FNMA Continued Effort to Get Rid of Appraisers

Fannie Mae Continued Effort to Get Rid of AppraisersFannie Mae Continues Their Effort To Get Rid Of Appraisers: Sends “Tips”

For the past year, Fannie Mae has sent unsigned complaints to state appraisal boards; when they see something they don’t like, they write it up and send it to the state. In their recent newsletter, this effort is called “Tips.” They emphasize they are not automated:

LQC reviews are not automated. Our expert analysts validate the appraisal results by asking questions like “Do the comparable sale selections make sense?”, “Is the data accurate?”, “Did the appraiser make appropriate adjustments?” and “Are we getting the most probable value?” in context of a comprehensive database of property characteristics and market transactions.

Yet because these “tips” are not signed and the reviewer is not identified, there is no accountability to the reviewer. I always thought the accused could face their accuser in a court of law in America. Fannie Mae plays havoc with appraisers’ livelihood and infers that the reviewer is perfect in every one of their reviews.

This is incredibly unethical on the GSE’s part and speaks to the absolute lack of respect for the last person in the home-buying process that stands in the way of a transaction.

FNMA state tips

Fannie Mae tips

Fannie Mae Continues Their Effort To Get Rid Of Appraisers: Property Data Collector Independence Requirements

As this property data collector thing moves along, there continues to be no legitimate reason for Fannie Mae’s motivation to push this so hard other than they want the valuation process fully automated and can pay $25 for an untrained inspector to view a home. It shows a fundamental lack of understanding of what appraisers do. Fannie Mae sees the appraisal process as “inspection + value.” Yet, the idea of sitting at the desk and relying on some stranger to gather the nuances of the property to generate a value is wildly flawed.

Fannie Mae culture has always believed they can do everything independently with their numbers. Still, they are diluting the quality of those very same numbers by allowing random people to collect on-site information. It’s insane, actually.

Fannie Mae PDC

Now take a look at NAR’s Appraisal Process Report: Notice anything missing?

Lawrence Yun, Ph.D., Chief Economist and Senior Vice President
Jessica Lautz, Dr.RealEst., Deputy Chief Economist and Vice President of Research
Meredith Dunn, Research Manager
Sidnee Holmes, Research Associate
Brandi Snowden, Director, Member and Consumer Survey Research

How about some appraisers? There is a real estate appraiser section with some of the brightest appraisal minds in the industry, and yet…no contribution to this report about property data collectors. I’m only making the point that appraisers seem to be the last people asked when looking at the appraisal process by virtually every institution that does so. Perhaps that’s by design, in this case, to make the results more compelling.

Here’s the last item on the executive summary:

According to the survey responses, the majority of participants (76%) perceive the quality of property data collected by data collectors to be lower than that collected by appraisers themselves. Conversely, 23% of respondents believe that the quality of data collected by data collectors is comparable to that of appraisers.

PDC effectiveness

Jonathan Miller
Image credit flickr - Mattia Merlo
Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

You may also like...

20 Responses

  1. Avatar Pat Turner says:

    Another terrific presentation Jonathan.
    I attended the last Virginia Appraisal Board meeting and reminded them that Fannie Mae was a private entity and that they had to follow rules just like everyone.

    Because they are Fannie Mae does not make them all-knowing and omnipotent!
    Inadequate complaints go nowhere I am happy to say.

    Everyone should appear in front of their boards and demand fairness and accountability!

    • Baggins Baggins says:

      The matter is beyond complicated. SCOTUS consideration of shareholders against GSE’s.

      Going to need to understand the terminology here. Fannie, defining corporations.

      Interesting. Whom are these mysterious board people? How much do they earn?

      Well, this below may be worth looking at. There is a lengthy additional page on ‘score cards’, of which executive compensation appears to be based, at least the deferred compensation portion which may be substantial, due to FHFA earnings limitations structures. So if they score higher, they get paid more. The score cards appear to have shifted over time to DEI focused initiatives. Hey, isn’t Dave Bunton rumored to be getting a golden parachute for his retirement? Good thing he’s with TAF and not FNMA. I make additional comments on this below link, further down.

      2023 scorecard.

      Efficiency in the mortgage market
      o Continue modernization of single-family appraisal processes and practices.
      o Leverage data, technology, and other innovations to promote efficiency and
      cost savings in mortgage processes.

