Fannie Mae – buy backs, adjustments, MLS fotos, etc

By Steve Costello, www.appraisalport.com

Steve reports on an educational session he attended at The Appraisal Institute (AI) annual conference in Austin, Texas, on Aug. 4-6, 2014. He also includes information from an Appraisal Institute seminar – Unraveling the Mystery of Fannie Mae Appraisal Guidelines

If you work for lenders, it is highly recommended that you read a summary of these recent changes for yourself in Announcement SEL-2014-03, dated . It can be found at
https://www.fanniemae.com/content/announcement/sel1403.pdf

Lenders are still concerned with buy-backs, where Fannie makes them buy back loans that Fannie purchased. Yes, they are happening today, sometimes due to appraisal “problems”.

Excerpts:

The ongoing scrutiny and updating of the Guidelines, combined with all these recent problems, are the reasons your lender and AMC clients now have to take great care screening your appraisal for any type of error. These days, it isn’t uncommon for a lender to be forced to buy back a loan that is still performing because an issue was discovered with the appraisal after the loan was sold on the secondary market. Many of the common UAD errors that cause problems may not have a direct effect on your final value, but these types of errors can still cause the lender to have to buy back a loan.
….
Another area of close attention by Fannie Mae that Underwood mentioned is the proper supporting of adjustments. Fannie Mae has determined this to be a problem area based on the volumes of appraisal data they examine. Just saying you made an adjustment is not good enough. You now need to show how and why you are making the adjustment. They found a lot of appraisers using “standard” amounts for adjustments. Many of these are old and outdated or no longer apply to a particular neighborhood. Fannie Mae is now looking for the appraiser to completely document how they arrived at their adjustments for any given property.

Note: Fannie Mae has said that they are especially looking to see some support for the adjustments made for gross living area and those items on the adjustment grid above gross living area, which include such attributes as the room counts, location, site and so on. How did you decide how much to adjust?

You may find some of Fannie Mae’s requirements surprising, but remember your lender may have different, more stringent requirements. Be sure to meet the requirements of your client even if they are above and beyond the Fannie Mae requirements.

A few Fannie guidelines you may not be aware of:
– Acceptable photographs include original images or those from MLS or the appraiser’s files. (If you can’t get to the comp, for instance in a gated community, you can use the MLS photos from the sale but make sure to document what you did).
– The appraiser must identify items that require immediate repair and deferred maintenance items which may or may not require immediate repair.
– Market condition adjustments must reflect the difference in the market conditions between the contract date of the comparable and the effective date of appraisal for the subject. (The adjustment may be either positive or negative).

 

Appraisal Today newsletter

Lender and AMC revision requests

Lender/AMC revision requests
By Steve Costello
Source: AppraisalPort monthly newsletter

My comment:  www.appraisalport.com  recently redid their web site and somehow their surveys got put on another page. Now, they are back. AppraisalPort has my Most Favorite Appraisal Surveys!! The current poll is about what measuring device appraisers use. Be sure to vote!! Their poll responses were typically very high, 4,000 to 6,000 responses.

——————-
Full article below:

First, I am glad to report that the poll is back up and running on the AppraisalPort homepage. It was down for a few weeks during the transition to the new version, but you can now find it by either scrolling down a bit or by just clicking on the button that says “Weekly Poll” on the right side of the screen.

This month, I want to discuss a couple of recent polls related to lender/AMC revision requests. First we asked: “Compared to a year ago, my lender/AMC revision requests have…?” Out of the 5019 responses, nearly 40 percent went with the answer “Stayed about the same.” Unfortunately the second most popular answer of “Increased significantly,” which took 21 percent of the vote and was followed closely by “Increased somewhat” with 19 percent. These were followed by the responses of “Decreased somewhat” pulling 13 percent of the vote and finally, “Decreased significantly” with a 7 percent share. There are two ways we can look at this data: Taking a negative view, 40 percent of the appraisers are experiencing some kind of increase in revision requests. That is a big number, but looking on the positive side that means that the other 60 percent have either stayed at the same level or have experienced a decrease in revision requests.

In the second poll we asked: “On average, how much time do you spend making and delivering requested revisions on any given appraisal?” We had a total of 4870 responses to this poll. Nearly half (48%) of those chose the response of “10-30 minutes.” This would seem about right for most minor to moderate revisions. Many must be making pretty minor revisions because the second most popular response with 24 percent of the vote was “Under 10 minutes”. Another 18 percent are having to take a bit more time and went with the choice of “31-60 minutes.” A smaller group of 7 percent is having to invest some real time to make the revisions and picked the response of “Over an hour.” The final 3 percent selected the answer of “I don’t make revisions.” I’m not sure if that means they are doing an amazing job on every report and never get a request or if they just refuse to do any revisions!

My comment: these results are somewhat similar to the recent Valuation Review survey results. I keep hearing lots of complaints about revision request hassles. It is good that it seems to be stablizing. Interesting results. I hardly ever have revision requests from my estate clients, except when I have a typo on the address or client name ;> I really hate getting reviewed!! Well… maybe it would be okay if it is an experienced local appraiser who knows all about my market!! I have always wondered why lender appraisals have been regularly reviewed. I don’t know of any other profession where someone else reviews so many reports that are done. I really think this is why appraisers are so negative about other appraisers’ work. I can’t remember if I took the poll… I often don’t because I don’t do any lender work and it sorta skews the results…

What do you think? Post your comments below!!

Appraisal Today newsletter