Hardly a bombshell to anyone that read (1) FHFA working paper; (2) Mnuchins Treasury Dept. Report to White House, (3) Jeb Hensarling’s Bill to eliminate Fannie and Freddie and replace it with a modified Ginnie & of course my old favorites (4) MISMO.

The lender. A requirement of PIW is that lender ‘verify’ the value. Can be done by the branch manager, etc..They are gambling on too big to fail all over again.

Bet the lender will go after the homeowner for the difference.

The GSE’s do not purchase loans that are higher priced mortgages as that term is defined under the law and loans sold to the GSE’s are exempted from the definition of federally regulated transactions, so the GSE’s need no waiver of any law in order to purchase loans without appraisals (even loans > $250,000)

Amen Mike.

Chris you are right. Again, unrealistically low fees that are neither reasonable, nor customary produced appraisers that don’t know how to appraise…or that know how but still choose to take unacceptable shortcuts.

Many appraisals range from the merely shoddy and haphazard to the outright dishonest.

Instead of learning how to develop and grow within our profession, most appraisers now study only what’s required for CE…even to the extent of taking the same courses over and over again.

Regulators do not promote or encourage effective career development…they promote fear of having failed to dot an “I” or cross a “T”. Micro management of the trainee process has become so burdensome that most of us now say “Why bother?” Extreme risk for very little economic reward? No thank you!

Those of us that could and would train or mentor, have to spend all our discretionary time fighting to recover our lost professional ‘respect’. ..or for C&R fees…or against the newest appraiser abuse of the month.

Excellent information Lee. Thank you.

Lets all remember that the CU process itself is fatally flawed. I’ve written previously that I carefully  studied the FNMA CU Patent Application and that the entire process was designed by seven people that have no appraisal license or certifications.

Then, those seven people used numeric ratios and ranges derived from FNMA data records that they admit came from appraisers that appraised to guidelines rather than to market. At best, this means that their CU system is based on their old (subsequently admitted to be wrong) “guidelines driven adjustments” rather than “peers” as their messages in CU state. Might be nice if the data were based on valid MARKET DATA instead of erroneous information!

In any event. Real word experiences of both AMCs and appraisers since CU was rolled out include a widespread practice among lenders that scores of 3.5 or higher are the same as hard stops. Many will simply not process loans at or above 3.5 scores even though FNMA claims they can be manually over ridden.

Now, they have a system where if the meaningless “risk score” is coincidentally 2.5 or lower, there will not even be a review of the appraisal (automated or otherwise). I mean, what’s the risk, right?

Its not like anyone knows how to manipulate the CU score by merely running all sales (comparable or otherwise) within the same census tract going back 24 months; or applying arbitrary GLA adjustments within FNMAs bell curve or “peer” adjustments from $35 sf to $220 sf. Both these things would lower a CU score.

So would going back to the appraiser (in violation of FNMA CU Licensing) and simply telling them the specific CU triggers that turned up in a first bite of the apple so that they could modify their work to produce a lower score…instead of a most accurate, independently developed and credibly supported market value.

Yo Chris!  Did you say something about foreclosures….

http://stopforeclosurefraud.com/

The real problem out there is that 50% of the appraisers out there were never taught right. I have seen their reports and know many reviewers who pull their hair out. They all tell me how bad these people are writing their appraisals. Nothing has changed with AMC’s.

When fee’s go in the right direction, We will start training again, until then….the bullshit continues !

Where did many appraisers go…..into review. And I say, those that can do…do, those who cant….go into review.

What an interesting article.  I’ve been trying to get more educated on these concepts.  Did the article writer confuse government ownership for receivership?  Will the gse’s still be federally chartered?  Will they still have access to the fed where they can lend themselves money for interest?  Will quantitative easing continue?  Will this solve the;  “fnma mortgage shell game”?  It’s all over my head man.  The pertinent question should be;  If the gse’s and lenders involved with them take losses, will they actually take the losses or pass them back to taxpayers?  Does this move effect the too big to fail argument?  Do I even know what I’m talking about?  Probably not, but I’m keen to learn more about this issue.

http://www.housingwire.com/articles/38635-trump-treasury-pick-fannie-mae-and-freddie-mac-will-be-privatized

“So this afternoon I listened to the Fannie Mae webinar regarding their new Day 1 Certainty program. The new program kicks off 10/10/16 and part of it to allow for some refinance transactions to have appraisal waivers. While there wasn’t a ton of super detailed information provided here’s a few items I learned.

They have offered limited appraisal waivers for 15 years but those old waivers were based on the borrower’s credit, not property value. The new program is based on property value using the 20 million appraisals we have all submitted to CU with standardized data and incorporates analytics to determine value. They were clear that is the first phase which makes everyone to believe that there will be other phases.

Their reason for rolling this out is it saves the lender time and reduces loan and borrower costs by waiving the appraisal requirement. The CU value is free starting 01/01/17. If the lender gets the approval to waive the appraisal they are released of any future value liability if they use the CU value.

Right now the appraisal waiver only applies to refi’s of normal homes and condos under $1M. These homes can be a primary residence, second home, or investment homes. They are not for purchases, new construction, construction loans, or multi-family homes. They are also not for leasehold, land trusts, or other properties with resale restrictions. Keep in mind, this is phase 1 so who knows what will be included in future phases.

If an appraisal is ordered and completed and a waiver is also issued the lender has to use the appraisal. If the lender orders an appraisal and gets a waiver before the appraisal is completed they can cancel the appraisal. So, for those that pre-write reports, be careful if you are doing that for refi’s…you might get stuck doing work for free.

It looks like with the new program we might see less CU feedback unless there is a discrepancy in subject data. If there isn’t any subject data questions and the CU score is 2.5+ they can ignore the other CU findings.That was it in a nutshell. Keep in mind that Freddie Mac is rolling out a similar appraisal waiver program in the spring.”

Could we appeal with citizen grand jury activity? What’s your take on class action for existing malfeasance? Personally I think it’s time to wind down FNMA and Freddie. The GSE’s have long since departed from their mantras which justified their federal charters in the first place. Let’s simply get the government out of lending and let the free market sort this out. It seems very obvious that most regulatory advancements merely put more burden on the taxpayer and relieve the lenders of actual financial responsibility. That is after all the point of self regulation activity which these closed door meetings are all about. If they want to be risky, let them, but remove their taxpayer backing and take FDIC insurability out of the picture?

Diana, Mike did find her license and he stated “She is not an appraiser as of this posting. Her name does appear numerous times as having held now INACTIVE licenses.”