and when agents, loan officers etc realize there is no appraiser coming on a regular basis I believe 100% of deals will go through at any price and in suspect condition.
As someone who managed and continues to see GSE purposed appraisals, data and technology generally provide a more reliable basis to mitigate the purposed collateral and value risk, than (unfortunately) many appraiser completed appraisals. Data by itself is Not the cancer, not understanding how to analyze data Is the cancer – that I know you know well, Jonathan – and can take most of us to class on. However, in my humble opinion, an independent party doesn’t necessarily by itself improve the data or the results. When you see what I’ve seen in my past appraiser roles and continue to see in my current appraiser roles, I prefer data and technology over mostly deficient GSE purposed appraisals to assist in mortgage lending decisioning and risk mitigation. Hopefully the new UAD appraisal platform will improve the appraiser skill set to better utilize data, to prevent your described cancer… Fingers crossed! However, in today’s risk averse and risk management environment, demanding full appraisals on every mortgage transaction is like demanding we all keep getting our entertainment from Blockbuster Video rather than NetFlix! The world and technology has simply moved on. Thanks Jonathan, for the your challenging insight. Much appreciated!
‘not understanding how to analyze data Is the cancer’
Artificially high sale A. Followed by artificially high sale B, C, D. Followed by artificially high E-Z. How did artificially high sale A get entered into the permanent record which then skewed all other avm and human based analysis upward simultaneously down the line? Commissioned based persons were in charge of developing the avm value for sale A, with their in house avm utilities. No independent person was involved, as the programmers answered to their employers.
Arguments which rely on the current dysfunctional amc industry driven environment which have compromised the integrity of the majority of gse related appraisal profession are straw man irrational positions. One does not measure for health by comparing one dysfunctional system vs another dysfunctional system. If the amc industry was reigned in, your position of ‘mostly deficient gse appraisals’ would be nullified. Pursuant arguments claiming a need to move to black box avm utility systems in leu of qualified appraisers would be subsequently nullified and best placed as illogical ideas from people whom did fully understand the issue.
Let us not forget the mismanagement of the amc industry has led to an exodus of qualified appraisers. Where literally three out of four appraisers refuse amc service. The position that black box proprietary avm systems controlled by commissioned agency should be installed to replace the qualified appraisers whom are not even present to begin with… How about bringing back the qualified appraisers before retooling the entire system and dismantling meaningful checks and balances systems? A simplified explanation; 75% of the appraiser workforce remains on long term strike in regards to completing the majority of GSE lending work. That’s a direct result of the amc industries continued abuse of the process, only made worse by the political witch hunt against non existent ‘racist appraisers’, a position the amc industry also backed.
Take a minute to consider that you’re part of this absentee workforce for all practical purposes of protecting American mortgage lending consumers and the liquidity of lending systems they rely on (the reasons gse’s enjoy congressional charters). How do you think it’s going to work for estate and other non lending work when the majority of sales are set by way of gse sourced mortgages which rely on avm waivers, and none of the data is reliable?
We’re not approaching that point, we’re already here. Everyone outside of the world of origination is effected downstream. Appraisers may not be completing gse work, that does not insulate them or their clients from the primary problem; commissioned agency should not be in charge of rubber stamping deals with black box avm systems. Every other avm system down the line is subsequently altered as a result, aka data cancer.
Reliable avm tech is a myth, a literally impossibility if the data the system draws from is primarily sourced from other avm faux-value conclusions. Avm’s have a helpful place in the industry, as an additional analysis tool, but only if they’re utilizing valid data to begin with. We’re past that point. The data is no longer validated, double checked, held to scrutiny, or able to be reviewed for validity. Hence the term; black box.
