23rd October 2013

GSEs Still Finding Problems with Home Appraisals

posted in Appraiser News |

Re-posted from Appraisal Institute

Three years after the creation of a database seeking to standardize the home appraisal process, Fannie Mae and Freddie Mac continue to see major issues in numerous appraisals submitted by mortgage lenders, American Banker reported Sept. 12.

Fannie Mae conducted a sampling of appraisals and determined that 17.6 percent contained contradictory information, typically pertaining to the condition or quality of the property, Robert Murphy, the GSE’s director of collateral and single-family risk policy, told a Phoenix conference of risk managers. He added that those two factors are the most important in determining a property’s value.

Elevated appraisals contributed to the housing market collapse because lenders frequently pressured appraisers to place artificially high values on properties, which helped increase home prices.

Murphy’s comments followed similar remarks from an official at the Office of the Comptroller of the Currency, who that same day told conference attendees that banks have been lax in their oversight of appraisers, American Banker reported.

The Federal Housing Administration, which oversees the GSEs, estimated that approximately 35 percent of repurchases that require lenders to buy back a loan are tied to faulty appraisals.

Murphy told conference attendees that Fannie will give guidance to lenders next month regarding ways to decrease appraisal conflicts.

“We want accurate data and accurate property values,” Murphy said, American Banker reported.”For years, no one was looking at appraisals. But now we can see things. We want to make sure a property meets adequate appraisal requirements and that the appraisal accurately reflects market value.”

In 2010, the GSEs established the Uniform Mortgage Data Program to provide standard requirements for appraisal and loan data. Mortgage lenders have to provide information via an online portal so the GSEs can identify issues and reject them prior to origination.

Fannie and Freddie have been telling lenders about the appraisal problems that need to be fixed, according to Murphy.

“Just because a lender uses an appraisal management company, doesn’t relieve them of responsibility as a lender selling to us,” Murphy said, according to American Banker. “At the end of the day, the lender is responsible.”

Murphy added that Fannie has been regularly reporting these issues to state appraisal boards that license and oversee appraisers.

There are currently 2 responses to “GSEs Still Finding Problems with Home Appraisals”

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  1. 1 /*On October 23rd, 2013*/, JAK said:

    AMC’s are the problem. They have one concern, the LOWEST possible fees and a 1 day turn time. College Degrees, Experience MEAN NOTHING TO AN AMC, just bottom line pricing. Canada does not license Appraisers, because the Banks are 100% responsible.

    YOU CAN END THIS PROBLEM IMMEDIATLY BY MAKING THE BANKS & LENDERS 100% RESPONSIBLE FOR ALL APPRAISERS AND APPRAISALS USED.
    LET THESE BILLION DOLLAR BABIES TAKE LEGAL RESPONSIBILITY FOR THEIR OWN BUSINESS DECISIONS.

  2. 2 /*On November 2nd, 2013*/, CLA said:

    I agree AMC Companies are the problem. Most care only about how low the fee can be and how quick the report can be turned out. And the remaining AMC Companies pay a little more and make the appraiser comment about every thing that has “nothing to do with your subject” so the appraiser spends three times the amount of time on the report typing “management company comments into the reports” which increases our liability and reduces our wages. Why cant banks pay part of the appraisal fee and pay appraisers well for the professional job that should expected for a much more higher fee? Are not lenders making profits on these mortgages? Why must homeowners be the only ones to pay for the appraisals? But yet the appraiser gets paid pennies for their labor and expert opinions and management companies get paid well instead for only office work. Appraisers are so discouraged because they see themselves slowly loosing their business’s and their profession. Appraisers don’t make any profit! We are all working for free after expenses. How can that increase appraisal quality when we are all running around doing reports cheap and for management companies who do not respect us at all so that we can only meet some of our bills. This industry has torn the appraiser down so badly that I feel that most do not even care anymore. If we were proud of our thriving appraisal companies and could afford to pay people to assist us.. this whole industry would change. Why cant appraisers make a profit for all their hard work? It does not exist anymore. We have been beaten up, treated as low paid slaves, and continuously asked for more to be done by us to further rob us of the wages we need to pay our company bills. We cant survive anymore at the current fees! Would you be focusing on loosing your business or would you be working on improving the quality of your work when hounded daily to work for the lowest fee possible when you cant even make your company bills now! There is ZERO respect for us! None! MANAGEMENT COMPANIES….WHERE ARE THE FEES WE DESERVE? WHERE? WHERE ARE OUR FEES? WHERE ARE MANAGEMENT COMPANIES WITHOUT APPRAISERS? NO WHERE!

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