I hear that I have been labelled a fanatic because I disagree with Fannie Mae’s new policies. I am being quoted with single lines taken out of context, and without being asked any questions or even being told they would quote me in their articles. It seems like a David and Goliath situation. What I understand is that Fannie Mae is one of the largest financial institutions in the world and if they go down, taxpayers pick up the bill.
My opinion is very clear, I am pro-appraiser. In my opinion, there has been an orchestrated effort to devalue the appraisal industry with one crisis after another, always leading the public to believe appraisers are the root cause of all mortgage problems.
What about the “data” we hear so much about? Just imagine FNMA without the ability to take data from signed appraisal reports. What would change? What if they had to pay appraisers for their data? Next, Fannie Mae and AMCs have worked together under the radar and now FNMA has granted a handful of AMCs the keys to the multi-billion dollar mortgage industry. Instead of a 5-10% fee these companies charged prior to HVCC/Dodd-Frank, now they expect to receive just as much and many times a larger fee than the appraiser. Pretty good work if you can get it. And, who reviews appraisals? The AMCs? Lenders? Fannie Mae? Who gets paid for that and who is truly qualified? AMCs get paid off the backs of hard-working appraisers without having to disclose it to consumers. And the new plan is for AMCs to create an army of appraisers working for their company who work at their direction. Who is responsible for those appraisals when a complaint is filed? I bet you know the answer…
Here are my complaints:
1. FNMA takes data from signed appraisal reports without consent or compensation. Realtors and the MLS charge a fee for the data they collect. FNMA plainly tells us they plan on continuing their efforts to take appraiser’s data to fuel their valuation models.
2. Appraisal Management Companies are allowed to avoid disclosing their fees. In no other industry is this allowed.
3. Six AMCs were given prior access to FNMAs new loan system giving them an unfair trade advantage over all other competition. In my opinion, this is Bias and an Antitrust issue in any other industry.
4. Third Party Data Collectors are being allowed to replace licensed appraisers. Granting unlicensed and minimally trained people access to consumer’s property. This places consumers at great risk and is being promoted as a method to improve appraisal quality. In my opinion, it is false advertising by stating that third-party inspections improve appraisal quality. This appears aimed at reducing the reliance of appraisers for consumers, providing FNMA with more power to grow automated valuations and reduce the appraiser’s role in mortgage lending.
5. FNMA can file a complaint against an appraiser without a signature and without giving the appraiser a chance to defend themselves. Not allowed in any other business.
6. FNMA ads state:
A. “We are moving away from implying an appraisal is a default requirement.”
B. “Empowering lenders to better serve their customers through a spectrum of options that foster a more efficient, understandable, and impartial valuations system, saving time and money in the origination process.”
C. “Promotes safety/soundness by obtaining current observation of the subject property.”
D. “The journey to a more efficient and fair home valuation process.”
This certainly sounds like an appraisal inspection is less reliable than a third-party inspection and appraisers must not be able to observe the safety and soundness of a property better than a third-party inspector. If this new program only impacts three to four percent of all total loans as FNMA claims, then why the major announcements and advertising to let the public know? It makes it sound like appraisers are on the way out. This is a major announcement and they have made a very big deal by advertising that “We are moving away from implying that an appraisal is a default requirement.” If this is for three to four percent of all loans, I can only imagine what is in store for the future.
If Fannie Mae wants to work with the appraisal industry again, they could take these steps:
1. Remove the third-party inspection program
2. Make AMC fee disclosure mandatory
3. Pay appraisers $3.00 for every appraisal report they have used to take data from, past and future. This is very inexpensive compared to what appraisers have to pay for the data they use from MLS.
Fannie Mae was once a great partner for the appraisal industry. However, that partnership changed from the appraisal industry to the Appraisal Management industry. I say let’s go back to better…