GLA - Appraisers Blogs

Uncovering Flaws in FHA Appraisal & Loan Review Process

AppraisersBlogs — Mon, 15 Jul 2024 12:30:32 +0000

The story of this single mother’s harrowing experience with a defective home purchase and HUD’s negligent oversight exposes deep flaws in the FHA appraisal and loan review process. After sacrificing for years to rebuild her credit and earn the right to become a homeowner, this borrower found her dream home in the country – or so she thought. During the home inspection, several issues were flagged. The seller, an investor who had purchased the home in an estate sale, was unaware of the septic system’s location. The seller agreed to have the tanks pumped so the location could be determined....

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Gov’t-Indulged Middlemen Are Wrong RX for Battered Borrowers, The Infirm

Jeremy Bagott — Mon, 17 Jun 2024 12:30:21 +0000

The U.S. government impoverishes homebuyers as it does the chronically ill – by promoting the use of middlemen who prey upon them. A cadre of such middlemen was created decades ago as a firewall between Big Pharma, the insurance companies and the pharmacy chains. Called “pharmacy benefit managers,” they were to negotiate drug prices, streamline distribution and manage lists of prescription drugs covered by insurance plans. But since the government has gone whole-hog into health care under the Affordable Care Act and into drug-price controls under the Inflation Reduction Act, things have gotten crazy at the slop trough. Today, according...

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Fannie Wants to Script Conclusions of Outside Analyst – Believes It Is Above the Law

Jeremy Bagott — Mon, 29 Apr 2024 12:30:51 +0000

Government-sponsored mortgage giant Fannie Mae is essentially forcing banks to repurchase any loan it wants if [the appraiser] refuses to use the comparables Fannie has selected. [The corporation] was created by the government, is controlled by the government, and operates for the government’s benefit,” wrote Justice Anthony Kennedy in a unanimous Supreme Court ruling in 2015. He was describing passenger rail hegemon Amtrak, but he could easily have been describing government-sponsored mortgage giant Fannie Mae. The Roberts Court held the National Railroad Passenger Corporation – known more commonly as Amtrak – was a government entity for the purposes of the...

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Majority of Reviewers Had Very Limited Field Experience

Guest Author — Mon, 23 Oct 2023 12:30:55 +0000

It was my experience that the majority of reviewers, FNMA included, had very limited field experience. Which is painfully obvious when they request baseless revisions for “more or better comps”. I’m a Certified General Appraiser that started appraising in 1984, almost 40 years ago! Spent the majority of my career appraising both residential and commercial properties in a major metropolitan market. I had my own appraisal firm for a number of years, prior to the AMC model which dissolved years of relationship building with clients large and small, almost overnight! Like most of you, I really enjoyed appraising and was...

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Fannie Mae Filed a Complaint Against Me

AppraisersBlogs — Wed, 18 Oct 2023 12:30:39 +0000

An appraiser shared the following with us which was posted on one of the appraisers’ groups. Fannie Mae filed a complaint against me with my state appraisal board. Here’s what happened. The Report In June of 2021, I completed an appraisal for a conventional purchase. The appraisal was ordered by an AMC on behalf of a lender. At that time, the real estate market was still being wildly affected by the COVID pandemic. Remote work was in full swing, and consumers were desperately seeking to get out of the cities. Prices for all types of residential properties were rising rapidly,...

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Appraisal Bias – A Counterpoint

Guest Author — Wed, 09 Aug 2023 12:30:01 +0000

It is a fact that 85% of appraisers are white with the majority of them being middle-age white men, although that is rapidly changing. The bias argument presupposes they are inherently more biased than women, Hispanic, African American, Asian, Pacific-islander, etc. We simply don’t have enough data to verify whether this is true or not. Therefore, as the argument goes, white appraisers must be biased. Just as there are more black NFL players in professional football it follows that the majority of touchdowns will be scored and fumbles made by a black player. We can, and should, encourage more diversity...

