Desktop Appraisals, Panaceas for Faster Reports

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Dave Towne
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Desktop Reports - Desktop Appraisals, Panaceas for Faster Reports?

…I’ve discovered a potential anomaly in Desktop reports (and Hybrids also) which might shock some appraisers…

Desktop Appraisals, Panaceas for Faster Reports. Or so they say.

Bankrate.com has a revealing article published on Oct. 27, 2021, titled As Appraiser Shortage Delays Closings, Mortgage Giants Try Workaround | Bankrate

FHFA (the GSE’s “manager”), after the administration change, under pressure from mortgage brokers and lenders, and after the experiment with the COVID era “flexibilities”, has decided to allow the GSE’s to accept a new type of appraisal for first mortgage (purchase) lending early in 2022: the Desktop report.

The current line of thinking is Desktop reports will take less time to turn around, from assignment date to submittal. The theory is they ‘might’ cost less than a traditional appraisal. Are either of these suppositions true? We won’t know until about mid-2022, after a number of these reports are delivered to the GSE’s by appraisers who choose to do them.

But, I’ve discovered a potential anomaly in Desktop reports (and Hybrids also) which might shock some appraisers. It might cause appraisers to take a more measured examination of, and involvement with, these newly authorized reports. My intention is to provide more info about that in another article.

In case you have not been following the news, here are the relevant items from the Bankrate.com article:

Hoping to find at least a partial solution to that problem, the overseer of mortgage giants Fannie Mae and Freddie Mac will begin accepting more “desktop appraisals” in early 2022. The Federal Housing Finance Agency said recently that these remote valuations will take the place of some traditional appraisals, which require appraisers to visit properties that serve as collateral for mortgages.

Desktop appraisals will be available for “many: purchase loans, the agency said — although details are sketchy about precisely which homes or borrowers will be eligible.

…help each appraiser complete more loans in a day…

Realtors and mortgage brokers gripe about long delays for appraisals, and they describe appraisers demanding additional fees for such items as long drives, or for evaluations of unusual homes that lack comparable properties.

You should re-read the last paragraph!

Desktop appraisal. This is the type of evaluation green-lighted by Fannie Mae and Freddie Mac. As the name implies, a desktop appraisal is conducted from the appraiser’s desk, using tax records and information loaded into the multiple listing service by the seller’s Realtor. (DT – There’s actually a bit more to this, if present plans play out.)

Michael Fratantoni, chief economist of the Mortgage Bankers Association, is among the industry leaders applauding the shift to desktop appraisals as an antidote to the shortage of appraisers. “If they’re not having to drive to the properties, they can do more work,” he says.

During the pandemic, Fannie Mae and Freddie Mac allowed desktop appraisals as a temporary measure. In the latest development, the remote valuations are a permanent part of the lenders’ underwriting process.

The regulator hasn’t shared details about how to know whether you’re eligible for a desktop appraisal, or if you’ll get a price break compared to another type of appraisal.

I am trying to keep an open-mind about this new initiative to have appraisers do their work faster, although I’m not convinced that is actually going to happen.

Technology and process changes are wonderful, until they don’t enhance productivity. The new ‘Desktop’ reports will just add new layers of responsibility onto the appraiser to manage – which some won’t want to do.

I’m not convinced that experienced appraisers, who adopt doing these new Desktop reports, will charge much less than standard fees for a regular report where the appraiser is NOT relying on someone else to assist with photos, measuring and data gathering using remote smart phone technology employed by someone else, and third-party drafting services to produce the home diagram.

The other troubling thing (to me) is third party involvement can hide, mask or conveniently not disclose elements of a subject property that the appraiser should notice if on-site. Is the floor level? Is there visible water or critter damage? Is there actually a back wall on the house? Is the community water treatment plant next door, and the home is downwind? Maybe the home is under the local airport runway takeoff zone, where the most noise is generated?

Appraisers are supposed to be the eyes and ears for the lender to protect them. That’s part of the pride I take with this work. But the initiatives to “just do it faster, damn it!” are not in concert with our responsibility under USPAP in preserving the public trust as professional appraisers.

Appraisers should start paying attention to this upcoming proposed process. It will be a major change to how ‘we’ do our work, if ‘we’ choose to do that work in the way that it is proposed.

Dave Towne

Dave Towne

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

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8 Responses

  1. Kathy Morton Bunting Hoey on Facebook Kathy Morton Bunting Hoey on Facebook says:

    I did a minimum of inspecting them from the exterior during the pandemic and made the homeowners send me photos of every inch of the house. The liability is a bit much for me, so I don’t think I would do them unless I had done a prior report on the house in the last few years and it was in good condition. To much can go wrong.

