In my state, a 703 expert means that both sides agree to “accept” the conclusions of an expert (appraiser) prior to court proceedings. Thus, the appraiser submits the report without any reviews or questioning process.

hm, I do not do divorce cases because i have a speech impediment and will not be willing to speak on a stand in defense of my appraisal. What is the 703 expert witness basis you speak of? I am in Minnesota. Does this mean they can not call me to the stand?

EGGS came for Joe Mags, Joseph Magdziarz, MAI, SRA, AI-GRS, AI-RRS …. I was lucky enough to take my first three classes from this guy, fantastic teacher and very funny. I’ve taken several higher level courses from him through the years, he’s likely retitired by now.

EGGS. That’s interesting, cool. I tried to search that and just got a bunch of stuff on chickens and green energy tech, lol. WAGS. Wild ass guesses. That’s for when the eggs break.

Lets hope some of those changes are incoming sooner than later, and some later rather than sooner. Like corporate investors are the problem why people don’t have houses and can never get a decent deal on a fixer upper or old home anymore. They don’t buy just one, these corps buy properties by the hundreds, by the thousands. If they invest in development they want high density stack and pack housing too, no more backyards or room to breathe for anyone. For your protection and the environment of course. More changes in lending regulations? It took me a decade just to get my mind around the last updated set of regs. Lenders write all of that anyways, consumers will never keep up. Wake me when it’s over.

there’s a big push to limit and outright forbid large corperations from buying up residential property in many towns across the country. Changes in the lending regulations is also in the works, it used to be investor rates were significantly higher, loans were renewed every 5-10 years …. if it were just a little harder for companies to gobble up SF homes the markets might stand a chance for a correction. Regulations —– Appraisal 101 is EGGS, Environment, Geography, Goverment, Scarcity —- change any variable, boom!

Charles, its been said that many homeowners are renting their 3% mortgage rates with minimal motivation to sell(move up) and assume a 7% mortgage rate. Couple this situation with 1st time buyers being priced out the market, it seems that this current market issue will be around for 2024 and probably 2025. AMCs know that under a LOW activity home market they can push appraisers for lower fees and faster turn times. Its a vicious circle that AMC appraiser have NO controls over. I’m just glad I left mortgage work 20 years ago.

Stroke of dumb luck actually. Remember how I was always dreaming of professional lawn mowing? Scooped up a rare client ahead of amc’s. Estate investment related. Probably going to run out soon and it will be the end of the line for me, any day now. The sales agents are still having a good run so I will quite soon have to make a choice; Go with sales with focus on estates or find a new industry and career entirely. Sorry, I know that’s probably not what you were hoping for. Don’t mistake me for someone successful that’s for sure. I’m just good at research and reports and such. Have a good one anyways. Thanks.

Mr Baggins, can you elaborate a little more regarding “the next working opportunity or client” I think I follow you, but I am asking because clarity is precious.

Excellent analysis Mr Minzenberger. What is holding the market up, given the dramatic disruptions?

Word on the street is that corporate residential real property holders, whom not to long ago anticipated continued rises in rental income for investment purposes, are now divesting substantial portions of their real property stock, previously acquired and held as REIT’s in perpetuity?

Things are happening and for those well informed, this may appear to be the next working opportunity or client solicitation lead. Certainly has kept me going. Pure dumb luck really, as I have apparently landed the miracle short term client at a 1 in 1.3k probability ratio. (number of licensed FHA appraisers in the state of CO.) Sadly, not the case, because most of the available client solicitation opportunities along this avenue have fallen to the amc model.

Who needs an appraiser anyways? When one finds themselves outside of federally regulated market valuation guidelines, why not pander to the most readily available purchasing entities whom have cash in hand?

Thanks.

Bummer.

Understand this…the Appraisal Institute has never exhibited effective leadership or representation for the interests of appraisers preparing appraisals for “mortgage lending purposes”. So, don’t expect that to be or change in the future. AI is set up to address and/or represent appraisers in the NON-lending appraisal arena(condemnation, estate work, expert witnessing, complex appraisal work, etc). On the other hand, its a very know fact the appraisers doing work for lenders have never been a cohesive group w/o much influence. Thus, the lenders control the entire appraisal process.

Thank you. This is terminology not typically present in GSE lending work. 703 expert witness. Apparently this is also state specific.
https://www.law.cornell.edu/rules/fre/rule_703

A substantial portion of well developed appraisal is based on logical inference… Recognized methods is also a somewhat subjective topic. I’m more inclined to the idea of differential proportions, that all else being equal, the need for applied adjustments becomes minimized. Or alternatively that if there are scarce ‘good comps’, the adjustment scales may need to expand. Then you’ve got mismatching benchmarks to value when market participators, although theoretically applying the definition of ‘fair market value’, are not actually fully equal in the real world. It’s all subjective which is where the opinion based aspect of appraisal service comes in. It’s all inference and data gathering, that’s the whole enchilada, also what roots the aspect of non advocacy in place. ‘Best of ability developmental methods.’ Thoughts? Solutions? Appreciated, thank you.

Appraisal work for Divorce settlement can certainly be sticky. The best way to avoid this stickiness is to accept the appraisal as a 703 Expert witness bases. Under this a 703 witness, both parties agree that they will accept the appraisal(only 1 appraisal) without any objections.

