The Appraisal Institute Reacts to Fannie Mae’s Value Acceptance Program
By Kate Merrihew, Director of Education and Marketing
In March, various representatives from the Appraisal institute met with members of Federal Housing Finance Agency Divisions of Housing Mission and Goals and Fair Lending in Washington D.C. to discuss the recent announcement of the Value Acceptance Program by Fannie Mae. Though the meeting, and subsequent March 28 conference call, helped to assuage some initial fears and reactions, it did not sell the AI population on the merits of this program. Frankly, we are not sold at D.S. Murphy.
The Appraisal Institute followed up with a letter, written by AI President, Craig Steinley. In this letter, Steinley argues that the following points are concerning for the appraisal industry:
- Cross Purposes with Recruitment Efforts
- Mixed Messaging
- Technology and Market Barriers
- The Future of the Industry (“Looking Ahead”)
To summarize Steinley, AI is concerned about the ability of new appraisers to break into the profession when this program allows for diversified data collection employment. The use of appraisal waivers brings up the issue of scope. This program doesn’t seem to clearly define parameters, leading to more confusion and skepticism surrounding the inherent risk. Additionally, AI had concerns about technology creating a barrier for small businesses when certain data collection could be required for these acceptance procedures. The final point was made that without clear communication and collaboration, this program would have negative effects on the appraisal industry. Programs such as The Appraiser Diversity Initiative and Uniform Appraisal Dataset were done in direct connection with AI. AI sees these programs as positive forward motion that supports the appraisal industry and its continued existence.
This reaction from The Appraisal Institute echoes the sentiments of many D.S. Murphy team members. In this ever-changing market it is important to stay on top of current events (and inherently necessary in our industry) but this topic seems to have appeared without much consideration for its impacts. The piece that our team is most concerned about is the Property Data Collection. Value Acceptance (formerly known as appraisal waivers) has been around for at least the past 5 years. Unqualified individuals entering the profession taking away jobs that would have otherwise been completed by licensed appraisers presents the risk Steinley was speaking about, bringing new people into the profession. Many of the jobs that will be taken by Property Data Collectors are jobs that can be done/historically have been done by licensed Trainee appraisers in order to support their development into full-time appraisers. Take that away and you remove the entry point to the profession .
Fannie Mae is in the business of risk. One must have evidentiary support to take on a significant amount of risk and this program seems to neglect the need for professional evidentiary support. While this program might make sense for some properties, it does not offer much protection to the borrower. We remain skeptical but interested to see what the next steps are as we remind ourselves that Value Acceptance does not mean “fair price being paid.”
If you are interested in reading the letter from AI – you can find it HERE.
You can read Fannie Mae’s Selling Guide HERE.