AN EDITORIAL BY MICHAEL SIMMONS
After 10 years of writing our monthly Newsletter, you might have noticed I’ve been MIA (Editor’s note: not to be confused with an MAI) for the last several months. I haven’t been sick (thanks for asking) nor was I in rehab (not that there’s anything wrong with that). The truth is, our Newsletter was connected to the monthly mailing of your checks and, at the point, we switched to an outside vendor to manage that process (and give you more options like ACH and early pay), I lost my triggering mechanism. While part of me enjoyed the new found ‘freedom’, in the end, I missed our conversations. Very much. So, if it’s all the same to you, let’s begin again and start a new 10-year arc…
You’ll remember last Fall we talked about Fannie and Freddie ‘introducing’ the term bifurcation into our vocabulary. The term has been around forever; it just wasn’t directly connected to appraising. This spring, at a CRN meeting and Valuation Expo conference in Chicago attended by hundreds of appraisers, Fannie virtually ripped the band-aid off and talked about bifurcation and their pilot program. Here are the short strokes.
Bifurcation, in its simplest form, merely separates the inspection process from the analysis and valuation piece. It opens the door to the utilization of alternative vendors to perform the inspection – or in Fannie’s new parlance, Property Data Collectors. These typically might include real estate agents, insurance inspectors, home inspectors, appraiser trainees … or even appraisers themselves. And just to round out the list, perhaps even your nephew Karl!
Part of what’s occurring in this Pilot program is that Fannie is seeking to learn from these various alternative inspectors (sorry, ‘collectors’) in order to determine the efficacy of each group. Delivery times, quality, consistency of data, ‘confidence’ scores and cost will all be part of the calculus in weighing the results. The stated goal is to determine the best delivery system, but I can’t help but think it’s to confirm if all options can provide an acceptable work product … including somebody’s nephew.
I can envision conditions and circumstances when each of the above could provide adequate service depending on the required Scope of Work for an assignment. And I believe the conclusion of the GSE’s (yes Freddie Mac has their own pilot too – they’re just keeping a much lower profile) is that all the various data collecting resources will ultimately be deemed endorsed providers. However, our money and commitment – is on the one group that has both a deep well of experience and an identifiable set of standards in how they prosecute their work. Any guesses? … It’s you…Appraisers!
The thing to remember here is that bifurcation can offer you an opportunity to perform an appraisal function via the inspection piece even when the goal is to support a waiver. It’s not always a given that a waiver will be offered – or that it will be accepted by a borrower or a lender. In truth, the GSE’s admit that waivers are rejected roughly 50% of the time by borrowers and lenders for any number of reasons. That means that your initial standalone inspection could easily morph to a Desktop or Standard appraisal as we know them today. And even if it never ‘morphs’, you’ve still been paid for providing an appraisal-related report – and you’ve added to your knowledge and information in a market area you serve.
I think though that, to a degree, this entire topic has been mischaracterized. Remember the statement of Fannie’s former CEO, Tim Mayopolous, who ‘envisioned’ appraiser’s sitting at their desks analyzing inspections done by non-appraiser 3rd parties? I know for some of you it conjured visions of developing Agoraphobia, becoming sensitive to sunlight and re-defining the term ‘shut-in’. Find the strength to suspend your fear and consider the following:
To begin, waivers under the best of circumstances are neither available nor recommended for jumbo loans, complex properties, loans that fall outside the spectrum of what the GSE’s purchase, FHA and VA loans, multiple units, investment properties, construction loans, ad nauseam– nor are waivers accepted in lieu of appraisals by private investors (who make up 10-15% and growing) of all mortgages purchased in the market place. You have – and continue to have – a role in providing collateral valuation assignments. So, what’s the problem?
Delivery times (i.e., speed), cost and consistent levels of quality. Same as It Ever Was (elliptical Talking Heads reference). What our industry needs to do is help you be more proficient and effective in your job. We need to make access to data, well … more accessible. You need to have tools that provide a comprehensive, complete and accurate rendition of a sketch consistently readable, informative and accurate. We need to help support you in seeing that your time-on-task is maximized. We (and others) find it disappointing that the push today is to develop tools to replace the appraiser when it should be to enhance the appraiser’s ability to perform. Why are we working to make anyone without the skills, experience, knowledge, and adherence to standards of an appraiser more efficient than you? That’s not logical (and I don’t need to reference that source).
Let’s view this as the start of a conversation. You may have questions. I may have answers or know where to get some. Either way, I invite you to ask.
Email me: firstname.lastname@example.org.
The debate around these topics will be central to all of us for a while.
I’m in…AXIS is in…How about you?
P.S. – Check your software to see if there might be a new 1004P form installed with your most recent update. Here’s a hint; compare the Statement of Assumptions and Limiting Conditions on the new form to the current 1004 you’re using.
This Month’s Tip:
One of the more common, and frustrating, comments from our Lender-Partners is that appraisers are not reading (or following) the instructions on the order regarding whom they are to contact to schedule the appraisal inspection. I know that in some jurisdictions that MLS has strict rules regarding the use of Lockbox keys and failure of an appraiser to properly notify the requisite party (in Arizona it’s the Listing Agent). Our counsel is to abide by any local rules but follow the instructions within the order. In the face of any conflict, call us and we’ll help navigate.