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GLA Adjustment: Adjusting Full Difference vs a Threshold Amount

Dave Towne — Wed, 14 Jun 2023 12:30:02 +0000

Appraisers, on Thursday, before the Memorial Day holiday, I circulated across the US an email asking for response to a simple two question survey about how you “adjust” the GLA square footage between the Subject and Comparables. The questions: adjust 100% of the square foot difference, or adjust the difference after a ‘threshold’ square foot amount (meaning not the full 100% difference). I received a respectable number of responses compared to emails sent out, and also posted to 3 different web forums, nearly 200 replies. So that’s enough to validate the percentage of both responses, and report the trends. As...

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AVMs… Garbage In, Garbage Out

AppraisersBlogs — Wed, 15 Mar 2023 12:30:07 +0000

Garbage data in means garbage results out every time! It’s no secret that AVMs have been a thorn in the side of real estate appraisers since they first came out. Despite all their bells and whistles, these automated valuation models still rely on inaccurate public records and often come up with wildly inaccurate home values. Unfortunately, some consumers don’t realize this until it’s too late – when reality comes crashing down from a local real estate professional after they’ve already gotten their hopes up about their home value thanks to an AVM. Yesterday, a Virginia assessor emailed us with an...

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Confusing Language for USPAP Ethics Rule Addition

Dave Towne — Fri, 17 Feb 2023 13:30:52 +0000

A proposed update of professional guidelines for property appraisals contains confusing language about what constitutes discrimination, and would even suggest appraisers could engage in “ethical” discrimination. Folks, the following article is in the ABA Banking Journal e-newsletter, posted on Wednesday, February 15, 2023. I’m really glad this has been released. Hopefully the Appraisal Standards Board will closely examine the concerns of the regulators. I read the USPAP 4th Exposure Draft. It contains so much new Ethics Rule “legaleze” language about conduct that it is, and can be, overwhelmingly confusing to a majority of appraisers. It’s written by lawyers in such...

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Two Cheers for an ‘Evolved’ Beltway Entrepreneur… David Bunton

Jeremy Bagott — Thu, 16 Feb 2023 13:30:33 +0000

We come not to bury David Bunton, the public figure, but to praise David Bunton, the evolved Beltway organism. Who is David Bunton? Bunton has made a small fortune and canvassed the world at the helm of a 16-employee Washington, D.C., nonprofit that publishes a copyrighted code of conduct. The code gives his tiny fiefdom a big say in how collateral in the nation’s $11 trillion mortgage market is valued. He is a figure with outsized power in an immense market. His day-to-day funding source? For 30 years, his nonprofit, known as the Appraisal Foundation, has sold copies of its...

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House Measurement by Property Data Collector Gone Wrong

Guest Author — Tue, 24 Jan 2023 13:30:12 +0000

The lender allowed an unlicensed property data collector give bad data to the appraiser… I work for this lender and they will not let my trainee inspect. The owners are now underwater by more than $100,000… I’m sad and I’m mad! I recently took on a measure job for a client who was questioning the square footage of their home. The couple bought the house at the height of the market last year. They paid 12% over list price to get the house. They put an appraisal waiver in the contract which meant they could not walk away if the...

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Visualizing Market Activity Using Graphs & Trendlines

Dave Towne — Fri, 18 Nov 2022 13:30:03 +0000

Spreadsheets and graphs are powerful tools for appraisers. With proper data, and incorporated into reports, they can enhance your professionalism and decision-making ability. Appraisers, this article will highlight the process I use to bring clarity to my research and analysis of ‘comparable’ properties. This completed process becomes an exhibit in all my appraisal reports because it helps the Intended User(s) visually see what the market has been doing over a known time period. The exhibit graph also indicates a daily rate of change for the sales over the time period, which can then be applied as a ‘time’ (market) adjustment...

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Fannie’s ‘Equity’ Plan: The Drinking Game

Jeremy Bagott — Thu, 07 Jul 2022 12:30:07 +0000

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...

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Solving the ANSI Measuring Dilemma

Dave Towne — Mon, 18 Apr 2022 12:30:51 +0000

…a brilliant ‘work around’ to solve the subject & comps adjustment issues, which Fannie Mae thinks is no big deal… Appraisers, I was chatting with an appraiser buddy last week about the ANSI measuring dilemma we all face when doing Conventional lending reports, which ultimately will wind up with Fannie Mae. In my view, my appraiser buddy has a brilliant ‘work around’ to solve the subject & comps adjustment issues, which Fannie Mae thinks is no big deal, but we all know will cause considerable consternation among users of our reports, and with appraisers trying to figure out how to...