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  2. As a subject matter expert, 20 years plus of appraisal experience, desktop appraisals and national reviewer. Almost 5 years of completing more than 1 type of Hybrid appraisals, interacting with different agencies that were hired to hire someone to do the site inspections and completing enhanced desktop and 2055 appraisals for the Department of Veterans Affairs. I know first hand the process and the up’s & downs. The one thing that most bothers me, and what I think needs a hard, hard look, is the lack of money appraisers actually make. Consider, the headaches of dealing with unethical real estate agents, (not all) and never ending “i need it back yesterday’s” Appraiser are extremely under paid!!! If the banks want to lower cost, Then mandate a flat fee for agents, and no more commissions for loan officers, Remember, appraisers are responsible for the valuation for 5 years afterwards. Agents/brokers forget about the deal after closing. So I employ every appraiser across the country stand-up for your fees and demand more. Everything cost more, agents make hundreds of thousands a year, appraisers 60 to 100k maybe, and that’s working 55 to 60 hour weeks. Remember, the appraisal type may change, but the appraiser responsibility, E&O, MLS Software and others do NOT…

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    • Baggins Baggins says:

      Thank you. Would be interested to hear more regarding real world experience with this. Many in the field origination focused appraisers only can read about hybrids. My vote is for insurers to place this sort of work under a different separate coverage policy. There is entirely different engagement and liability dynamics.

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    • Avatar John Parsons says:

      Like Bitcoin, some things are here to stay, no matter how you feel about them.

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  3. Avatar Garth says:

    Appraiser Liability, FEE & Turn Time Expectations.
    Having performed enough of the Covid Desktops, they take longer to diligently complete & the Fee necessary for the Amount of Time involved was Higher than the a 1004 Fee.

    IN the VERY least: Just a Few- Thoughts:
    *COVID Exceptions would need to continue with the 2022- Hybrids. Extra Extra “” Extra-Ordinary Assumptions “” would need to be given- compliance. Extra exterior photos of conditions & improvements, interior photos indicating- per room condition examples, measurements, etc. would need to be “date-taken disclosed”, along with the “inspectors name & contact information” & a copy of the Inspectors E&O with proof of same provided. ( I have mine. They should have theirs! Will they have a license? Any THING they would be liable for? )

    *Those that ORDER HYBRIDS would need to be thoroughly Educated on the Liabilities of the Form Use, service, & the Form Instructions.
    How many times has a Stern-Request Via the Lender’s Rep to essentially overlook USPAP & Appraisal Guidelines for a 2055 Form happened? Are we not to use Source information Found Credible for the “current date of the report”? (Lenders Reps’ tend to have an Employer Mentality. When an appraiser with best effort attempts to explain the circumstances, they just Cancel the Order and assign it to those that will. Actually, I’ve LOST lenders over the Order Rep’s ignorance & stance.)

    * I foresee Many “In-House Appraisers” (Lender-AMC-Owned Appraisers) completing the majority and where the Left-Overs are farmed out with CHEAP & FAST expectations, performed by Starving Appraisers who must accept LESS than Fair Fees. An appraiser’s Fee Schedule doesn’t really exist in the Real World.
    How much will the Lender-AMC “pocket”??? Will that BE disclosed & separated from the Appraiser-Retained Fee?

    ** Except in certain Rural Areas, there is NOT a shortage of appraisers.

    *So, if this becomes the Norm’…there WILL be many appraisers who just can’t survive on Half a Fee & needing triple the amount of orders to make up the difference.

    Fannie Mae’s Data Chomp has in excess of 5,000,000 appraisals & algorithms in abundance. The Time has finally arrived: The sky is Falling!

    Finally, they finally have found a Way to get rid of US. Next Step: Desk Top Algorithm Services, like a Zillow. We all know just HOW GREAT that… IS NOT.

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  4. Avatar Douglas A Parkes says:

    I have a hard time seeing how this type of desktop report is going to be faster or cheaper. First you have at least two, the person doing the site inspection and the appraiser and possibly three if a third party is measuring the subject, who have schedules that need to be coordinated. Then once the party inspects the property, they need to put the information into a usable format and send it to the appraiser, who then needs to review it and verify the information against public, MLS, etc. records. The same would hold true for the measurements if completed by a third party. Time is still being taken to drive to the subject property, do the inspection, take pictures, measure the improvements, check public, MLS and other records, prepare the report and submit it. To say nothing of the additional recordkeeping. If a discrepancy is found, who will verify the correct information. The person who inspected the home, the person who measured the home or the appraiser whose name and license is on the line. Someone will need to make another trip to the property and most likely the appraiser who should want to make sure they have the correct information. What about billing, right now the lender receives one invoice from an appraiser and under this plan they will get three invoices. Speaking of three, you will now have three office related expenses, software expenses, insurance, vehicle, equipment, living wage to cover for three individuals versus the single appraiser.

    My guess is you will see some of the turn and burn type appraisers who will end up hiring unlicensed individuals to do the field work and probably complete the majority of the report imputing, prior to the licensed appraiser putting the final touches on it. Why not allow licensed trainees to complete the field work while the supervising appraiser is in the office preparing reports. Much quicker, cheaper and a more controlled chain of responsibility.

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  5. Avatar henry jung says:

    Desktop appraisals will lead us right back to Bush’s Great Recession debacle.

    The bubble is blowing up; and this time it will be leveraged upper middle class peeps holding the pooch. Instant recession.

    Rates can’t go any lower to save us.

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Desktop Appraisals, Panaceas for Faster Reports

by Dave Towne time to read: 3 min
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