VaCAP Sits Down with Fannie Mae
- Federal Valuation Agency Impact on Appraisers & the Public - July 22, 2022
- Is Georgia Going Rogue? - June 13, 2022
- Bias in Automated Valuation Models - February 28, 2022
As many of you know Fannie Mae (along with Freddie Mac) has launched an initiative which they label “modernizing appraisals”. This initiative consists of two distinct facets: 1) “modernizing”, or redesigning the forms which are utilized and 2) “modernizing” the processes involved in producing a valuation including the inspection process, data collection, etc., up to the delivery of the completed report. In the pursuit of this goal Fannie Mae has pledged to leverage stakeholder input, and of course appraiser input is both valuable and critical in this regard. In gathering stakeholder input Fannie Mae reached out to VaCAP, and invited three of its leaders to Washington DC for a sit-down discussion of relevant topics. VaCAP wishes to thank the agency for this opportunity, and applauds them for seeking dialogue with appraisers, most particularly in terms of a state appraiser coalition.
The meeting took place on June 6th and included three Credit Risk Analysts from Fannie Mae’s Collateral Policy and Strategy Team. These three representatives are at the tip of the spear for the modernization effort. In advance of the meeting each side prepared items for discussion and submitted them to the other party. Obviously no proprietary information was discussed. Further VaCAP learned upon arrival that this team is not directly involved with the forms redesign facet of the initiative, thus Fannie Mae’s modernization efforts relating to the appraisal process facet of the initiative were the sole focus of the discussion. Fannie Mae had a number of issues/topics for discussion and VaCAP provided commentary and opinions on these issues. VaCAP asserted to the representatives that a large number of the goals which they seek to achieve/problems that they seek to resolve originate with, or are stifled by the involvement of AMC’s in the process. While this is extremely alarming for the appraisal community Fannie Mae themselves cannot initiate any maneuvers which would eliminate that paradigm. Thus VaCAP feels their modernization initiative is, by definition, limited.
VaCAP presented questions and issues of their own for discussion. As might be expected quite a bit of the dialogue centered on Property Inspection Waivers, Alternative & Hybrid Appraisal Models, and the original comparable photo issue and the nature of that function as adverse to the desired streamlining of the process & reducing turnaround times. Of note is that VaCAP was encouraged to learn that Property Inspection Waiver execution had actually declined (although fractionally), and that expansion of the program would require more than simply a decision by Fannie Mae to do so, but rather would require maneuverings involving Fannie Mae’s regulator (the FHFA) and expanding the credit box consumers. VaCAP also presented several general questions offering commentary & opinions on them, with a central point being that we believe a practice of maximum transparency by the agency best serves all stakeholders and fosters the public trust
The meeting lasted roughly two hours. There was no shortage of commentary from either side on the issues. The discussion was lively and, as would be expected, questions (and responses) were generally direct. In several instances both sides agreed on helpful or even best approaches to achieving the goals sought in the modernization effort. In other instances VaCAP and the agency simply had to agree to disagree. The meeting adjourned at roughly 5 p.m. Despite the fact that ultimately no individual or organization could have provided their team representatives with stunning revelations or issue positions which they had not likely heard from other stakeholders, and the inevitable disagreements on some issues, VaCAP was very pleased to have the opportunity to open this dialogue with Fannie Mae, a fact that we deem to be critically important going forward as we navigate the undeniably changing landscape in the appraisal space. In closing we expressed with their team members our hope that this would be the initial step in a continuing dialogue in the future.
And Speaking of Fannie Mae….
Fannie Mae Appraiser Page: This is your go to source for answers.
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Thank you vacap! Any discussions about their CU scoring system needing transparency and why they have not made it available to appraisers?
I hope that Fannie understands that independent fee appraisers are also stakeholders and not just the Banks and Appraisal management companies.
AMC’a are NOT stakeholders. They are suppose to be a firewall, nothing more.
