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Ask the Insurer – Appraisal Review, Part 2

I recently commented on an appraiser’s blog and I must admit I was hesitant at first. The relationship between appraisers and underwriters has always been a bit “strained” to say the least. As appraisers, your job is PROPERTY VALUE. That’s what they do, they appraise houses on a daily basis. One job of the underwriters is to assess risk. The value of the appraisal may not be what the insurer thinks of. In shorts; the appraiser is looking at the value of the neighborhood and the insurer is looking at the resale value (… you can almost say the worst case scenario). The insurer wants to know one thing. If this borrower defaults, what value can the “lender / investor / bank” get for it?

I want to make it very clear that if you exceed these 12 points and you submit your appraisal, there is still the possibility that your appraised value will be trimmed or revised by an outside appraisal company. One of the required appraisal review steps used by some of the larger lenders is AVM (Automated Value Model). The appraisers I have spoken to are not very appreciative of them.

They take the sales for the last 6-12 months and use some calculation unknown to any appraiser or insurer and spit out a value (maybe spitting is a bit harsh, I apologize). I may be exaggerating a bit, but I think you get my point. I’ve had more verbal beatings from appraisers after admitting that the reason I ordered a field review on their perfectly good appraisal was because the AVM was lower than its appraised value! I’m not saying the AVM is a bad thing, I’ve gotten some really bad reviews and the AVM gave me the comps I needed to prove the value was wrong.

At some point, we need to be able to make a decision based on the obvious, oh that’s right … we had that opportunity! … that’s why the market is where it is now (one-sided out-of-subscriber opinion!)

One of the things I want you to know about is FIELD REVIEWS ARE BACK! Fannie Mae Desktop Underwriter even has a RED FLAG on their finds now that says:

“Desktop Underwriter’s collateral evaluation model indicates that the value estimate submitted for this cash-out refinance transaction may be excessive. The lender should carefully review the appraisal of this transaction.”

The other two under the property and appraisal information are:

The property in question has been identified as being located in an area of ​​declining home prices or in an area where it can be difficult to assess the value of the home. The lender should carefully review the appraisal to make sure the appraiser has analyzed it properly; Lenders can order a field review or a desk review.
Property value trends and general market conditions to arrive at the provided value. The lender should request additional support from the appraiser if it determines that the appraisal does not accurately reflect current market conditions (for example, the declining property values ​​field is not marked when market conditions suggest otherwise). See our Property and Appraisal Guidelines in Part XI of the Sales Guide. This is another find condition that gives the lender the green light for a field review.
Now, no one will admit it … but these very wordy paragraphs actually mean: FIELD REVIEW!

Continuation of Part 1 Appraisal review from the insurers’ point of view

7. Did you check the bedroom count?

The building sketch shows a diagram of the rooms on the property in question. Basement rooms are not counted as bedrooms. (Please note: one of your fellow AR appraisers may explain the room count rules in detail … remember this is a list of general underwriting questions)

8. Proximity must show blocks or miles (not the same subdivision or the same street)

The proximity should show the actual number of blocks or miles. The same street or the same subdivision is not acceptable.

9. Does the subject compare with a similar property?

Do you have a ranch with a parking slab compared to a traditional two-story with an attached 2-car garage? Don’t laugh, I’ve seen it! Do you have a 2 bedroom compared to a 4 bedroom? If so, did the appraiser make adjustments and comments?

10. Is there something obstructing the subject’s vision?

Now this is a tough one. The appraiser is taking a photo at the best possible angle, but as an underwriter we have to see the full view of the house. It’s ugly sometimes, but I have to go back to what I said in Part 1 of this blog … appraisal is the only way the underwriter views the property. They should be able to see the property from the photos provided.

11. Can you see the entire topic in the image or are sections missing?

This is a red flag to subscribers that they are taught to spot immediately. If the insurer can only see part of the house, a partial street scene, half the back of the house, etc., you will need additional photographs. Some lenders may not contact the broker for additional images and may submit you for a field review, but whatever the course of action is to make sure you can clearly see the front of the house, the back of the house. house and street scene

12. Are there broken windows, missing doors, etc.?

I strongly suggest that you talk to your lender about broken windows, missing doors, and the like. Different lenders have different policies.

My suggestion: Read my blog Comp Search Anyone? If your company uses FannieMae or any other AUS (Automated Subscription System) that has an AVM built in, as I said before, the system will flag ownership.

Let me tell you this: AVMs are not accurate. I’ll say it again: they are not accurate. They are a tool lenders use to help them with the appraisal review process. In the past, underwriters pulled AVMs from questionable appraisers and back then we were looking at comps, not value!

The last thing I want to encourage you to do is ask your lender what their review process is. They may tell you the truth.

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