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Fannie Mae's Value Acceptance + Property Data program, set to launch on April 15, 2023, has cast a shadow over the appraisal industry's future, potentially marking the beginning of the end for licensed appraisers.
The program aims to transform mortgage loans by replacing traditional appraisals with assessments conducted by unlicensed "Property Data Collectors," and many are questioning whether this is the first step in eliminating appraisers altogether.
Appraisal Waiver Program Explained
Value Acceptance + Property Data expands upon Fannie Mae's 2017 appraisal waiver program, providing a more extensive data-driven approach to property valuation. The new program combines automated valuation models (AVMs) with additional property data collected by non-licensed inspectors, currently limited to single-unit properties.
Critics argue AVMs cannot replace licensed appraisers' expertise, and using non-licensed Property Data Collectors raises concerns about assessment quality and consistency.
Property Data Collectors visit properties to perform data collection using one of Fannie Mae's six approved apps that meet their Property Data Standard. These individuals must identify safety, soundness, or structural integrity issues and items of incomplete construction or renovation. However, they don't require a license, raising questions about qualifications and industry impact.
Requirements to Become a Property Data Collector
Fannie Mae requires lenders to vet Property Data Collectors by verifying their background, providing professional training, and ensuring they possess the essential knowledge for competent data collection. However, the lack of a licensing requirement leaves the profession largely unregulated, with the scope of "professional training" left to the lender. This absence of regulation raises concerns about data collection quality, consistency, conflicts of interest, and biased assessments.
Lenders must ensure data collectors comply with fair lending laws and deliver unbiased, accurate results. Lenders are required to ensure that Property Data Collectors have received Fair Housing training, the scope of which has also been left entirely to the lender. However, without standardized licensing, maintaining consistent quality across the profession may prove difficult, potentially resulting in inaccurate assessments and skewed property values.
Potential Impacts on the Housing Market and Appraisal Profession
As more loans bypass traditional appraisals, property value inaccuracies may increase, leading to higher loan-to-value (LTV) ratios, increased default risk, and possibly another housing market crash like in 2008. The absence of a strong foundation in property values could erode trust in the mortgage system, impacting the entire housing market.
The introduction of unlicensed property inspectors in the Value Acceptance + Property Data program could signify the appraisal profession's decline. As more loans are processed without licensed appraisers, the demand for their services may diminish, jeopardizing their careers and livelihoods.
In conclusion, Fannie Mae's Value Acceptance + Property Data program poses a risk to the mortgage industry and licensed appraisers' future. By replacing traditional appraisals with unlicensed property inspector assessments, this program threatens property value foundations and could potentially destabilize the housing market. As the industry navigates this new program's implications, the future of mortgage lending and the appraisal profession hangs in the balance.
Do you have any plans to moonlight as a property data collector?
Sound off in the comments or discuss with a colleague in our next CE class!
References
McKissock Learning. (2023). Beyond the Hype: Fannie Mae Announcement SEL-2023-02.
HousingWire. (2023). Fannie Mae: Appraisals no longer the default option.
Hamp Thomas. YouTube Video. (2023). Fannie Mae - No Appraisals Required - The End of Appraisers?
Fannie Mae. (2023). Selling Guide Announcement SEL-2023-02.
Data collection also involves a detailed scan of the interior of your home, down to the names of the books on your table to the dust bunnies on the ceiling. Then this scan is saved in the Governments data base forever. I personally do not think they need to have my personal contents in my house to reference anytime they please for any reason at all. Plus Fannie Mae does not disclose this fact to anyone.
OMG nobody cares about race. Stop being brainwashed and baited by MSM propaganda.
Appraisers are like the brakes on a train. Take away the brakes and see how well that goes over for you.
Which part of the waiver is new? These PIWs have been used for a long time. The given value is based on comparable sales in the area, and rarely deviate from a fully completed appraisal value. I think I need more information.
This can be dangerous for the appraiser taking on ALL liability for the products, the lenders, borrowers and the economy. Every listing agent should verify that the person scheduling the appointment is an appraiser (state licensing board or ASC.GOV) or data collector. Imagine the liability giving a lockbox code to some random person? Many of these "data collectors" receive 3 hours of training. How does that compare to the hours and hours of education and experience an appraiser has? We have already seen fallout from these products, and this can potentially cause problems in our economy. If you are a Licensed RE agent participating in data collection, you also may be on the line if there are errors or omis…