Fannie is tracking photos from appraisals
"Murphy does acknowledge that Fannie Mae is able to track photos in each appraisal, a practice many appraisers have long suspected, which means that Fannie Mae is able to detect when appraisers reuse comparable photos in different appraisals and flag appraisals which contain outdated photos as deficient."
My comment: I have been hearing for awhile about appraisers who use the same smoke alarm photo in all their appraisals. Be careful out there. Fannie is watching!!
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FHFA considering representation and warranty relief on appraisals
Source: October 19 prepared speech at MBA national convention by Melvin L. Watt, Director Federal Housing Finance Agency
Excerpts:
(This is the only reference to appraisals in the speech.)
"An effort that will not be completed this year but will carry over into next year is the work that has been taking place about possible appraisal-related representation and warranty relief. Both Enterprises have developed tools that provide lenders feedback about appraisal quality and are now using these tools in independent pilots to assess the feasibility of representation and warranty relief on the value of collateral. These pilots are in their very early stages. But throughout 2016, we will continue our efforts to provide as much certainty on appraisal-related issues as is possible. "
(The next paragraph refers to all the changes they are considering, relating to easing credit requirements. Presumably it also relates to easing up on collateral requirements.)
"Each of these efforts is intended to provide more certainty to lenders and to do so in a way that is safe and sound for the Enterprises. We anticipate that greater certainty will translate into fewer credit overlays, lower costs for borrowers, and greater access to credit for creditworthy borrowers. As I said last year, we expect this to be a two-way street. FHFA will continue to do what we can to provide certainty and thereby reduce the unintended consequences that follow from uncertainty in the market. But, we are looking for lenders in return to take the necessary steps to serve creditworthy borrowers who are currently sitting on the sidelines."
My comment: I have been hearing about this for awhile. Finally, everyone knows about it now. I assume that it means that lenders will be less worried/paranoid about appraisals, as rep and warranty relief means appraisals will not trigger a repurchase. Maybe lenders will "lighten up" on the ever-increasing Scope Creep requirements, which significantly affects AMC appraisals as they work for a lot of lenders with widely differing requirements.
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Property condition and quality ratings differ from previously reported data in 39% of appraisals
Full press release below, except for the promo writeup for Platinum Data Solutions
ALISO VIEJO, Calif., Oct. 19, 2015 /PRNewswire/ -- Platinum Data Solutions reported today that in the third quarter of 2015, 39% of appraisals contained property quality or condition ratings that conflicted with previous ratings on the same property. These-and other-appraisal inconsistencies are a primary cause of underwriting delays. They can result from a number of factors and apply to work completed by the same appraiser as well as that of another appraiser.
Platinum Data analyzed its database of over 300,000 appraisals that were evaluated by RealView®, its appraisal quality technology, in Q3 2015. RealView is used to protect not only the nation's top 10 mortgage lenders, but also 16 of the top 25 largest mortgage lenders in the country. Platinum Data evaluated appraisals representing all 50 states, Puerto Rico, and Washington D.C.
Conflicting property condition and quality ratings cause delays that generally range from one day to several days-a costly and risky setback for lenders concerned with rate locks, and deadline-oriented guidelines and regulations. They can result from a number of factors, such as human error, appraiser subjectivity, actual changes in the property's condition or quality, or even possible appraisal fraud, which has been cited by the GSEs as the top origination fraud scheme trend in 2014.
"More than one in three appraisals contain inconsistencies in property ratings," said Phil Huff, president and CEO of Platinum Data Solutions. "Causes aren't easy to determine, so they need to be investigated. Doing this after UCDP submission opens lenders up to numerous issues. Costly delays are just one of them."
According Fannie Mae, Collateral Underwriter (CU) identifies rating inconsistencies on loans submitted through the Uniform Collateral Data Portal (UCDP) by comparing the appraisal's data with its own proprietary data, and flags the appraisal for comments or corrections.
"Lenders and AMCs-not to mention appraisers-have felt at CU's mercy and have been practically begging for a way to identify these issues before submitting their loans to UCDP," said Huff, who explained that Platinum Data's RealView® solves this issue by identifying all 15 possible discrepancies prior to UCDP submission, so lenders and AMCs can address them during the underwriting and appraisal review process.
Check out the very interesting graphic at:
My comments: What's the biggest problem? Fannie forms work best for tract homes that are built with below grade basements. Trying to fit a non-tract house into the Fannie Mae forms has always been hard. CU makes it even harder as you have many more factors to try to fit into the forms.
Nothing new in this press release, except that a data company is looking at this issue. CU has been issuing warning messages about this. I think the biggest problem is that there are too few ratings. When I worked for an assessor's office in the 1970s, we had many quality ratings, a lot more than 5. It was easy to figure out the rating for a house. Why did Fannie decide on 5 ratings instead of more? There is the same problem for condition ratings - too few.
On a positive note. This is one of the many reasons appraisers cannot be replaced by computers. AVMs have been used for about 20 years. They work best on conforming tract homes built in the past 10 years (before remodeling), and are used for home equity loans. Maybe they will be used by lenders for first mortgages with low LTV and tract homes.
