Hey, thanks Mike.  If the topic is interesting, I normally read through the entire article and all posts, before trolling through the commentary with one or several posts of my own.  For legistic and legal issues, I usually take the time to read through your posts completely.  My highest hope is that hopefully someone somewhere at least skims through mine.  Got to have fun with it.

I think this blog and ensuing posting calamaties would make a great printed monthly publication.  Surely the other guys stop by here now and then in hopes of scooping something or another, scraping a story out of thin air.  I’d like to think I give real journalists something to strive for.  Publications which stand on merit are not afraid to allow open posting, and don’t need the heavy handed moderation approach.  I’m loving the format here because disguss based blogs are really horrendously managed and heavily censored.  The blogging will continue until the appraisal management methods improve.

Baggs, you DO realize how funny your last post is, don’t you? Suggesting I EVER wrote anything briefly or concisely! I think you probably had half the regular blog readers peeing themselves with laughter over that one. (The other half are still sitting in stunned silence)

Thanks Mike.  Your comment illustrates why you’re a better appraiser than me though.  You capture the message in simple terms.  Adequately expressing what took me several paragraphs.  Ha!  I really honestly do take the John Henry approach.  We’ve all got to stick in our own competency range, and utilize our own best skills to present credible valuation results.  Who programmed that algorithm and are they trustworthy?  Probably another in a long line of non appraiser tech guys whom may not have yet repaid their student loans and attained a mortgage on their own first home.  It’s just a job to them, and likely not the job they initially went to tech school for.  Amc’s have enough tech guys to create video games, but very few appraisers on hand.  It’s like a ghost ship, crewed by the damned.

Awesome Mr Ford.  And an extra tidbit for you;

Scenario 5:  Appraiser completes order, and is reliant on automated development and statistical analysis program assistance.  They fail to properly recognize and apply substantial adjustments for quality contributions like utility updating, quality materials, decks, porches, outbuildings, etc.  This happens because they’re unlikely to be able to easily reconcile automated trending data results with real world cash out of pocket contribution costs to home.  Does not compute or attain reasonable distribution of total applied adjustment balance, in a strictly statistical based analysis setting.  The unfortunate consequence of presuming real property value is strictly tied to numerical based statistical analysis.  The whole enchilada for both avm, and automated developmental assistance for full appraisal orders rests on numerical measurements, rather than artful and meaningful generalized and individual expressions of grid adjustments for real property characteristics that can not be measured in numerical data or statistics.

Scenario 6:  Manually oriented appraisers like myself step in with what is quite often a higher value opinion which is a result of more careful, much more time consuming manual analysis.  Backed by thorough knowledge of real property, construction methods, participant behavioral patterns in the larger market, and real world current costs of labor based improvements.  Guess what, I do not have a cell phone, I don’t use spreadsheets, I am paper use intensive, I don’t use mobile devices, my reports never short cut with ‘see addenda’ or boilerplate, I demand direct assignment, maintain minimum fee expectations, maintain longer turn time expectations 1 wk or more, and I don’t use any outsourced assistance, digital or human.

On a related note, you’d have to be plainly out of your mind to trust an unlicensed person to perform the appraisal inspection.  I currently have a letter to CJ at Mercury, demanding my Mercury profile carry an option for me to note I do not use unlicensed inspectors.  I think it’s important that lenders be able to know who does and who does not use unlicensed inspectors from this point forward.  This critical rule change just nullified the turn time ratings system, in my personal opinion.

And that’s the difference between a human and a machine.  The data speaks for itself.  I’m like John Henry over here, and I did beat that steam hammer, repeatedly.

Sample One-likely the loan did not get made at the anticipated loan to value ratio since the majority of indications were well below the appraisal. A single AVM being high would not over ride the risk of lending above the safe or expected investor LTV limit.

Sample Two probably happened at $222,000 OR Underwriter over rode the AVM and called it $225K…maybe even $227K Its well within any reasonable range of variance.

Sample Three– is another “probably could have been made as planned loan EXCEPT that the AVMs from the Banks were ALL low. Very low. Quote loan fees for one LTV but deliver a much lower LTV product to investors to increase net proceeds to the bank? Happens all the time. Consumer fraud perpetuated and facilitated by the AVMS in this example.

Sample Four -Probably made loan at the 105% to 115% of appraised value. AVM failed to consider property condition. Assumed it to be average. Buyer may or may not have funds to raise property from fair to average condition. Chance of default statistically higher. Taxpayers once again take it in the shorts when this loan goes bad. Planned 80% to 90% LTV far less than actual. Mortgage Insurance Companies take loss on this one initially; then taxpayers if trend is wide spread.

In summary: 25% either killed the deal or left consumers upset by far below market value based LTVs.