This comment made me think about the scale of these investments. Fannie’s profit loss summary, early 2023. Am I reading this right; 40% of seniors are on adjustable rate loans?
https://www.fanniemae.com/media/46286/display

https://www.msn.com/en-us/money/realestate/fannie-mae-quietly-scrapped-a-program-that-could-have-saved-americans-thousands-of-dollars-in-insurance-costs-reports-say-but-here-s-why-it-might-not-be-a-bad-thing/ar-AA1m33xu
That’s fun. They tried to pass some title waivers deal too, and it was shut down. The logic for scrapping was; ‘According to the Journal, after extensive backlash — mostly around Fannie Mae’s lack of experience with title insurance — the pilot program was scrapped’ / Why doesn’t that same logic apply to appraisers? Fannie does not have experience in providing valuation services either, that’s always been the appraisers position.

https://insights.issgovernance.com/posts/in-rare-jury-trial-fannie-mae-and-freddie-mac-shareholders-recoup-612-million-against-us-housing-agency/
FHFA sued by investors. FHFA advisory groups are the ones demanding Fannie and Freddie move forward with appraisal automation even faster. Who’s steering the ship?

This makes me think, are we complaining and arguing to the wrong people? Would the Securities and Exchange Commission be interested in the appraisal industries pending demise and all this risk people speculate will eventually be realized when they automate the appraiser away completely? Via the domino effect of systematically applied stale data and off base algorithmic avm modeling which will inevitably lose accuracy to ever greater degrees as fewer and fewer human appraisers provide contemporaneous data input and current analysis into the CU system? Take these concerns all the way to the top of the ladder with the SEC? The stakes are high. They’re circumventing sound checks and balances systems every time they issue an appraisal value acceptance waiver or allow an amc to manage order distribution. If it does not make sense for title, it does not make sense for appraisal either.

Though that was interesting, sort of a different perspective. I wondered, why is there perpetual conservatorship in the first place? Then I searched; ‘FNMA loses money’, with a 1 month and then 1 year time limit. Quite a lot. I’ll quit trolling now, thanks though.
https://www.sec.gov/

In the late ’80s the savings and loan crisis revealed that weakness and the federal government mandated minimal standards for and licensing of appraisers which generally improved the overall quality.

Ten years later another crisis occurred, real estate fraud from lenders, investors and appraisers conspiring to overvalue properties leading to massive losses. The result was to take steps to ensure appraisal independence from external influences. The goal was to insure not only competence but independent analysis.

Another ten years went by, and we had the great recession pointing out that the lending system was flawed in that the wrong parties, those who stood to benefit from originating and selling loans, still has far too much influence over those tasked with make secure loans (too little has been done to eliminate that).

That brings us to present times where the Fannies & Freddies of the world are moving to what they deem to be a better, faster, cheaper process. Under this new scheme a data collector with as little as three hours training in the use of a phone app and no training in valuation will do a walk-thru, take photos and then send the data for a value. In some cases, an appraiser will review the data and arrive at a conclusion. (remember the children’s game telegraph) In other cases, an in-house algorithm will estimate the value. In either case something is lost either from the lack of an appraiser’s firsthand expert observations or a truly independent value conclusion because the algorithm and the persons creating it are employees of the institution.

So, it appears that we have come full circle.

‘Powers that be’. Mr Bagott wrote an article about that recently too. If anyone cares to pontificate how this protects the public trust, be my guest. The revolving door keeps on spinning. Your tax dollars, hard at work.

https://mailchi.mp/cfa902bc341e/meet-the-special-interests-who-have-captured-hud-9094146

That’s the rub though. If not for these modernization programs, there would still be enough routine appraisal requests for everyone to get by. Amc’s redirected every single property inspection duty to realty or even non licensed people, rising demins cut away all the easy work which was invaluable to the trainee mentor structure, now waivers and value acceptance automated programs cut away even more working opportunities. It’s true that the only full requests these days are high risk high liability and/or dealing with tentatively qualified high risk borrowers.

Appraisal modernization is modernizing tens and tens of thousands of qualified professionals and associated companies whom provide us services, right out of their careers and jobs. In turn placing the financial stability of the largest mortgage lending apparatus and all of the investors behind them into a position of untenable risk with uncontrollable unpredictable consequences. Automating the human appraiser away is not to save anyone a dollar or a day as the talking heads claim. The GSE’s are failing in their duty to the public and their duty of care to provide reliable and fair access to lending systems. This is one big setup to short the market and drive untold volumes of properties and wealth into the hands of corporate owners. You will own nothing, and be happy.

Let’s check the old meme files for something elephant related. Here is a good one. Ignore the problem.

Artificial non-intelligence is more like it. Those softwares don’t program themselves. Qualified appraisers are not coding them in or playing any substantial role in their development either. Just a bunch of young tech people with rather distorted ideas of what appraisal valuation service is, and how the human elements of experienced qualified observation and reporting relate to the infinite possibilities in the real property housing realms, in the real world outside of the tech bubbles. I have a very special rule which I adopted a very long time ago; I do not talk to robots. I wrote a letter to Judicial Watch hoping they might get involved in something class action wise. Jeremy Bagotts latest article mentions ‘The Institute for Justice’, a story about how a state licensing board tried to prohibit the free speech of a retired engineer because he did not have an active license, how he fought back with the help of non profit legal advocates, and won.

https://ij.org/ Watch the video about the retired engineer. A similar vexing situation may be in store for every appraiser out there, whom may one day allow their license to expire as they have retired. Will we be one day prohibited from even advising people with your decades of expertise, even if you’re not technically ‘providing appraisal services’?
https://nitter.1d4.us/jbagott