Who’s still buying this?
https://appraisersblogs.com/fannie-mae-2-state-of-maryland-drop-dead/
As someone who managed and continues to see GSE purposed appraisals, data and technology generally provide a more reliable basis to mitigate the purposed collateral and value risk, than (unfortunately) many appraiser completed appraisals. Data by itself is Not the cancer, not understanding how to analyze data Is the cancer – that I know you know well, Jonathan – and can take most of us to class on. However, in my humble opinion, an independent party doesn’t necessarily by itself improve the data or the results. When you see what I’ve seen in my past appraiser roles and continue to see in my current appraiser roles, I prefer data and technology over mostly deficient GSE purposed appraisals to assist in mortgage lending decisioning and risk mitigation. Hopefully the new UAD appraisal platform will improve the appraiser skill set to better utilize data, to prevent your described cancer… Fingers crossed! However, in today’s risk averse and risk management environment, demanding full appraisals on every mortgage transaction is like demanding we all keep getting our entertainment from Blockbuster Video rather than NetFlix! The world and technology has simply moved on. Thanks Jonathan, for the your challenging insight. Much appreciated!
Well looks like 2005- 2008 is going to be repeated the below list was generated by “technology” AI some o the items can be replaced with “appraisal waivers”
1. Subprime Lending & Loose Credit Standards
• Lenders aggressively issued mortgages to borrowers with poor credit histories (subprime borrowers) who had a high risk of default.
• Many of these loans featured adjustable-rate mortgages (ARMs) with low introductory interest rates that later skyrocketed, making payments unaffordable.
• No-documentation (NINJA) loans (No Income, No Job, No Assets) became common, allowing unqualified borrowers to take on mortgages.
________________________________________
2. Securitization & Mortgage-Backed Securities (MBS)
• Banks and financial institutions bundled these risky mortgages into Mortgage-Backed Securities (MBS) and sold them to investors, including pension funds and hedge funds.
• These securities were falsely rated as low risk by credit rating agencies, despite being backed by high-risk loans.
________________________________________
3. The Housing Bubble & Speculation
• Low interest rates and easy access to credit drove up housing demand, leading to a real estate bubble where home prices surged beyond their intrinsic value.
• Many homebuyers and investors speculated on rising home prices, buying multiple properties they couldn’t afford under the assumption they could flip them for a profit.
• Lenders encouraged this speculation, offering zero-down-payment loans and interest-only mortgages.
________________________________________
4. Rising Defaults & Foreclosures
• When interest rates increased, adjustable-rate mortgage (ARM) payments spiked, making them unaffordable for borrowers.
• Home values began to decline, and borrowers found themselves “underwater” (owing more than their home was worth).
• As defaults increased, banks foreclosed on homes, flooding the market with supply and causing home prices to collapse.
________________________________________
5. Financial System Collapse
• Banks and investment firms had leveraged themselves heavily with mortgage-backed securities.
• As defaults rose, these securities lost value rapidly, leading to massive write-downs and financial losses.
• Lehman Brothers collapsed in September 2008, triggering panic and a financial meltdown.
• The crisis spread globally, as international banks and investors were also heavily exposed to U.S. mortgage securities.
________________________________________
6. Government Response
• The Federal Reserve and U.S. government intervened with bailouts and stimulus packages, including the Troubled Asset Relief Program (TARP), to stabilize the financial system.
• New regulations, such as the Dodd-Frank Act, were introduced to prevent reckless lending and excessive risk-taking.
________________________________________
Key Lessons from the Crisis
The importance of prudent lending standards
The dangers of excessive financial risk and deregulation
The need for transparent credit rating systems
The role of government oversight in preventing future financial bubbles
What a great story! The only thing missing is appraisers. Why? Because appraisers didn’t cause the bubble or the fall, and didn’t prevent them either. By the mid-2000s, we had a decade and a half of appraisal regulation since the S & L disaster and the whole state/federal structure of licensing, regulation, enforcement, and continuing education. And what difference did it all make? Zero. With appraisal not really making any difference, it’s no wonder that the world is trying to ignore it. BTW, what is “intrinsic value”? I appraised for 30+ years and somehow I missed the secret directory of intrinsic values. Sure would have made the job easier than trying to estimate value in exchange from a bunch of contradictory data points.
