Speed Regardless of Accuracy Under the Banner of Modernization
Appraisers, something – comparing and contrasting – dawned on me last week, after reading another news release titled “Dean Kelker: Appraisal Modernization is Starting to Gain Momentum“, which is basically pushing an “Enterprise” singular ‘agenda’ of valuation speed regardless of accuracy. Under the banner of “modernization.”
VA does not demand appraisers complete assigned appraisal assignments extraordinarily quickly. They give appraisers 7 – 10 days (depending on location) to submit the report after assignment. VA expects good quality and accurate information.
FHA/USDA/ONAP also expects appraisal accuracy using an inspection protocol that many appraisers object to, and some choose not to do these assignments, but which is designed to have the home examined with more detail. These folks expect a report to be submitted within a reasonable time frame of several days, not 48 hours, unless of course the assignment comes via an AMC whose only objective is to ram as many appraisals through their business as rapidly as possible.
Freddie Mac has basically been reticent to demand speed of appraisal report submittals. They’ve not been saying much publicly. I know from communicating with their Senior Director of Valuation (an actual appraiser) that this Enterprise expects a high level of accuracy in the appraisals they process. In other words, I don’t see proclamations from Freddie with the same focus on turn times that their larger sibling espouses. That’s to Freddie’s credit.
That leaves us with Fannie Mae, the ‘big dog’ in the mortgage lending arena. They do process the majority of mortgage loans across the nation, roughly 60%. Thus, they have an elevated opinion of themselves, which seems to me that they believe they are invincible, which some call “too big to fail.” Just about all the public discussion I’ve seen about “appraisal modernization” has been issued by Fannie Mae. And seldom, if ever, do they place weight on reporting accuracy. Instead, it’s always focused on how they can generate a loan acceptance in the shortest amount of time.
Fannie Mae is the principle Enterprise in all of mortgage lending which is also focused on eliminating appraisers. We see that in various communications they distribute to stakeholders and the public. Fannie Mae is being swayed by the lending organizations who also basically hate that appraisers are the last cog in the lending wheel, and can, if the inspected property issues are adverse to decent, or have incomplete, conditions, derail the loan. Lenders are in the sales business. They just want to churn out as many loans as possible, in the shortest amount of time, with no interference. They don’t like it when that does not happen largely because the appraiser does their job properly. So lenders have been constantly hounding Fannie Mae about designing processes that speed up the lending approval process while at the same time negating appraisers in the process. This Enterprise has been a willing partner in this endeavor. They’ve done so recently with changes to the Fannie Mae Selling Guide which ELIMINATES appraisers from doing final inspections for items reported as ‘subject to’ in the original appraisal.
Fannie Mae is like a charlatan (a fake, quack) who presents different perspectives separately to those of us who really want to do good work. On the one hand, Fannie Mae says they really want more appraisers to be employable in the U.S., while their other side is demonstrating by actions and communications that appraisers are a pain for them.
It’s really disappointing that our honorable profession has been subjugated in the way it has.
And it’s really disconcerting to me that after nearly 22 years I’m finally to the stage recommending that appraisers avoid doing assignments for Fannie Mae if at all possible. I’m not the only one who’s come to this conclusion and publicly stated this position.
Here is the link to the news release I mentioned at the start of this article. Keep in mind that it is written by a person ‘on the inside’ of an organization that just wants to help his company process as many loans as is feasible in a given day, with the least interference from appraisers. Speed is paramount.
You need to read this carefully so that you gain understanding of how you are being mistreated by Fannie Mae and others. You will see that removing appraisers is a primary objective to “appraisal modernization.”
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