Hybrid Appraisals were tested and failed. So what does Fannie Mae do? Let’s call them Desktops with third party inspectors.
Fannie Mae has announced they will soon start accepting Desktop Appraisals. The appraiser does not inspect the property; however an interior floor plan including walls is required. This in itself is over and above what most appraisers typically provide. We understand Fannie Mae’s decision is based on risk,; however, risk is not part of an Appraisers analysis under USPAP. Will State Appraisal Boards look the other way for USPAP compliance?
How will an Appraiser who does not inspect the property provide an interior floor plan with walls? Will the Appraiser rely on virtual software with the assistance of the homeowner? If so, how will the Appraiser verify the data to comply with USPAP? Will the lender/AMC provide the sketch by an unknown third party? Does having an unknown third party or homeowner provide this information promote public trust? Will investors of the Mortgage Backed Securities accept these products? So many unanswered questions exist. See what Fannie Mae has to say about Desktop Appraisals.
We are not going to rehash everything that is wrong with the Hybrid Appraisal products (and that is exactly what this product is!) We have been there and done that. There is lots of information and comments on AppraisalBlogs, Appraisal Forum and within the Face Book Appraisal Groups.
We are simply going to share a Change.org petition that was started and ask you consider signing and sharing it with your colleagues, friends and professional associations.
https://www.change.org/p/fannie-mae-no-to-desktop-real-estate-appraisals
There are many legitimate times and reasons a desktop appraisal may be performed. In every single one of them, it is assignment specific based on the assignment specific needs of the client with a mutually agreed upon scope of work between the client and the appraiser.
They also include a scope of work decided upon and explained in the appraiser’s own words. Any relevant extraordinary assumptions and limiting conditions dictated by the nature and use of the assignment are able to be identified and explained. Such assignments may or may not be USPAP compliant. Many aren’t required to be.
The new desktops are all required to conform to USPAP…though the appraisers’ hands are tied as to how they achieve this in any reasonably economic business scenario.
FNMA’s new desktop (like all bifurcated hybrids that came before it) is very different from private desktop assignments for clients that understand what they are and are not getting.
First of all, they are all pre-labeled as being USPAP compliant. Next, NO extraordinary assumptions or hypothetical conditions may be employed. ADDITIONAL limiting conditions can only be used as long as they do not conflict with FNMA’s pre-approved one-size-fits-all limiting conditions.
Then there is the laughable requirement of an interior floor plan, complete with interior walls. Apparently, they misunderstand the concept of DESKTOP appraisal.
So, some third party has to be relied upon to go measure the interior. This is either an untrained owner or a cheap, poorly trained third-party non-appraiser vendor.
Keep in mind that NO EXTRAORDINARY ASSUMPTION of accurate or competently completed interior representations can be employed. The appraiser is responsible for all content of the report including representations of the interior. Some past bifurcated formats have even gone so far as to say the appraiser deems the (unknown) inspector to be competent!
At best this means we are reliant upon (and liable for) an owner honestly and accurately reporting interior conditions and drawing a floor plan of all living areas. We report GLA as a stated fact (a specific amount). Traditionally we explain any variances between public records and observed conditions and why we conclude our own estimates to be essentially correct. Now we must cite that some third party is factually correct.
Keep in mind the further requirement that we must verify through credible, disinterested sources any information that is provided by parties with an interest in the transaction.
Such as GLA. Or interior condition. See where this is going yet?
All without the ability to limit our exposure based upon the limited scope of the assignment. That doesn’t even consider yet that all promoters are hyping these products as cheaper and unrealistically faster. Based on WHOSE analyses?
Since FNMA has tied my hands as an appraiser by not permitting me to use logical, professional limiting conditions if I perform these, then I have ONE limiting condition left that they have no say in whatsoever.
I can and will decline to do any of these Catch-22 Fraud facilitating misleading products promoted by a GSE that was so inept that the government had to take over their control as a result of their last major fiasco in the first five to ten years of this millennia.