25% appear to be reasonably safe as a coincidence (provided they are close to area or national medians), 25% facilitate consumer fraud by banks allowing them to charge for risky 90%-95% LTVs while only lending 9% or 10%+- less (non PMI ranges BUT with PMI anyway! ), and 25% leave FDIC or taxpayers holding the bag again when the loans go bad.

So, at best 1 in 4 has a chance of being an acceptable risk. Certainly FNMA will leap at that!…Their investors? Not so much.

THAT is why they have to be lied to with AVM/Hybrids that look like and pretend to be real appraisals. As always, follow the money folks.

Comp  # 1 All AVMs had incorrect bath counts, 6 did not show the basement.

Comp # 3   Four AVMs has incorrect sq ft of living area, 6 did not show basement, all bath counts were incorrect.

Comp # 4  All AVMs show incorrect Sq Ft of living area and one shows a basement, incorrect.

If any of these errors were in an appraisers report they would need to be corrected however apparently no one need to correct errors in the AVM report, they only care about the value.

If they want creditable results they need to have creditable information.

Yeah Bubba.  Sounds like we’ll need a regulatory engine regarding the sound use of avm’s.  Sort of nullfies the need for them, considering one already exists for appraisers whom have a long track record of doing a better job.  You know, comp shopping was a problem, but calling your appraiser to comp search was a valid approach method for ethical persons.  Separation from loan production causes long delays and assignment inconsistency woes.  They could have simply fired every broker whom ever ‘comp shopped’ and that would have been the end of it.

too funny.

so again, i am curious.

lets say you (or anyone) are refinancing their house, 150k is owed on the house and the borrower wants some cash out. where in that range of $230-260k is the value of the house? that bank has to cut the borrower a check for something. if the bank chooses 260k, the borrower gets a much bigger check than if the bank chooses 230k. will the bank choose the mean of 245k?

how is that going to work? will the high or low value be based on a borrowers credit rating, or will the high or low value be based purely on the greediness of the banks. in the end they will need a hard number to come from somewhere to write the borrower a check.

does anyone know?

if the banks will always be using the higher number just to make more money, (you know they will), then it wont take long for all houses to be upside down again, and say hello to 2008 again.

Welcome to the Matrix mls program, combined gla first, sorted agla, like a distant second.  For the variable values, well there has been this big deal about consumers needing ‘options’.  You wanted a range, you got one, and two, and three, and four, how many of these out the box AVM programs are out there again?  Perhaps when it’s labeled as Realquest with the red corelogic box, it’s more credible?  I don’t know, which industry partner corporate brand of avm do you trust the most?  LOL.

everyone wanted a value range, now there is one. in this example, there are eight sources, and thus a value range.

here is my question though. where in the range does the loan fall? banks dont give loans based on ranges, they give out loans based on a single number. for example, they cut the seller a check for $100,000, or pay off bills in a refi for $100,000. banks dont cut checks for a range.

if the banks are given a range, how will they determine what the single number is? they have to cut a check for something.

i think it is pretty accurate to say that they would push for the higher end of the range to boost their own profits, and go right back to their old habits of screwing the borrower. wouldnt you say?

oops. all of a sudden, all house values are over-inflated again.

welcome back to 2008.

Retired, entering the wide wide world if internet meme’s. Gotta love it! Strangely enough zillow is under market in CO sometimes. I think the analysis points are tied to population density, but I may be wrong. I’d like to know if zillow is accurate in highrises or if the variance is more or less depending on housing type. That would be a fascinating analysis to know how much data inconsistency these companies cover up, and how they manage base variability in analysis peramiter setting by categorical housing type. If AVM’s replace appraisers in the regulatory structure, a brand new regulatory structure will have to be developed to regulate the AVM’s. Think they’ll require the software programmers to be state licensed?

If only as a borrower I could borrow in such a variable range…  The rubber has to hit the road somewhere. Should all refi’s really be heloc’s? LOL?

Such analysis was not opted for in development costs when they ordered the software from the tech jockey. The AVM is not like for the public good, the people presenting them need to make money too. How to extrapolate interpolated data into hard cash….. Better pump up the coefficients and have stronger page placement in google! How do we clickbait this competition properly…. We need higher numbers, stat!

They get hit with a putback and then write off the loss. The larger they are, the more subsidy they get. It’s not a low risk issue, it’s more reflective of an increased risk model which is supported by taxpayer write off allowances via volume scale. Never objectify financial risk by volume. If it was your dollar, would that be acceptable process to you?

Cntrl Shft R successfully cleared out my previous ready to post comment. LOL. But no, no difference with a page refresh. Last week the ‘more’ column was absent and the content areas occupied right 2/3rds and page was wide and read really clean and better. Now article and read is confined to center 1/3rd only. FYI this is an interesting tech site; learn what your browser is requesting without telling you… Click in, do a few tasks, listen to commands, page refresh, move mouse, click button, and then achievements list will appear to click into. Then you can see all the things your browser asked to do you may not have been aware of. Remarkably interesting for being so simple.

https://clickclickclick.click