Intrinsic value is the anticipated or calculated value of a company, stock, currency or product determined through fundamental analysis. It includes tangible and intangible factors. Intrinsic value is also called the real value and may or may not be the same as the current market value.
if you have any interest in stock trading (day trading) get your bear market strategy ready for the downturn..Overblown portfolio values
The current status of gse managers; tap dancing on a bubble, cigar and whiskey in hand.
Bail ins bail outs. I know it’s hard for people to understand but many within the system actually believe in the prosperity through debt program.
https://www.alphaspread.com/security/otc/fnma/summary/1000
I’m not buying into the idea there is this much potential energy. Click through the relative value link. All your favorite players are in on this game.
https://howardonmortgagefinance.com/2024/07/09/the-mbs-vigilantes/
The situation is complicated over the long term. Perhaps from their lofty investor standpoints, many are not understanding the gravity of ‘appraisal modernization’ and moves towards completely automated systems. Your tax dollars, hard at work.
The public facing statement; Waivers are good. Safe to use. Save consumers money. (the unspoken consequence only whispered about in secret meetings) An acceptable industry practice to put approximately 25k – 40k appraisers out of work and place consumers at untold not yet determinable risk.
The investor facing disclosure; Models are inherently imperfect and may adversely affect our ability to manage risk. / To the extent our internal models or the third party models we use fail to produce reliable results on an ongoing basis, we may not make appropriate business and risk management decisions, including decisions effecting loan purchases, guaranty fee pricing, management of credit losses, and asset and liability management. / Errors have been discovered in some of the models we use, as well as deficiencies in our current process for managing model risk.
Image attachment and quote above taken from this document;
https://www.sec.gov/ix?doc=/Archives/edgar/data/310522/000031052223000184/fnm-20221231.htm
Rumor mill article;
https://appraisersblogs.com/gse-executive-boasts-scheme-2-slash-appraiser-numbers/
Blatantly abusive practices. Disinformation trolls and systemic harassment of industry workers.
Has the congressional charter ever been reconsidered in relation to performance history?
Post this FNMA related image quote again I suppose…
https://www.fanniemae.com/about-us/corporate-governance/fannie-mae-charter
could someone provide an address where a waiver was part of a sales transaction?
The loan originator would know that. It’s also confidential.
confidential…so is the epstien list
if there is nothing to hide…it wouldn’t be hidden
One robin does NOT make it springtime.
One sale does NOT make a market.
Proprietary weighted algorithms which favor maximized lending volume says differently.
Confidence score; 99.999999% Sell score; HIGH. Mean deviation; 1,000b³
Reliable logical simple math a regular human can understand? Who needs it? Automation!
Question: How can appraisers, and software providers, justify the time and effort needed to retrain the appraisal and lending industry on the new URAR, if the GSE’s waive the appraisal on the vast majority of first mortgages?
I believe that’s the point. Make the appraisal process take longer and cost more so they can justify moving away from traditional appraisers. They can say “waivers are just as accurate, cost less, and take less time than the dwindling numbers of appraisers doing GSE assignments.”
Answer; Corelogic raising fees to appraisers. / Image. Email just landed this week.
im pretty sure they do not grant appraisal waivers in east cleveland…
Wells Fargo Fires Loan Officers Accused Of Abusing Appraisal Waivers
Wells Fargo has been cracking down on loan officers in the past few weeks over allegations of widespread abuse of appraisal waivers in the past two years.
Wells Fargo has been cracking down on loan officers in the past few weeks over allegations of widespread abuse of appraisal waivers in the past two years.
https://nationalmortgageprofessional.com/news/wells-fargo-fires-loan-officers-accused-abusing-appraisal-waivers
they are letting the mortgage broker estimate value without an appraisal license…what could go wrong
THEY want to artificially inflate property values and remove the independent appraiser hurdle. Who benefits?:
> Realtors – higher commissions;
> Assessors – higher property taxes;
> Certain Investors – continue the march to make real estate unaffordable to own – resulting in citizens becoming
tenants instead of property owners;
> Builders/Developers – artificially higher profits (warning this may be a temporary windfall)
> Insurance Companies – higher premiums.