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Sketch or Floor Plan?

Dave Towne — Mon, 28 Mar 2022 12:30:23 +0000

The FLOOR PLAN has all the elements of a SKETCH… Appraisers, I was given some ‘inside info’ about DESKTOP assignment reports being submitted to the GSE’s – incorrectly. The FLOOR PLAN exhibit in these DESKTOP reports, in some cases, is not being done correctly. Let’s examine what is actually required as a diagram showing the dwelling: First, when the appraiser certified that they, or their trainee, have/has made an on-site personal visit to the property and has measured the dwelling, only a SKETCH is required – unless interior design problems are noted, in which case the SKETCH must be upgraded to...

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VA Unofficially Says NOPE to ANSI

Dave Towne — Mon, 21 Mar 2022 12:30:20 +0000

The other agencies, Freddie Mac, HUD/FHA, USDA, ONAP, VA have NOT (yet) adopted this ANSI measuring protocol. Appraisers, an appraiser I know sent an email to the VA asking if VA was going to require appraisers to adhere to the ANSI Z765-2021 Measuring Standard as of April 1, 2022. The appraiser received an ‘unofficial’ response back from a person within the VA connected to processing appraisals, which said: “The short answer is, no.” I say this is ‘unofficial’ because to-date, I have seen nothing “official” from VA about this topic. Only officials from within VA know whether or not they...

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Promoting False “Racist Appraiser” Narrative

Mary Cummins — Fri, 18 Mar 2022 12:30:30 +0000

Some Lenders promoting false “racist appraiser” narrative to optimize profits via AVMs Like most businesses lenders want to optimize their profits. One way to make more money besides charging more is to pay less in costs and fees. One way for the lender to do that is to pay the appraiser less or just get rid of them and use a free or very inexpensive Automated Valuation Method (AVM). I personally don’t care if a lender or borrower wants to use an AVM. There is enough business out there for appraisers because not all appraisals are for loans and not...

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ANSI & Floor Plans Goofiness

Dave Towne — Wed, 09 Mar 2022 13:30:52 +0000

“…if you the appraiser are not required to inspect the property yourself, don’t you want to have a more detailed diagram of the home, i.e., a Floor Plan?” There’s been lots of discussion on various forums, classes, Facebook, blogs, podcasts, surveys, articles, etc., about the upcoming ‘demands’ by ONE of the GSE’s to measure using ANSI Standard Z765-2021, and by both GSE’s to provide a Floor Plan for certain assignments. Uniformity is the stated goal. ANSI is not consistent in how they want the perimeter of homes to be measured. Here’s why: for new construction, when the plans (blueprints) are...

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Fraud Facilitating Misleading GSE Products

Michael Ford — Fri, 18 Feb 2022 13:30:03 +0000

I can and will decline to do any of these Catch-22 Fraud facilitating misleading products promoted by a GSE… There are many legitimate times and reasons a desktop appraisal may be performed. In every single one of them, it is assignment specific based on the assignment specific needs of the client with a mutually agreed upon scope of work between the client and the appraiser. They also include a scope of work decided upon and explained in the appraiser’s own words. Any relevant extraordinary assumptions and limiting conditions dictated by the nature and use of the assignment are able to...

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ANSI Measuring Standard Required in 2022

AppraisersBlogs — Fri, 17 Dec 2021 13:30:35 +0000

On December 15, 2021, Fannie Mae announced that it will be adopting ANSI Measuring Standard in 2022. Appraisers will be required to use the Square Footage-Method for Calculating: ANSI® Z765-2021 (American National Standards Institute®) Measuring Standard for measuring, calculating, and reporting gross living area (GLA) and non-GLA areas of subject properties for appraisals requiring interior and exterior inspections with effective dates of April 1, 2022 or later for loans sold to Fannie Mae. For more information, watch this video and check out this fact sheet. Here are some items for appraisers to consider when using the ANSI standard Measurements...

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