Posts Tagged ‘desk review’
Fannie Mae Plays Hardball
As we all know, real estate appraisers are the men and women in the field, going from property to property and making evaluations based on years of training and experience, and then reporting these numbers to mortgage lenders to establish property values.
But after receiving appraisals they feel are too high, some lenders have taken to performing desk reviews – appraisals done from a computer. While qualified real estate appraisers are able to perform accurate desk reviews if need be, lenders’ desk review values can be wildly inaccurate. Since there is no on-site inspection, they don’t reflect the condition of a house, they don’t add value for remodels, they’re often lacking information even on room additions, and so forth. Nevertheless, lenders are using desk reviews as justification to reduce appraised values, and sales continue to fall apart.
Fannie Mae has announced that effective September 1, 2010, lenders will no longer be allowed to reduce appraised valuations. Instead, they will be required to contact the appraiser to resolve discrepancies between the appraiser’s value and the desk review value. If the disagreement can’t be resolved on that level, the lender will be required to order a second appraisal.
By: Present Value
Additional reading:
Appraisal Review
An appraisal review is a report that comments on the completeness and accuracy of a real estate appraisal report. Some appraisal reviews ensure compliance with technical rules such as USPAP, and other reviews focus on the value estimate. The review may be written out in paragraph form, or presented as a checklist.
There are three types of appraisal reviews:
> A desk review, as it sounds, is done at the reviewer’s desk, and can be prepared with or without validating the data in the appraisal report. The desk review searches for discrepancies, and verifies that the appraisal meets all standards set by the industry, appropriate comparable properties have been used, and correct adjustments have been made. The desk review ensures that the values are accurate.
> In a field review, the review appraiser examines the property in person. The appraisal is examined for accuracy, and the reviewer provides an exterior field inspection of the subject and all comparable properties used, which provides maximum appraisal certainty.
One reason that a field review appraisal might be required is that the property could be located in an area that just realized a natural disaster, and extensive damage could have been done to a property after the initial appraisal was already completed. To protect a lender’s interest, a field review appraisal may be required to ensure the property being financed was not affected by the disaster.
> A full review is one in which the appraiser independently collects data. Ideally, the reviewer has qualifications at least equal to those of the appraiser who prepared the appraisal. The reviewer is normally not responsible for the value estimate in the appraisal report.
By: Present Value
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