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House with flying moneyFannie Mae Tightens Up on Appraisals 

Since the new appraisal rules went into effect last year there has been a noticeable decline in the quality of some of the work that has been turned out by appraisers.  This has been largely due to the fact that local knowledge of the market has been put on the back burner and, in its place, has been the goal of getting the job done as cheaply as possible. 

The net effect has been third party companies hiring appraisers from up to 100 miles away.  This, of course, negates any chance of their being familiar with the neighborhood that the property is actually in. 

Now it appears as though Fannie Mae has taken notice and has not liked the looks of some of the appraisals on mortgage loans sold to it by lenders.  As a result, they have just issued some new, more stringent requirements. 

The new language specifies that appraisers must have the "requisite knowledge" along with experience and the correct data to perform an appraisal.  This, after much concern has been expressed by industry professionals as to exactly how appraisers are currently being selected.  More detail on this via the Chicago Tribune. 

Fannie has also said that appraisal reports must now include more photos, including interior shots of the kitchen, main living area, all baths and any examples of physical deterioration and or updating that have taken place in the home. 

The tightening up of standards is definitely a step in the right direction.  Appraisals should not be compromised in an attempt to get them done cheaply. 

We all know that far too much is riding on the accuracy of the residential appraisal.

 

Copyright 2010 "Fannie Mae Tightens Up on Appraisals"

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28 Comments on Fannie Mae Tightens Up on Appraisals

JUL
17
2010
1 Featured Post Called Shot Master

That's great news :-) Hopefully, it'll help lessen people's dissatisfaction with the process.
11:13pm • #1
563,179 Points 24 Featured Posts Attended Rain Camp Called Shot Master

Claudette, This is a step in the right direction. We have many more steps to take before the appraisal issues are corrected.
11:14pm • #2
116,834 Points

Oh halleluja and amen.  Finally, something that may actually help.  I still don't like the HVCC.
11:14pm • #3
980,379 Points 81 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Claudette,

Isn't is funny/ They cahnged the way the appraisals been done to have a better appraisals, and they got the  opposite.

That's a lesson. Good intentions do not mean good results. And we often judge by intentions
11:26pm • #4
395,027 Points 35 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp

Dawn:

I think the process has been overdue for some improvement.

Kathleen:

Last year was a situation that seemed to cause more problems that anything else.

Dedra:

I think you are in good company with that sentiment.

Jon:

That is exactly what has happened and I think it is being realized.  Changes are much needed at this point.

 
11:38pm • #5
538,546 Points 6 Featured Posts

Hi Claudette:

That's actually great news.

There's nothing worst than an out of area appraiser doing a bad job.
11:48pm • #6
JUL
18
2010
687,219 Points 83 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

More pictures, that's good!  Maybe because the ones they have taken (at least the ones I've seen in the appraisals) have only be exterior and of the street.  Doesn't show that they have actually even examined the interior.
2:08am • #7
1,049,319 Points 177 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Any step towards a healthier lending practise is always welcome and necessary. I watched House of Cards - a CNBC documentary on DVR yesterday and realized that as important as it is to close on a good loan upfront with consumers, it is just as important to package it up in the secondary markets sold as CDOs.
7:29am • #9
395,027 Points 35 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp

Toula:

It is good news. Those appraisals need to be as accurate as possible, otherwise we are all in trouble.

Carla:

I think more photos will be a great improvement.  And, why not? It is more information and that can only help.

 
7:29am • #10
519,126 Points 43 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Carla, I think that appraisals are one of the biggest issues in the industry today, it is really causing some problems, You are right on the money when talking about the focus being on cost and not a quality appraisal....
10:20am • #11
405,745 Points 34 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

...must have the "requisite knowledge"

I certainly hope so because the changes earlier this unleashed a number of appraisers who did not have this vital component, at least in Austin, Texas. Many problems resulted from several who had only worked in outlying cookie cutter subdivisions and did not have the slightest idea how to value older upscale homes in established areas.
10:24am • #12
501,812 Points 1 Featured Post Outside Blog Attended Rain Camp Called Shot Master

Now if we can just get them to eliminate the 100-mile distance from allowing "requisite knowledge".
12:08pm • #13
501,812 Points 1 Featured Post Outside Blog Attended Rain Camp Called Shot Master

As I read the Tribune article one of the more encouraging aspects of this new approach by FANNY is that they are directly appraisers to be careful how they use distressed sales as comps on regular sales.
12:15pm • #14
1,140,610 Points 76 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Having just taken the Appraisal module of the Broker Pre-Licensing, I thought requisite knowledge was required via the certification/licensing process of the appraisers.  If they don't know enough about the assignment, they are supposed to turn down the job.  Guess that's not been happening.  Then again, it's not like the Realtor® Code of Ethics really keeps agents on the straight and narrow.
1:12pm • #15
367,535 Points 5 Featured Posts Outside Blog Called Shot Master

Hmmm...  So "... appraisers must have the ‘requisite knowledge' along with experience and the correct data to perform an appraisal."  What a concept! How many of us have had appraisals come in unreasonably low recently?  I have!  And I'm not blaming the appraisers. I think they're doing the best they can given the circumstances (i.e. current guidelines). Thanks for sharing, Claudette. The new language is encouraging.  
7:15pm • #16
1 Featured Post Outside Blog Called Shot Master

Yeah!!! - they should stop the drive by BPO's also.
9:57pm • #17
JUL
19
2010
611,298 Points 11 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Does this mean they merely must be able to find the listing without the use of a GPS device ???
7:57am • #18
848,742 Points 153 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

This is excellent news, I am tired of appraisers coming to Ann Arbor from 2 hours away. Ridiculous.

