For awhile after the election I thought deregulation meant getting rid of appraisals. Of course, lenders would love this.

But, why did we still have appraisals after the deminimus of $250,000 in 1989? Investors, who purchase the residential loans wanted them. Will they trust CU, BPOs, AVMs, etc. etc. Not very soon, if ever. Many thanks to the long conversation I had with long time reader and Michigan appraiser David Fishman. It reminded me of 1989 FIRREA and what it meant. Not sure if they will cut way back on commercial appraisal requirements, though.
  1. It’s terribly easy to get caught-up in the politics of the day. When I started in this business in the late 70’s home loans where about the 3-Cs. Cash, Capacity (credit) and Collateral. I don’t think that’s changed much. Appraisers judge the collateral. So long as lenders want to finance 80-95% of the “value,” they will need a reliable, unbiased opinion. Any value automation using large data sets and its algorithms is subject to huge variables in an imperfect market; as well as any bias of the program. It’s all about risk.

  2. I work for some smaller private lenders and guess what, they are far more concerned with appraisal quality than the big boys, who simply pawn the risk off to the taxpayer through (unconstitutional?) GSEs. Cheap and fast will do just fine in that case. I would love to see the government phase out loan backstops, you’ll see the demand for quality appraisals skyrocket, and you’ll also see those horrendous Fannie Mae forms get replaced with something much more efficient.

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