Appraiser

Fannie Mae recently released information on historical default rates. An interesting trend popped up, current default rates are unbelievably low, at least compared to the years 2004 through 2008.

Prior to those years, the national Fannie default rate is still slightly below that trend. Some critics are saying that this proves our loan policies are too tight and need to be loosened. Are they crazy? Remember 2008?

Core Logic reported 34,000 foreclosures completed in July, nationally. This is down 29.1% from July a year ago, and down 6.8% from June, the month before. This is good news, but, there is a large ‘shadow’ inventory of bank owned properties just sitting empty. These need to be moved through the pipeline eventually and hopefully sooner rather than later. 

In the appraiser world, a mansion is generally defined as a home with at least five bedrooms and 15 rooms (and we’re not talking about two mobile homes hooked together!). You would think Miami, Chicago, or Los Angeles would all be at the top of the list, but we’d be wrong!

SmartAsset, a technology firm analyzed Census information and came up with the following list.

The top 10 mansions in metro areas

Fannie recently announced in the Selling Guide Announcement SEL-2014-16 that the 15% net and 25% gross adjustment guidelines were eliminated. Fannie Mae also clarified their expectations for the appraiser to analyze the market for competitive properties and provide appropriate market based adjustments without regard to limits on the size of the adjustments.
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Many times SAMCO, and other professional AMC's, are just lumped into one overall group by appraisers.  Now, as an appraiser, you know that not all appraisers are the same as you, either in professionalism or quality.  So why are AMC's considered that way?  SAMCO is a champion for customary and reasonable (C&R) fees.  I strongly encourage all new community bank clients (the only ones we work for) to view the over all fee's in their area.  Sometimes a community bank has a relationship with 2 or 3 appraisers for a below market fee. One reason an appraiser can provide a below market fee appraisal, corners are cut in quality.

Here is a scenario that I think we have all experienced. You have been assigned an appraisal of a basic ranch home, in an established neighborhood. Your research finds a 1375sf home with a detached garage. You make the appointment, show up, introduce yourself, and begin your inspection. The walk through, and photographs on this 3 bedroom, 1 bath dwelling (on a crawl space) takes 5-7 minutes, and that's while chatting with the owner!

As busy as everyone in the mortgage business was this past year (not now though) it comes as no surprise what the reporting companies are announcing.  CoreLogic reported in their December report that the 12 month sum of completed foreclosures is at the lowest level since 2007, with the rate of serious delinquency at the lowest level since November 2008.  They also reported that foreclosure inventory was down 31% year ending December 2013.  RealtyTrac announced that the shrinking number of distressed properties in 2013 helped reduce foreclosure filings 26% year to year.  Both companies have many other great stats that will make everyone in the lending industry much happier.

This means if they have found an appraiser providing inferior work the lender is not to utilize these appraisers for Fannie loans.  Sounds OK, but they only have four appraisers on their list, for the entire United States!  It’s a small beginning, but it’s sure to grow as Fannie searches through its database for appraisers who have repeatedly provided inferior work. 

On a regular basis SAMCO reviews individual State Appraiser Board Disciplinary Actions.  We will now be doing this with Fannie also.  In the past some ‘bad apples’ have tainted our profession.  But with every passing year, the professionalism of our appraisal industry is growing.  It’s great to be part of it.  

A Fannie Mae Dec. 10 letter to lenders addressed appraisal quality, appraiser selection requirements, data quality issues and new processes to identify and monitor appraisers.  Fannie Mae stated that there are appraisals being completed by appraisers who have has their license suspended or revoked.  Fannie also reminded lenders that patterrns of discrepancy and inconsistancies in physical data are occuring and that Fannie reviews for that.  Fannie will be contacting the appraiser directly about inconsistancies or errors.  See the Dec. 10 Fannie Mae Letter.