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What does Fannie Mae want? Can we even provide what she wants? Is it clear what she wants? In a short podcast it is impossible to answer these questions in any depth. Nevertheless, The Appraiser’s Advocate will take a stab at it! Why? Because you deserve to know!
What does Fannie Mae want? Among other demands, she wants the ability to measure risk. “What risk?!” you demand? It is no secret Fannie Mae has algorithms to provide her with a value opinion. She has this long before we turn in our appraisal reports. What she does not have, however is boots-in-the-living-room. That’s why she hires us. Out job is to look at the subject, in the context of the neighborhood, to tell her what’s going on. Is there new construction? Why? Are land uses changing? Why? Does demand well outpace supply? Why? Can the subject feasibly be modified to another use? Why? How soon? At what cost? Is the housing in the neighborhood affordable to the typical purchaser? Why? There are so may questions Fannie Mae has about a neighborhood! She needs all of these answers to measure risk. Risk of what? Risk of loss! Lending money is risky. When you lend other people’s money, it is really risky! So Fannie Mae needs us to measure the risks of investing in a mortgage in any particular neighborhood. That’s what she needs, so that’s what we provide (or what we are supposed to provide, anyway).
So, what does Fannie Mae want? She wants us to amass data, analyze it in the context of the risk of making a mortgage loan, so she can determine how risky any given loan is. We are her boots-in-the living-room, her eyes-in-the-neighborhood, her ears-to-the-ground. As we are, we are far more valuable than any AVM.
I understand that is what FNMA wants. But what I see is that very few of the words in my appraisal that would address risk, neighborhood, interesting points, exceptions, and other items of note, detailed in my report, are not read. Not by the reviewer. Not by the lenders. My reports tend to be heavy on the GTA because I use words and support, but often it feels in vain. You highlight what’s important or unique and it’s overlooked because it is outside the box.
Thank you, Jenny! You are right. We have so much to offer, yet there are so few who want what we have. My Best to you and all of yours!