This is why……
Post crash, lenders can’t manipulate markets on the origination side like they did thanks to QM. Today, there’s a new attack angle and it’s on the value side. Volume is down, they want control and they want it now.

I want to train apprentices but how can I under these conditions? Go back to your source and explain to them that lenders need to allow our own trainees. Pay appraisers properly, and all will be good in the world of housing finance. We will serve them professionally and honorably.

I realize being professional and honorable is difficult for AMCs to fathom, but wow ~ what a concept.

I attached a sample hybrid request. Please explain to me how appraisers are to value a property as repaired when they don’t know what the repair items might be? Then, please also explain how appraisers are supposed to perform two appraisals for $185 and be in business very long?

The entire concept is wrong on so many levels. Here is one last bit of information for everyone. Consumer attorneys are aware of all these shenanigans and waiting in the wings to cash in again. When calculating risk, perhaps it’s something these “innovators” should consider.

All the best Dave!

Per VA guidelines:

VALUATIONS BELOW THE CONTRACT PRICE (AKA Tidewater)

If you determine that the final value estimate will be less than the contract price, then do the following BEFORE you complete and send the appraisal report:

• Check the Appraisal Request form (VA Form 26-1805) in block 30 for a Point of Contact (POC). If none indicated then contact the requestor (at the bottom of the form). Advise that individual ONLY that you are requesting any additional data that they (or the buyer/seller/agents) can provide, to ensure that you have considered all pertinent information. You should AVOID any discussion of the value estimate.

• The POC or requestor will have two workdays to respond.

• Additional information (if any) sent to you should be in a format similar to the comparable sales grid (i.e. page 2 of the URAR) including verification of the sale. When pending sales contracts are submitted (especially to support time adjustments) they must be complete with all addendums attached. A narrative should be included describing the similarities and differences between the pending sale(s) and the subject property.

• Review and analyze all data submitted, then complete your final report based upon your finding.

If you are able to increase the value estimate to meet or exceed the sale price, then comment to the extent of this process used and the (extra) time needed.

• If the final value estimate is still less than the contract price even after review of additional information, then comment on the source of the additional information, what was provided, the results of your review and analysis, and the (extra) time needed.

Im slow Pattie – followed most of what you said but unclear on parts. Is it Tidewater that requires you to email the lender rather than VA or AMC? (I dont do VA so I, fuzzy on the requirements there).

Am I quibbling over the verbiage “tell them I need assistance in the form of comps that will justify the contract price.” …instead of just saying market data I have doesn’t appear to support price? (If Im correct telling them there is an issue with value is a requirement of Tidewater, right?).

Who decides how long they get to submit new data? Is that set by VA or by appraiser? What happens if they have no comps?

Last year during the rush I was getting 250 for finals, but that’s back to the standard 150 now.  I had a drive by 2055 volunteered to me at 450.  Sure dude, wow, who have you been on the phone with and please call me more often.  Everyone these days seems to have bought into the idea that checks and balances should be optional, only necessary for lenders risk and not consumers risk.  As if a consumer with 50% equity does not deserve equal protection as lenders.  The original reason for regulation was to protect the citizens access to lending, not to protect lenders themselves.  Everyone has drank that kool aid.  Those checks and balances systems should only be implemented when lenders take risk, consumers are expected to trust the lender without such protections?  This goes against the very spirit of lending regulation in the first place.  That’s a lie, fail.  There is prudent underwriting then there is this new thing, robo underwriting.  If the auto tools allow a single reviewer to ‘review’ 40 appraisals a day, how many do you think their daily quota will be with hybrids?  This is like factory chickens on hooks, the inspectors for chicken have to ‘inspect’ 140 of those bad boys a minute.  And so will go hybrids, the people who profit from them will push them out at absurd rates, rates they themselves can’t even apply quality standards to.  If they get hit with sending too many through, they’ll just raise the allowable rates or decrease the inspection standards.  This hybrids deal is shaping up a lot like factory produced chickens, or is this just me?

They also have a 110% ltv allowance with their guarantee program to accommodate that sort of lenient behavior.  Just saying.

Mike, take the comps up front. I do anyway. I don’t “call” any one for purchase or refinance. For purchase, I stop what I’m doing, send an email to the lender, tell them I need assistance in the form of comps that will justify the contract price. Give them 48 hours to submit. No wait, lets give them only 24 hours to speed up the process. After 24 hours resubmit discussing any new comps and why I did or didn’t use them. For refinances, if they have comps up front take them consider or discount them, complete the report and submit. If they want a reconsideration of value then complete a reconsideration of value in 24 hours to “speed up” the process. That’s it and have a blessed day !! Move to the next assignment. Repeat. No calls. Collect non loophole, actual customary ( that did not use bogus AMC fees in the survey ) and reasonable fee in 30 days.

Pattie, not bad ideas but let me ask one question. Why cant the listing agent or seller or owner provide the data they’d submit under Tidewater RIGHT UP FRONT – not later than the appointment? Why must there be a post appraisal hand holding period at all?

Also, whats the procedure re fee when you call someone and say – Value isn’t happening from data I’ve reviewed. Can you supply alternatives? Do you still get paid FULL fee even if they cancel at that point? (like often happens) if they decide to relist and go conventional instead – or do one of those phony FNMA 97% LTVs and just add the added costs to the price – knowing they can just get a trained sealer low ball hungry appraiser to hit the number?.

No not true, false presumptions. Pay me! Show me the money! I’ll be there in a heartbeat and will train anyone. The status quo which is a problem, is the notion that appraisers are not a highly effective free market force to themselves. The prohibitions laid down by excess regulatory structure is a key consideration, leading once again full circle that the size of the government and the continued meddling in this industries regulatory structure plays a strong role in constricting the ability of free market participants to engage. I’m your new relocation appraiser, get me a license waiver, pay me the premium fees, I’ll be your man and will train your selected persons. Can not happen quick enough? By what measurement? Let them fail, the invisible hand will move and another whom can source talent will fulfill the market demand. If they’re on such limited revenue they can’t afford the talent, they’re on the way out anyways. The sooner the better.

Keyword: Invisible hand. Neither do personal judgements come into account regarding valuation duties. All we need to do is eliminate the government insurance and financial taxpayer backing for lenders and they will regulate themselves effectively or they will most appropriately fail and go out of business. The effective nature of innovative products will speak for themselves, clearly it’s a gamble and possible risk, but also with possible reward. The invisible hand of normal market forces will drive lenders to seek either a traditional or new innovative approach to risk management. I’m from the school that more data is better, that efficient process should never be prioritized over sound management, and highest quality results should come first ahead of increased profit considerations. It’s a free market and anyone can engage how they so choose. I could leverage my equity and become a small scale cash lender tomorrow.  I would set my own terms based on my own risk analysis. If lenders want less surety in favor of more efficient process that’s their business. If they can’t source talent that is a strong indication of the power of appraisal consultation and existing risk analysis from a large mass of industry persons whom refuse service. In this instance, our reluctance to perform these duties represents the hand. In our absence and the absence of government backing, the hand would be the ability of the lender to remain liquid despite engaging with notably reduced risk management investigation into the viability of the real property asset. Time will tell. I would not lend my money based on scaled down data and possibly deficient investigation. If a lender wants to do that, let them. Just so long as the taxpayer is not backing their risk taking decisions. If we’d just remove the taxpayer backing and let the free market work, many might be surprised these bright new ideas won’t really last that long anyways. “No business is good business until it’s old business.”