> Banks / Lenders – increased profits for larger loans and fees
> Secondary Market Entities – All sorts of deceptive and wild manipulations of the RE market
So THEY remove the SINGLE (or at least one of few) reality check(s) – THE APPRAISER
THEY are creating (non) comparables that are not truly ARMS LENGTH due to improper manipulation.
Where are the “Professional Appraisal Organizations” in all of this – Crickets .
https://www.youtube.com/watch?v=9xZBksjuEVc
Disturbing.
Good piece but not news. GSE’s servicing have used many methods to keep homeowners in place, like 40 year mortgages. it simply echoes 2008 with new lipstick.
Bad comps lead to bad decisions. If we don’t keep real appraisers in the process, this problem will only get worse.
Go ahead and cancel the office space lease. Now that GSE appraisers are written out of full appraisal service, whom performed the predominant volume of appraisal work for the sales which all other non lending appraisers rely upon… There will be little point or merit in using independent valuation services anymore for non lending work in the not too distant future. The systematic conscious dismantling of the residential real estate appraisal industry continues unabated.
https://x.com/hartgoat/status/1886494151400644766
who can steal your data…and use it against you…the gse’s can
02/05/2025 Fannie Appraisal News Letter
To increase appraiser efficiency and capacity, we’re expanding our hybrid appraisal policy option. Hybrid appraisals utilize a third-party property data collection that is provided to the appraiser for the completion of an appraisal using appraisal Form 1004 Hybrid or Form 1073 Hybrid.
Hybrid appraisal property eligibility will align with traditional appraisals except for the following exclusions:
2-4 unit, co-op, and manufactured home properties;
Construction to Perm, HomeStyle® Renovation and HomeStyle® Energy Loans; and
Proposed construction.
This expansion aims to reduce loan origination cycle time for borrowers.
Effective: This change is effective March 22, 2025.
______________________________________________________________
Apparently the illustrious persons in the new administration do not have the capacity or resolve to acknowledge these programs are a direct result of both predatory lending strategy and DEI initiatives, solidified by the PAVE task force working group recommendations.
I’ve prepared a special thoughtful meme to celebrate the occasion. Image attached.
Just got an email from a lender asking me to search for comps and report results prior to any appraisal being ordered. I thought THEY were supposed to stop doing that. I’m just getting over a bad case of the flu. Maybe I’m hallucinating. Never mind.
Elon Musk’s DOGE Team Enters Consumer Financial Protection Bureau After Biden Holdover Fired – And Staffers are “Mad as Hell”
https://www.thegatewaypundit.com/2025/02/elon-musks-doge-team-enters-consumer-financial-protection/
that is good news for appraisers and bad news for the unethical stakeholders…
Off Topic. Just got an email regarding declining number of Appraisal Institute members. It apparently dropped approximately 40% over the past several years. I recently dropped my AI designation and membership for multiple reasons that did not allow me to support AI with a clear conscience. Sad to see that, what a couple of decades ago was a decent entity, fail dramatically.
https://www.appraisalinstitute.org/advocacy/appraiser-diversity-initiative
TAF newsletter today, more parea. If you have been a victim of discrimination, call the HUD hotline…
For all these appraisal groups to push issue after issue while ignoring the multiple elephants in the room. Hard to take them seriously.
From the CO appraiser group; With lending work slowing to a crawl, many appraisers have expanded their type of work. Expert witness testimony can be a critical component in non-lender work. This course will discuss /
To all the appraisers who said; just get away from lending work. That safe space with adequate opportunity is going away. There is forty thousand new appraiser applicants flooding that portion of the industry. How will they manage the constant stream of interested appraiser applicants? Amc’s perhaps? And who will the amc’s market to now that a substantial portion of the lending work is going away? Lawyers perhaps? NAR? At this point the big amc’s send more work to realty people than they do appraisers. Why do they even still call themselves appraisal management companies? Is their licensing oversight even applicable?