      Well that figures. They get paid more for decreasing appraisers costs and making the appraisal portion more efficient. Curious that saving borrowers money on exponentially more influential and costly points based sales commissions which get rolled into amortized loan packages which lenders earn long term interest on and also exacerbates potential liquidity risk is suspiciously absent from the scoring list. A portion of executive compensation tied via conservatorship and the act of eliminating or automating the appraiser is just one of a handful of limited and obviously inadequate metrics, which can increase executive compensation amounts. On the chopping block today for execs whom want six hundred thousand yearly income, instead of just four hundred thousand, is the entire appraisal profession as that pertains to GSE participation. When is enough enough? (reference to above compensation explanation page link.)

      This is it, look through the various scorecards on this page. My how the criteria has changed. Who the hell is in charge of developing this criteria, because we need to know, so we can all in one unified voice, write them letters and voice our objections, that adding the appraisers to this list, while omitting realty agents, and not considering the detrimental nature of amc companies which stack unnecessary risk onto consumers, and DEI focus, is resulting in a purposeful dismantling of an entire industry and is going to cost half of all licensed appraisers left, forty thousand Americans whom voluntarily choose service to the public, to serve the American consumers of mortgage lending products, our entire careers. Read through these.
      (getting this particular link proper on repost was challenging. If the above does not deliver you the 2012-2023 ‘scorecard for fannie mae, freddie mac, and common securitization solutions’ reports, then you can also achieve this page by clicking the above FHFA link on executive compensation, then buried obscurely far down the page in the ‘executive compensation and incentive compensation plans’ section, there is a little hotlink in the word ‘scorecard’ which is highlighted blue. Click that.) Looking through over various scorecards of which there are a great many may be interesting too, but my research today was just taking me to this specific set on compensation related goals and compensation related measurements.

      You know, that’s what I get for even looking, more disappointment… But it’s important to know. Homework assignment for anyone whom wants to save the appraisal industry; Carefully analyze the FHFA summary score cards through the years, track and document the changes, identify detrimental inclusions which negatively effect appraisers, and argue the counter points that removing and downgrading the human appraiser works against other key goals pertaining to soundness of collateral securitization and consumer protection.

      All these years later, did I just crack the case of why things are even so much worse than before? Just one part. Mr Turner, I just thought I’d help out with your comment request on the concept of these monolithic entities actually having to answer to state boards, which led me to ask whom the corporate board people are, and how much they got paid, and lookie here what the internet delivered. Remarkable.

      Oh yeah, who are they? o.k., general hit on ‘conservatorship’.

      FHFA directors page. VIP’s only. Somebody far more important and successful than me needs to get on the horn with someone on this list please. Talking to congress critters ain’t going to cut it. Find out who’s developing that score card metric over the years (as linked above), why would anyone in their right mind place removal and reduction of the appraisers participation on that scorecard list, and to have that removed and reversed immediately.

      And finally, Fannie Mae board of directors. Although if I’m interpreting the data accurately, these are the people whom are allowing the appraisal industry to get completely crushed in order to comply with what appears to be misguided FHFA conservatorship goals, that their executive compensation is tied to reducing appraisers participation levels in the loan process. So perhaps don’t call them. Or do. Or don’t. Nothing good will come of this but as Brutus has already delivered the knife to all our backs, what’s the worse thing that could happen other than this industry staying on it’s current downward trajectory. Perhaps they can be reasoned with.

      You know, just yesterday I said, no more trolling the boards. Give some other people some space here. Better things to do with my time. Yet, hope remains. Give this another spin here, see what happens. I’ve got to pick up the kids from charter, perhaps change the oil, mow the lawn, get steak ready for dinner. Cheers.


  2. Avatar Kevin M says:

    This could be a good thing. There are so many bad appraisers out there doing lots of volume. Chop shops. Let the system weed them out.

  3. Avatar David says:

    Can you say Lyle Radke!!!!!!!! Don’t forget that name!

  4. Avatar Ed Brugh says:

    Good to hear from you Pat. Is VACAP still in operation? Not heard anything from them lately?

  5. Jacob Landfair on Facebook Jacob Landfair on Facebook says:

    At first I saw other appraisers posting and claiming that FNMA reported them to the state for frivolous issues. I thought to myself “surely something more serious must be wrong with their appraisals” and dismissed concern. Then it happened to me! Luckily the state dismissed it completely but it was a threat to my career for 20 years! It was a condo in the city that had a private roof top deck, however FNMA wanted subject compared to other lower selling condos that don’t have such an amenity. I wasn’t given an opportunity to explain myself to FNMA, just got a complaint emailed from state with no warning.