The appraisal process is not broken. It is the lender process that is broken. We do not have issues with private clients. Nor do we have issues when lenders order direct. The problem is the amc. They do not add any value to any entity; In fact, they create a liability for lenders, investors and consumers
Amcs are supposed to be a firewall. Why are they hiring staff appraisers? Why are they talking to Congress? Why are they talking to Fannie and Freddie? Why are they talking to Moody’s? Why are they developing alternative products? Who gave them any authority? Do amcs think they are industry disruptors?
Fannie Mae is in consvertorship because of poor decisions on their part. Are they really the best source to initiate change of the appraisal process? Shouldn’t their priority be to get their own house in order? What makes them the authority on the appraisal process anyway? Certainly not their colossal disaster they call Collateral Underwriter. Why isn’t Fannie focusing on fixing Collateral Underwriter?
Milton, did you catch the links posted on the blogs regarding CU patents which described many software functions? Those were indeed interesting. They changed the landing pages but I put up some new links today. Thank you.
Well, the link feature did not work, edited here. Trying again. The direct link to a very interesting fnma patent for the cu system.
VaCAP We all sincerely applaud your efforts, but I’m still trying to see what was accomplished.
Of the two topics you identified, they were only prepared to address one and the summary of that appears to be.
1. Fannie Mae has pledged to leverage stakeholder input (whatever the hell THAT means);
2. “modernizing” the processes involved in producing a valuation including the inspection process, data collection, etc., up to the delivery of the completed report.
May we assume the “etc.” involves continued theft of appraisers professional work product?
Did vaCAP remind them THAT is not their job? Congress already directed TAF to set the standards. That has been done.
FNMA is nothing more than a client. They do NOT get to direct the fundamental principles and standards of our profession. They have over stepped their bounds and it could be credibly argued THEY are in violation of appraiser independence requirements.
The ONLY thing FNMA has a right to do is raise, or lower the standards of performance that they will accept. It’s clear reading between the lines that they have decided further LOWERING of their standards in a carefully camouflaged manner is the course they have chosen. Everything we read and hear from the flawed FHFA working paper, and all the background ‘noise’ is that they have already decided the unreliable, low quality of AVMs / hybrids are completely acceptable in lieu of appraisals. No wonder they can’t get out of conservatorship.
For it’s part, TAF was kind enough to redefine what an appraisal is so that the hybrid fraud-formats desired by FNMA can also be called ‘appraisals’ instead of what they really are.
Another fine example of their ‘preserving the public trust’. There are a lot of self serving culprits degrading our profession these days. From MISMO, to TAF, to FNMA to REVAA. All under the guise of euphemistic feel good slogans like value added; modernizing, leveraging, big data, and expediting ‘for the consumers.’
Respectfully VaCAP, I think you just got patted on the fanny by FANNIE as token outreach.
Modernization of the appraisal process can not happen as long as amcs are in the picture. They are the source of most of the issues. They are also the ones promoting products with no credibility like the hybrid garbage. I agree with Milton, leave the appraisal process alone and focus on the real issues. Anything other than that is just irresponsible.
Fannie Mae needs to get their heads out of their rear ends and fix their own issues. The tax payers did not bail them out because they made good sound decisions! And from the looks of things, still are not making good sound decisions. Probably why they are still in conservortorship.
Does Fannie Mae write USPAP now?!? Just checking why they think changing checkboxes on forms will change the appraisal process… last time I checked, we are held accountable to USPAP
FNMA learned long ago (and both accepted, and promoted the concept) that most residential appraisals are performed ‘to the form’ as a guideline, with relatively few appraisers either knowing, or practicing appraising to standards.
For those that learned under MAI’s, SREA/SRPAs, ASAs and similar designated appraisers, we learned USPAP before the feds did. (Some also learned that it wasn’t a black and white enforcement issue as states see it now; but a perceptual issue).
Others learned from the Henry S. Harrison books which several form changes ago were actually great learning tools and report writing guides; paying attention to both USPAP and FNMA (as well as Freddie & HUD Guidelines).