Those appraisers whom did not stay current with the lending world are going to get caught off guard. They’ll be in court talking about the reliability of previous bonafide sales, only to be challenged why they’re relying on sales data which was made possible by pdc hybrids and waiver programs. Not quite as reliable as presumed. AI may want to beef up their jewelry, art, and equipment valuation outreach divisions. The golden goose has laid the last egg.
Class-action law firm opens investigation into appraisal fees, AMCs
Appraisers have contended that AMCs are suffocating the industry
February 10, 2025, 3:11 pm By Jeff Andrews
A top law firm is investigating the role of appraisal management companies (AMCs) in driving up appraisal costs. The firm is asking homebuyers to contact them if they feel they’ve been overcharged or misled about how much of the appraisal fee goes to an AMC versus how much goes to the appraiser.
In a blog post on its website, law firm Morgan & Morgan said that AMC involvement in the appraisal process is potentially concerning because of a perceived lack of transparency, inflated costs and limited additional value to the consumer.
https://www.housingwire.com/articles/law-firm-opens-investigation-appraisal-fees-management-companies/
no cfpb to cover for their amc minions…i mean public trust i cant stop laughing
Appraisal waivers aren’t about saving consumers money—they’re about fast-tracking deals, keeping mortgage pipelines full, and sidelining the only unbiased person in the process: the appraiser. But hey, who needs professional oversight when we have algorithms?
Sacramento Real Estate Appraiser
Jonathan, your post highlights an incredibly important and often overlooked issue in today’s real estate market: the proliferation of appraisal waivers and the resulting “data cancer” that’s infecting property valuations. I wholeheartedly agree that allowing inflated sales prices, which aren’t adequately reviewed by a licensed appraiser, to become the basis for future comps is a dangerous and unsustainable practice.
The concern you raise about the GSEs pushing appraisal waivers under the guise of “value acceptance” is not only misguided but also detrimental to the integrity of the housing market. We’ve seen firsthand how these policies can artificially inflate prices, leaving unsuspecting buyers holding the bag when the market inevitably corrects itself.
I also appreciate your mention of the growing risk to mortgage-backed securities (RMBS) and how these inflated comps could lead to a higher risk of defaults, ultimately raising mortgage rates in the long run. If the industry continues to prioritize volume over quality, consumers and taxpayers will bear the brunt of these poor decisions.
As you point out, appraisers are the last unbiased party in the transaction, and their expertise in determining market value has never been more critical. The reliance on algorithms and software is problematic because, as you’ve rightly said, these systems can’t replace the nuanced judgment of a human professional.
While some argue that appraisal waivers save consumers money, the hidden cost—whether it’s in the form of inflated prices, future litigation, or a shaky housing market—far outweighs the initial savings. As appraisers, we are expected to be impartial, objective, and thorough in our work, and it’s disappointing to see the GSEs undermine this role.
Sacramento Real Estate Appraiser
Found a meme on that point a while back.
https://appraisersblogs.com/new-uad-overhaul-what-appraisers-can-expect-in-2025-n-beyond/#comment-44619
Data cancer follow up comment. Data cancer is now self sustaining. Why and how. CU systems relation. Ordering process. There will be no automated or regulatory solution to answer the problems created by abandoning a workable industry standard which was; full service appraisal requirements for the majority of origination. Tracking back full circle how the release of the CU data by the FHFA was mistakenly interpreted as biased appraisals. Exclusion of the majority of the appraiser workforce from GSE lending and CU database inclusion. AVM over valuation systemic problems. How the expansion of waivers, rising demins, hybrid products, all contributed to the problem. Close out with simple solution suggestions.
Hopefully someone is listening. Thank you.