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2015 Expert’s Guide to Defensible Workfile
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2015 AMC Guide – Recently Updated
Lies, Damn Lies… and FNMA ‘statistics’
by Dave Towne, AGA, MNAA
Appraisers… something has been gnawing at my craw ever since January when FNMA’s Collateral Underwriter (CU) was unleashed to the world. And before that, when FNMA’s Appraiser Quality Monitoring (AQM) process was introduced, and which is still in use to judge the work of appraisers.
It has to do with the word “Comp,” which is used liberally by Fannie Mae (FNMA).
What exactly is a “Comp?”
In FNMA’s world, it’s any property that they obtain, either by their vast automated valuation model (AVM), which examines millions of property transactions, or from properties that have been extracted from appraisal reports submitted by appraisers… yes, your work. In their fuzzy logic, it’s a “Comp” to be considered for your report if they say it is. It is not!
A true “Comp” is a property viewed and/or analyzed by a real living, breathing, mirror-fogging appraiser who compares that sold property against the subject property in terms of multiple features, characteristics and amenities. It is not determined by an AVM or algorithm within the vast bowels of FNMA. Until the property has such analysis done by an appraiser, it is merely a SALE… it is not a “Comp.”
This FNMA’s misguided perspective- intentional or not- became evident to me via a news release about how CU has been integrated into their on-line Desktop Underwriter software, that mortgage lenders use, and which you can read here: http://www.fanniemae.com/portal/about-us/media/corporate-news/2015/6239.html?p=Media&s=News+Releases&from=RSS.
Within that news release is this quotation from a VP at a mortgage lender: “The collateral information that CU provides is invaluable and simply staggering,” said Breck Tyler, Executive Vice President, Trustmark Mortgage Services. “CU has aided in providing important comparable data that was previously unavailable or very difficult to get. CU messages in DU will help streamline appraisal review and make the underwriting of an appraisal a much more informed process.”
Then FNMA released additional information directed to Correspondent Lenders who intend to use the CU process in the Uniform Collateral Data Portal (UCDP) but don’t intend to sell the loan to FNMA: https://www.fanniemae.com/content/fact_sheet/collateral-underwriter-non-seller-implementation-guide.pdf That includes this statement: “Fannie Mae does not instruct or suggest to lenders that they ask appraisers to address all or any of the up to 20 comparables that are provided by CU for most appraisals.”
I want to repeat what I said above… in case you missed the point: a property is not a “comp” unless YOU determine it is and include it in an appraisal report. Otherwise it’s just a “sale.”
If you’re an appraiser who liberally uses the word “Comp” in place of a “property sale” I would ask that you be more careful. If you receive information from a lender, AMC or anyone else who asks you to look at the “Comp” that they have provided, correct them and use the words “sale property” until you have determined that it truly is a “Comp.”
I’m also asking members of appraisal organizations and associations to communicate your concern directly with FNMA about this misconception, that they seem to be perpetuating, and ask that they change the word “Comp” to “property sales” in their CU Reports, news releases, instructional materials, etc., so that there is no misunderstanding about the significance of this issue.
If we all won’t do that on behalf of all appraisers, then we might as well kiss the profession of residential real property appraising goodbye. Because if a list of “sales” is considered as “Comps” then an actual human appraiser won’t be needed to provide supportable property analysis and market value reports.
Upcoming Live Webinars:
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Part 1: May 12th, 10 – 11:30 a.m. PST
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Background Checks—Understanding the Problem, Finding a Solution
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