Sometime after the extremely deficient URAR form was designed by FNMA as a one size fits all (sfr; condo, PUD, 2-4 units, mobile home) was introduced, ‘old’ standards started disappearing, as many of us struggled to make a required form, that simply did not ‘fit’ work for the other purposes. Then when FNMA realized their horrible error and re-invented new condo (1073) and 2-4 units forms (1025), they still tried to ‘make them consistent’ with the one size fits all URAR and they ‘lost’ a lost of check boxes and sections that forced a bit more neighborhood, market and site analyses.
Additionally the Institute (AIREA back then) and the Society were great advocates of pre printed boilerplate. Either cut and paste from old reports (literally) or “one from pile A, B or C, etc.” for different specific markets and time trends (quarterly or semi annual updates).
Fast forward to FIRREA and TAF. As originally written, a clear and easy to understand and follow set of standards and practices were adopted. For reasons TAF is still not willing to fully and openly (widely) disclose, ‘business decisions’ were made to ‘tinker’ with USPAP every few of years (or so)- predating the current like clockwork mandatory changes. The original phony argument promulgated was that because real estate changes, so too must appraisal; and logically so too must standards. (Think on that one for awhile). Fundamental standards must change? I think catering to the ‘changes’ desired and dictated by the TAF special interest lending related sponsors is a more accurate explanation.
So Preservation of the Public Trust started to become more of a furball style dogfight.
Some advocating strict USPAP adherence; others saying it only counted if you could prove something was a violation, lenders saying nothing is a violation if they ask for it, TAF confused about how to best fix the confusion they were creating published statements that weren’t opinions and advisory opinions that weren’t statements to clarify their needless wordsmithing and selective parsing of the English language. (Y’all remember the distinctions that USED to exist between extraction and abstraction… before they became the same thing?), state regulators that included non appraisers as well as appraisers not knowing the difference between a USPAP violation and permissible deviation from a FNMA ‘guideline’.
Add in TAFs deviation from their Congressional mandate and rewriting USPAP to become another one size fits all system to cover accounting and business valuations, and a prevalence in use of narratives by those trying to hide USPAP NON-compliance more than they were trying to achieve any degree of self containment.
Appraising to forms started to make more sense than it had before. As bad as the forms were and are, they are still superior to 90% of the purely narrative written reports in play today.
In 1991 we all knew what the appraisers obligations were under USPAP, whether the report was narrative or form. If form, then it had to be added to until the report was compliant. If narrative, at a minimum it should have included the same analyses of a form…hopefully in greater detail.
Did I mention lenders and other special interests STILL wanted something that was ‘less than‘ an appraisal for a much lower fee; but it still had to be able to be called an appraisal? Hence bring the almost unknown ‘evaluation exceptions out. Already permitted by the feds, they merely required tweeking of all those states laws that had foolishly incorporated USPAP as minimum standards. Standards that made no provision for ‘less than” evals.
As that process started (remember California AB 624; and later SB70?); states like Tennessee and Illinois possibly Texas were adopting revisions to permit evaluations, NOW covered by a much more flexible scope of work in lieu of report use restrictions. This particular bandwagon is so popular that states are falling all over themselves to adopt permissive hybrid language now.
Hence the third party inspection hybrid. Its promoters and huckers insist it IS “an appraisal” and object to it being called a hybrid. My preferred term is much more descriptive, and accurate:
So, long way around, does FNMA set USPAP? Indirectly, yes. Look at who the Directors are of MISMO; and MISMO’s historic relationship with TAF and the incestuous relationship of CoreLogic and FNMA with FHFA and each of the other MISMO and TAF sponsors.
Though in fairness, calling USPAP Uniform today is probably a misnomer. Suggesting ‘standards’ are some form of higher level of performance is simply no longer true. Practice(s) is really the only part that still means what it says. Unfortunately it means it in all of its possible definitions.
So, it probably doesn’t really matter anymore who sets ‘standards’ in appraisals for GSE lending purposes. They change more often than the tides along a shore do.