    • Kelly Rodriguez on Facebook Kelly Rodriguez on Facebook says:

      Jacob Landfair that’s awful. I’m sorry

    • Avatar hammering hank says:

      You must be leaving something out in the compliant. that makes no sense. Unless of course it is a similar unit in the building that sold lacking the roof deck.

      • Baggins Baggins says:


        As posted above, makes perfect sense.

        At least 15% or more of the corporate managers income rests on compliance with every FHFA recommendation. That is from the conservatorship rules link I posted above, alongside an image clip highlighting the terms for ‘at risk deferred salary.’ Looks like we’re talking sixty thousand dollars per person or possibly twice that (15%/30% of $400k), for complying with everything. So if they can’t actually find something against appraisers, they could be manufacturing something just to check that FHFA compliance box to access the additional salary potential. Sounds logical to me. It’s not a coincidence we are so beleaguered as of late.

        The possibility of substantial additional scrutiny being placed on some random report has always been how this works, but appears to be ramped up with financial ties to managers now. Appraisers are walking ducks with targets on our backs. I’ve been warning people for years, wait till the market gets rocky, all those little mistakes and shortcuts appraisers may have taken for ‘efficiency’, will come back to bite them. The appraisal is a legal document not some trinket or puzzle set there so appraisers and tech companies can unlock the potential of maximum efficiency with minium effort. Enough appraisers went with that program though, enter new forms which will strip traditional appraisers of a sizeable portion of their ability to defend themselves from unwarranted, or even warranted claims.

        Equitable access to housing
        o Take meaningful actions to achieve the goals and objectives of the Enterprises’ Equitable Housing Finance Plans.
        o Continue efforts to minimize single-family appraisal bias and improve valuation equity, including by supporting FHFA’s implementation of the Property and Valuation Equity (PAVE) action plan.

        Help! Have they even read the Tobias report from AEI, ‘a response to the pave task force’? Will someone please print up that entire report, in color, and physically mail this to every FHFA director with an accompanying request for them to remove the references to the appraiser or at least uncouple that from the ‘at risk deferred salary’ consideration?

        This might be helpful. Think of the appraisal as an argument of a product or cause. Always prove your value opinion and methodology you utilized to get there. Boilerplate, outsourcing, typing services, comps sharing, auto data extraction for graphs which illustrate hardly anything about the subject specifically, may all cumulate towards a final work product which then can be identified by the CU system (as indicated in Mr Millers graphic above), as having ‘a significant appraisal defect.’

        It’s important to get into the weeds on anomalous data issues, such as the rooftop deck mentioned above. And luck of the draw because how would Mr Landfare have known if perhaps the appraiser before him failed to document the feature, or someone in the past had lackluster appraisal data entry which his appraisal was then compared to at a later point in time. That’s the point of the CU system, long term data comparisons across the entire body of appraisers whom provide service. We are all operating in the blind and I maintain the position that it’s important to go through the same tedious time consuming activities of describing the property, the research, showing mls data, more than necessary additional photo and maps documentation, and just using laymens hand written unique explanations so that regardless of intended users, the appraisal can be defensible and understood by anyone.

        Because one day, somehow and we’ll never know exactly the reason, a borrower will default, or some other action will cause loan re examination, a buyback or put back may occur, and only then possibly years later, will someone really examine the appraisal with a critical eye. And new enter a new dynamic that the GSE’s are looking at identifying these flaws through automated systems. Appraisers whom just buy into this maximum volume on the origination side are asking for trouble down the road. It was all fun and games until the rate jumped and the markets got rocky.

        That’s where all this comes from, ‘the tips’, the flawed notion we’re all biased and therefore pdc’s are necessary, that automation leads to better outcomes. These bureaucrats in their ivory towers are so far removed from reality, they really believe the rhetoric. Things to be aware of. So rather than wait for some opportunity to defend yourself, as one of the better managers I’ve ever dealt with often advised me; ‘If there is anything to be said about the property or situation, make sure that’s in the report ahead of time.’ Just assume you will not be given opportunities to defend your work at a later date and treat every appraisal as a stand alone legal document in unknown hands.

  6. Avatar koma says:

    Time for Appraisers to stick together and maybe strike? One of the conditions no AI in real estate.

  7. Avatar Michael B Roper says:

    No one will care until deals start to fall apart and account officers are hit in the pocketbook.

  8. Baggins Baggins says:

    PDC’s are a joke and I am not the only appraiser sounding the warning alarms to every single realty agent whom we are in contact with. Qualify your appraisal service contact and ask before hand if they are an actual licensed appraiser or not.