Let' hope this works.
8:32am • #19
1,400,148 Points 109 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Claudette,

House under contract, appraisal ordered last week by the lender.  I've just been told that it will not be done until August 2nd. 
5:44pm • #20
1,545,555 Points 416 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

This is a matter of supply and demand.

When the fee to the appraiser was reduced dramatically, suddenly, there was a shortage of qualified appraisers. 

Simple cure.  Pay the appraisers a decent fee and there will be no appraisal problems.

This is just another problem created by the government.  If you didn't know it before, you'll now know that EVERYTHING THE GOVERNMENT TOUCHES TURNS INTO CRAP.
6:28pm • #21
Outside Blog Called Shot Master

Absolutely .... that is good news .... hopefully these problems will be solved......  Its unfair to sellers to have an appraiser coming in over 100 miles away who are completely unfamiliar with the local market and neighborhood. 

 

Lori Cofer
11:34pm • #22
JUL
20
2010
447,818 Points 36 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Please don't get to encouraged.

"The new language specifies that appraisers must have the "requisite knowledge" along with experience and the correct data to perform an appraisal.  This, after much concern has been expressed by industry professionals as to exactly how appraisers are currently being selected."

It may sound good, but it doesn't say any thing! The Fed' mandated the states license appraisers about twenty years ago. They are all ready suppose to have "the "requisite knowledge" along with experience and the correct data to perform an appraisal."

It was the same people that switched how appraisers were selected, that replaced the rare crook with the common incompetent!

This is the second reform by the sane shysters that caused the problems.

Bill
9:59pm • #23
395,027 Points 35 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp

Loreena:

Thank you for pointing out that documentary.  I read the article - it is interesting.

Russell:

I think that has been a large problem that was brought on by some of the changes last year.  Hopefully, this will help.

Jim:

The "100 mile" distance is clearly too far away from a subject property.  That appraiser does not know the neighborhood.

Chris Ann:

If they do not know the area, they are supposed to turn the job down?  That hasn't been happening at all.

Bill:

Exactly, and the circumstances that they have been operating under have been "getting the cheapest appraiser possible." 

Roseanne:

It is not clear do me why they sometimes use driveby BPO's for residential sales.  I think they should be using full appraisals to get the correct value.

Michael:

Well, that would certainly be a qualifier; however, I think most of us have come to totally rely on our GPS systems.

 
11:38pm • #24
395,027 Points 35 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp

Missy:

Two hours away is unacceptable, really. I do hope this works.

Judi:

That's insane. I understand that they are backed up but couldn't that bank find a different appraiser? That seems unreasonable.

Lenn:

Exactly, you get what you pay for. A good appraiser is not going to want work cheaply. I take your observation about government involvement - it does seem to run true in so many cases.

Lori:

Absolutely - you cannot know the neighborhood well enough to do an accurate appraisal if you are coming from 200 miles away (or even 100.)

Bill:

Good point.  We are yet to see the actual interpretation of having the "requisite knowledge."  Sounds good though...

 

 
11:44pm • #25
214,759 Points 2 Featured Posts Localism Sponsor Called Shot Master

Its about time Fannie Mae wised up, I never could understand how they would allow appraisers to come from out of the area and expect to get the correct value of a home.   Excellent post.
11:55pm • #26
JUL
21
2010

Hi Claudette. Thanks for the good news! I am curious about "requisite knowledge". The time will show, I guess. Great post.
12:03am • #27
431,027 Points 1 Featured Post Outside Blog

Hi Claudette, The new rules will be interesting, we will see how it works out.  Nice post!
12:48am • #28
MAY
25
169,775 Points 23 Featured Posts Attended Rain Camp Called Shot Master

 

I have a friend that is a lender on a Fannie Mae sale.  Even though no appraisal is "required" if an HomePath loan is done, his buyer was going FHA and here in Idaho, it is customary to have the appraisal paid for by the seller.  That was noted in the original purchase sale and sale agreement and we don't see anything in the Fannie Mae addendum that changes this request.  However, the title company and Fannie Mae are saying Fannie won't pay for it.  Has anyone ran across this?  If so, please contact me. 

 
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Claudette Millette - Metrowest Mass Buyer Broker

Ashland, MA

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