Appraisal Valuation Expo Convention 2019 Recap
April 4, 2019 |
March brought the annual Valuation Expo convention at the Palmer House in Chicago, a great opportunity to get updated on all the appraisal changes. Speakers at the Expo included representation from VA, FHA, Freddie Mac, Fannie Mae, Moody’s, CoreLogic, and many others.
Here’s some of the news coming out of the convention:
Comments from Freddie Mac Representative
Scott Reuter, chief appraiser and director of valuation for Freddie Mac, spoke on a variety of current appraisal topics, including the elephant in the room: bifurcated appraisals. The following are some subjects of interest.
Mr. Reuter acknowledged that “appraisal modernization” is a work in progress, and not a finished deal by any means. Concerns include the time and excessive costs of appraisals in some markets; the goal is to reduce costs while managing risk. He made a point that bifurcation is NOT considered to be appraisal modernization. They reached out to appraisers and other involved parties for input, to review the appraisal process, including inspecting the property, developing an opinion of value, providing protection against mortgage fraud, and mitigating repurchase risk.
MC Form: Do we need it, or not?
He noted that Freddie Mac no longer requires the MC form. However, it’s “lender-specific”, meaning that lenders may still require it and Freddie Mac will accept the report it if they do.
Trainees: Can they do appraisals and sign them, or not?
Similarly, Freddie Mac allows – and has for some time – trainees to do appraisals, and sign them, with a supervisor’s signature. However, this is also “lender specific”.
Can appraisers use MLS photos?
Yes, they can, per the speaker. The appraiser, of course, is required to certify that they are familiar with the properties as stated in the URAR certification. Of course, this is not the case as noted on many appraisal orders that specifically state that MLS photos are NOT allowed.
What repairs may Freddie Mac find acceptable?
Deferred maintenance that will not be required to be repaired include items such as cracked windows, worn carpets, missing trim, and raised sidewalks. The appraiser may determine, of course, that these must be repaired if safety hazards are present.
News on manufactured home lending
Manufactured homes can now be certified to meet new guidelines through a new program. This program mandates certain upgrades to manufactured housing in the factory that can be certified for this special standard.
Levels of Valuation Products being considered
Of most interest was a chart showing 5 proposed levels of valuation reporting:
- ACE: This is their AVM, which uses big data and analytics to support an appraisal waiver, with no appraiser involvement.
- Interior/exterior report powered by analytics: Leveraging on-site property inspections in combination with big data and analytics. It involves an appraiser, agent, or inspector.
- Drive-by product: Leveraging appraisers performing exterior appraisal report in combination with big data and analytics.
- Bifurcated product: Inspected by a trainee, appraiser, inspector, agent, or another person, with a desktop valuation prepared by an appraiser.
- Traditional appraisal report: Includes typical appraiser involvement.
Comments From Fannie Mae Representative
MH Advantage Program pushes manufactured homes as affordable housing
This program (mentioned above) will certify manufactured homes and will have a certification sticker to be placed near the data plate. The speaker from Fannie Mae further detailed the following: Various manufacturers have been approached to offer these homes. Appraisers will be advised to use similar MH Advantage homes as comparables, or the best sales available, which may include site-built homes. This program will allow on-frame modular homes, if they are the same quality a stick-built home.
Collateral Underwriter: Items that cause issues on appraisals
The representative summarized common issues that are flagged by CU:
- Lot size adjustments materially different from peer and model adjustment
- Condition adjustment smaller than peer and model adjustments
- Appraiser-provided comparables, materially different from the model-selected comparables
- GLA adjustments are smaller than peer and model adjustments.
- Location ratings different than reported by other appraisers
Changes to Appraisal Forms
They are pilot testing the 1004P, which is a hybrid (bifurcated) product. The representative noted the third-party inspector on bifurcated reports could be a surveyor, appraiser, inspector, home warranty inspector, or radon tester. They would undergo a background check and training. This appraisal product may include the use of 3D scans that can more accurately produce a floor plan of the subject property.
Alternative Appraisal Products
Proposed are 3 possibilities:
- Waiver: No appraiser involvement
- Property data collection with desktop valuation: They have sufficient information to support the loan and the appraisal process may stop here. If not, the inspector will provide information to the appraiser who will then produce a desktop valuation.
- Traditional appraisal: With typical appraiser involvement
It’s a time of great change coming for appraisers in the U.S. as big data changes how we do business. It will be our individual decisions to accommodate these changes, or to opt out from doing the proposed alternative products. Stay tuned!