Analyze the neighborhood? According to the Fannie Mae Selling Guide, there are 36 questions about the neighborhood she wants us to answer. Answers to these 36 questions helps Fannie Mae and its investors to analyze the risks of investing in a mortgage in a particular neighborhood at a particular time. For example, are land uses changing? How? Why? Are people buying houses in this neighborhood to go all Chip and Joanna on them? Why? Is there a profit potential in updating houses in your subjects neighborhood? How much? Why? What is the unemployment factor in your neighborhood and has it changed recently? Why? Are the architectural styles in your neighborhood homogenous? How did you determine this? Are prices changing? By how much? Why?
When we answer these questions we analyze the neighborhood. This helps Fannie Mae and her investors to understand thus to underwrite, risk. So Fannie Mae needs us not so much for our opinions of value. She really needs us to help her understand risk. The stupid stips we get from reviewers and AMCs are really nothing more than attempts to get us to answer the questions we should have answered in the first place.
This is why we analyze the neighborhood.
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