Rants & Raves
1004MC Complaint
Dear Mr. Harrison,
I find the 1004MC a maddening affair. If the intended goal of the form is to reveal price trends in a defined market during the past year, then there must be an adequate amount of data. Mark Ratterman, whom you may know, states that statisticians claim data is generally not adequately revealing with less than 30 items from which to make a meaningful analysis.
Given the dearth of sales activity brought on by the poor economy over the past year, it is often tantamount to pulling teeth to come up with even the minimum required 3 comparable sales for an appraisal. One cannot produce meaningful results through an analysis of a literal handful of sales. If one accurately defines the market for a particular property, there will likely be far too little data from which to identify trends. The more one broadens the defined market, the more revealing the data, but doing so would necessarily include properties that are not competing with nor comparable to the subject property. Without adequate data, the 1004MC form becomes just one more useless and time-consuming pain in the backside for appraisers.
It also occurs to me that if an appraiser is intent upon producing a fraudulent or misleading appraisal report, it is no trick to construct the data for the 1004MC to support whatever value estimate he or she chooses to make. The 1004MC adds no insurance that a reported value is accurate. The net result is that the 1004MC is merely punitive to appraisers rather than useful for underwriters and lenders.
Terry Shannon
tjshannon2@comcast.net
Indianapolis
Dear Terry,
I agree that the number of sales usually available from a neighborhood sample is not adequate to render an opinion only on statistical analysis. However, I don't agree that 30 is the magical number. I like 18 better. Why not accept the 1004MC for what Fannie Mae claims it is for. Just give them what ever data you find (don't fudge the area just to get more data) and render you opinion on what you find. Explain in your comments on how you came to the conclusions you made and if you could not render an opinion just say there was not sufficient data to render an opinion. An appraiser can make a fraudulent appraisal with or without the 1004MC.
H2
Numbers Lie...
Dear REV:
I am old school. Face to face with people who had faith in our relationship. Now AMCs have become a way of life. Poor pay and coercive expectations on turn times. All your work gets checked by a computer, most of the people scanning the reports have no idea. Leave a box unchecked, even if it has not been checked in ten years, now some computer programmer says it has to have an answer.
New 1004 request yes or no answers to cut down on the dialogue. Forget that, yes or no requires an explanation. For that matter everything requires a book. Where is USPAP in all this? Every bank we deal with has a three page set of requirements.
1004MC form wants to know trends in a neighborhood. 90% of the neighborhoods or within a mile of subject have not had enough sales in the past year to verify any trend or market direction! Insufficient Data has become almost a standard answer.
I do not know where all this is going, but it has never paid to lend money to people who cannot pay. Free money drove the market and tight money is killing it. Well, as the saying goes: "Numbers lie and liars number." And greed never takes a holiday.
Joe Johnson
Cert. RD Florida
jjohns58@verizon.net
Where Will New Trainees Come From?
Dear REV:
With the new FHA requirements and the AMC situation, where are the new appraisers going to come from? The AMCs all state "no trainees" on their work orders. If you can't train, you can't work, and you will never be able to do FHA appraisals. Seems to me there will be a shortage of qualified residential appraisers in just a few years. A lot of the older guys have already quit in disgust, and more are retiring every day.
Mark Stephenson
UNCMRK21@COX.NET
