Meanwhile, cratering home prices are eroding demand for the junk-rated credit transfers. As mortgage giants Fannie and Freddie bend the knee to their political overlords, they securitize ever riskier loans. It’s a sign of the times. But while no one was looking, the twins – who wield the full faith and credit of the U.S. government – began quietly offloading this surplus risk in the form of so-called “credit-risk transfers.” The U.S. taxpayer should be worried. As the public learned in 2008 with AIG’s credit-default swaps, hidden risk injected into the financial system doesn’t stay hidden for long. The twins,...
Loan officers at Wells Fargo altered values in the bank’s database, so loans would qualify for so-called appraisal waivers… It feels like Ground Hog Day all over again. Who can forget the Wells Fargo banker who, stressed from opening fraudulent accounts in the name of hapless depositors, had begun guzzling hand sanitizer? That was in 2016. New revelations from the nation’s second-largest mortgage lender will make the U.S. taxpayer want to take a good long pull on the nearest bottle of hand wash. Dozens of loan officers at Wells Fargo altered values in the bank’s database, so loans would qualify...
What makes equity so invidious as a governing tenet is that it involves not just helping people of one racial or cultural group but it has the effect of knocking struggling members of disfavored groups out of the game. One type of parlor game relies on players’ ability to maintain their memory, logic and articulation – all while getting blotto. These alcohol-fueled “think and drink” games are highly challenging. Even Britain’s royal family engages in such diversions if Netflix’s “The Crown” is to be believed. The games have names like “Bizz Buzz,” “Ibble Dibble,” “Never Have I Ever” and “Roman...
More great research from AEI. This is an analysis of Freddie Mac’s misleading and basically defamatory paper on Appraisal Gap. When government related entities release misleading information like this they are attacking and defaming real estate appraisers. The hate real estate appraisers have received because of this paper and Andre Perry’s paper is relentless. Another problem with releasing misleading data and conclusions is that it actually hurts the people they are trying to help. Facts show that the real cause of the wealth gap between blacks, whites and Latinos is the income gap. It has nothing to do with appraisals...
The CFPB is reviewing bias in Automated Valuation Models (AVMs). The proposed rules are a joint effort by the Consumer Financial Protection Bureau, the Office of the Controller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Federal Housing Finance Agency. These agencies are concerned AVMs may reflect bias in design and function. The mathematical models rely on biased data resulting in inaccurate valuations. Basically the agencies are stating historical data going back to redlining is built into these models and do not reflect current market data. Remember markets are not static and are...
…I’ve discovered a potential anomaly in Desktop reports (and Hybrids also) which might shock some appraisers… Desktop Appraisals, Panaceas for Faster Reports. Or so they say. Bankrate.com has a revealing article published on Oct. 27, 2021, titled As Appraiser Shortage Delays Closings, Mortgage Giants Try Workaround | Bankrate FHFA (the GSE’s “manager”), after the administration change, under pressure from mortgage brokers and lenders, and after the experiment with the COVID era “flexibilities”, has decided to allow the GSE’s to accept a new type of appraisal for first mortgage (purchase) lending early in 2022: the Desktop report. The current line of thinking...
The desktop appraisals are not necessarily more reliable, which could become an adverse issue for appraisers in the future… Appraisers, we learned about this late on Monday, Oct. 18, 2021: Sandra L. Thompson, acting director of the Federal Housing Finance Agency (FHFA) appeared before the Mortgage Bankers Association annual conference on Monday. Her remarks to that group featured this: The “flexibilities” (i.e., the desktop appraisals) put in place for appraisers after COVID-19 hit, have ended. However, FHFA has been reviewing the data gathered during their use and examined feedback from lenders and other parties. She told the MBA attendees that both...
What once was a ‘three year’ project to redesign and implement revised appraisal forms has morphed into one taking far longer. Actual implementation and use of ‘new forms’ are not scheduled to happen until (presumably) early in 2024, but could be extended even further. By 2024, the currently used ‘forms’ will be 19 years old, and the current UAD overlay entering ‘teenage hood’ at 13. For context, the current Planet Mars Perseverance Rover mission to successfully plan and land scientific instruments took only 9 years! Details for the ‘forms redesign extension’ are based on the announcement from Fannie Mae (and Freddie...
If we value higher, what about affordability?… A great deal of economic, social, and political talk has been around affordability of housing. To explore this topic, it may be helpful to ask some questions. Good policy starts with the right questions. In simplest terms, some people have the resources to have nice homes in nice neighborhoods, others have just tolerable homes for shelter. And others have no homes at all. We call them “home-less.” More recently, we have become aware of the connection of poor housing and groups of certain ethnic categories. Discovery. There is association between housing status and...
Why FHFA thinks the GSE’s should be even discussing appraisal processes is a question that needs to be asked of FHFA… Appraisers have let others dictate many things in our profession. It is time to stop the trend… How about 20 questions? The Federal Housing Finance Agency (FHFA) has 20 questions for you. Well, actually it is only 19 questions. The FHFA is the organization of the Federal Government that oversees Fannie and Freddie. They want feedback on how the GSE’s should move forward with appraisal policy, risk and appraisal processes. Now why FHFA thinks the GSE’s should be even discussing appraisal processes...