    Agents are in disbelief. They know very well, having been in contact with GSE appraisers for decades, that the problem is appraisal management companies and excessive regulation, not ‘appraisal bias’. Most agents laugh at the position when described the current narrative FNMA and TAF is pushing as an excuse to replace appraisers for our traditional full service performance requirements. In the real world these supposedly justified positions to replace appraisers are only relevant on paper.

    That’s the intended response though, is it not? The chilling effect? Intimidating appraisers has always been the name of the game. So much for ‘Appraiser Independence’.

    • Avatar hammering hank says:

      The problem is not excessive regulation. Problem is the implementation of stated guidelines by the appraiser. Which are MOSTLY the standard use of “ethical” common sense.

      You always blame the govt… not the uneducated appraiser. Pay attention.

  9. Retired Appraiser Retired Appraiser says:

    Be thankful they are driving you guys out of business. The faster you get out the quicker you can earn a real paycheck and provide for your families.

    • Baggins Baggins says:

      I hope you and your family are among the first to go through updated GSE lending portals, once the appraisal position is fully eliminated. You’re going to need that extra income to cover the pending swindle.

  10. Baggins Baggins says:

    The hits keep coming. Another consortium of lenders and governance people, referring to the Brookings report. Someone needs to physically paper mail every one of these people the AEI Housing Center Tobias report as well, as linked above. Someone please take the time to spread that document around to these people before it’s too late. They all just refer to the Brookings report and have no clue it’s been so thoroughly discredited.


    Use control + F, to bring up the word search tool and read every instance for ‘appraisal’.

    ‘Black neighborhoods are under valued by as much as…’

    The appraisers do not set the pricing structures, and the value opinions follow the pricing structures. It’s not the appraisers fault that predominately black neighborhoods sell for less than white. Will someone tell me what exactly is wrong with lower prices? The blatant anti white racism of these people, as if they do not understand basic economic influences. The socialist sweep is here. Someone in history may have referred to these wealth redistribution programs as taxation without representation.

    • Baggins Baggins says:

      ‘Low ball appraisals’.

      These people are not experts. This is not credible, well researched, or well written.

  11. Avatar Dennis L says:

    I read the article about State Tips with extreme interest as I recently became aware that a complaint had been filled against me with the State. I saw where somebody above commented that they had a complaint also and that FNMA was not accepting the comps they had used and wanted other comps that the appraiser considered to be not comps. I also see that somebody replied to his post that there had to be more to the story as that didn’t make sense. I am not calling out that responder. I am just saying I would have said the same thing if it wasn’t happening to me. I appraised a house built in th 1970’s when new homes were basically boxes with low pitched roofs. My Subject was much larger with a open air courtyard in the middle, steeped pitched roof, with projections and recessions in the exterior walls with a minaret in the front. Not at all like 99% of the houses being built back then but very much like todays homes. I had to look very hard to find homes that had a fraction of those items but more than the normal box. The house was located in an area where there were houses of very different values along side of each other and the appraised value was somewhat less than the top end. I had numerous email discussions with the lender who was acting as the go between with Fannie Mae. I never saw the communications between the lender and Fannie Mae.The lender only paraphrased what they wanted to pass back to me. I never talked to, emailed or texted with Fannie Mae. When I got the first notice from the lender, I thought piece of cake. Anybody could plainly see the Subject is not a tract home box. Guess they are blind at Fannie Mae because a couple of months later I got the complaint from the State. I got ahold of my E&O provider (OREP) and they provided me a lawyer who guided me through the reply process. He told me the case is likely to be dismissed but the State has not responded yet. Of course, the AMC and lender were my biggest supplier of my work. Notice I said were as I am now on their do not use list which was a big blow and the current market was another big blow so my appraisal business is all but dead. And I wait every day for the States response hoping that another blow doesnt hit me. My appraisal was correct but that gives me little satisfaction.

  12. Sue Louisignau on Facebook Sue Louisignau on Facebook says:

    Who determined Appraising is no longer a profession but occupation


Leave a Reply

We welcome critical posts & opposing points of view. We value robust & civil discourse. You may openly disagree, but state your case in an atmosphere of mutual respect, in which everyone has a right to a particular view about the topic of conversation. Please keep remarks about the topic at hand, & PLEASE avoid personal attacks. If the poster gets you upset, it is the Internet, you can walk away from it.

Personal attacks harm the collegial atmosphere we encourage on AppraisersBlogs.

Your email address will not be published. Required fields are marked *

xml sitemap

FNMA Continued Effort to Get Rid of Appraisers

by Jonathan Miller time to read: 2 min