If You Want Online 1004 MC Information, Gather Around the Appraiser’s Water Cooler

The Market Conditions Addendum to the Appraisal Report (Form 1004 MC) is coming, and many appraisers are searching for ways to complete it online or at least via a spreadsheet program like Microsoft Excel.   If the 1004 MC is news to you, it’s surely not news to the appraisers you use.  In fact, the 1004 is pretty much the main topic of interest around the Appraiser’s Water Cooler.

I’ll go over some of the basics about the 1004 MC here, and I’ll try to lead you to a few resources that might provide some additional information.

Why is Fannie Mae Requiring Form 1004 MC?

Sometime around mid November 2008, Fannie Mae announced that it would begin requiring Appraisers to submit a Market Conditions Addendum to the Appraisal Report (Form 1004MC) with each and every appraisal they complete.

Basically, Fannie Mae purchases or securitizes mortgages in all markets and under all market conditions.  When lenders run out of money to lend, they bundle up mortgages and sell them to Fannie Mae (as well as Freddie Mac) who then turns these “bundles” into Mortgage Backed Securities to be purchased on the stock market.

Needless to say, Fannie wants to over its “Fannie” by making sure that the mortgage they buy up are worth the paper they’re written on!  Form 1004 MC, and the market conditions it requires appraisers to document, is to be the tool appraisers use to make sure that their valuations hold up.

OK. So, Form 1004 MC Helps Appraisers Back Up Valuations.  But How?

When I first wrote about the Market Conditions Addendum to the Appraisal Report, I mentioned that it will be required on all Florida appraisal reports for single to 4-family home loans dated on or after April 1, 2009. However, as explained, a good number of appraisers and lenders are asking for the information found on the 1004MC now!

Basically, the 1004MC asks for more information about market trends, supply and demand, marketing times, prior listings, and the like.

The Market Conditions Addendum FAQ provided as part of my earlier post takes care of a lot of the main questions folks have about it.  So, be sure to check it out. I’ve provided answers to some of the questions I’ve been asked most about the 1004MC.   I hope they help to clear some things up for everyone.

Doesn’t the 1004 MC Just Mean More Work for Appraisers?

For some, yes.  However, long-time Appraisers like Brian Davis, have been collecting the data and performing trend and market analysis as part of their standard appraisal efforts for a long time now.

I popped in over at the Appraisal Water Cooler today and caught a few of the Pros talking shop about the 1004 MC.  Here’s what some of them had to say…

Reply by Bill Cobb on November 15, 2008 at 8:46am

Brian, I attached the draft I was sent in August 08 (the whole page). When looking at all of the detail of this new form, it would take at least 1 hour to fill out just this form. Not to mention that lenders and AMCs have demanded we add more market analysis, 2-3 listings adjusted to list-2-sales price ratios with listing photos, much more commentary on the reconciliation section, etc.

All of these add-ons are adding 1-2 extra hours to complete this thorough of an appraisal report. MY BEEF is that they don’t want to pay a dime more for all of this extra work and time.

Reply by Brian Davis on November 15, 2008 at 9:05am

Bill – Thanks. I also provided a link to the final document (bottom of original post). I’ve also uploaded the announcement pdf as well as Fannie’s FAQ sheet on the new form.

Over my career, I’ve seen many of these initiatives. Most often it’s a reaction to appraisers not doing what they should have done in the first place.

I can remember when we did not have to include photos of the comps. Why? Because it was presumed that all appraisers were doing their job and were at least driving by them. To make SURE . . . they began requiring photos. It was their insurance that we HAD visited the comp.

There’s case after case of that happening. More recently we’ve been required to report on the historical sales and listings of the subject and comps. YEAH . . . we should have been analyzing that all along . . .but many were not. NOW . . .we’re all required to “report” that analysis.

That’s what I see in this latest Addendum. Because they feel that many appraisers were not doing the proper analysis . . .we now have to “report” those findings.

I agree . . . It take a LOT longer to “Report” those findings than it takes to just do the “Analysis”. Primarily because we have to get it into THEIR format and not just a series of MLS, Assessor, or personal charts and graphs.

So, we can see that appraisers are looking at this much as any other professional might.  Most of them have already been doing the work that a few of them look at as “extra,” so no big deal there.  It’s just a pain to get the analysis into the format the lenders are looking for.  I imagine I’d share that sentiment.

What are Some Solutions Out There to Make Completing the 1004 MC Online a Possibility?

I can’t imagine what it would be like to take paper and pen mortgage applications every time I interviewed a new applicant.  Luckily, I don’t have to.  Whether in person or by phone, I can easily use my Encompass software to get the job done swiftly and professionally.  Obviously, it also helps that I provide a way for customers to securely apply online for a Florida mortgage with a few easy clicks and some keystrokes.

But are their online 1004 MC solutions out there for Appraisers to use?  You bet.  Here are a few I’ve found.  If you know of any more – please share.

1004MC Total Solution©

It’s no secret among Appraisers that Brian Davis, over at the AppraisalScoop blog, is one of the top authorities on pretty much all things “appraisal.”  If you’ve spent any time at all on his site, you’re now very aware of an electronic 1004 MC solution that is aptly named “The 1004MC Total Solution©.” Devised by Automated Valuation Technologies, Inc. (AVT), this solution claims to streamline the various trending and analysis tasks required to complete the 1004 MC, running on the popular Microsoft Excel (2003 or 2007) spreadsheet platform.  My guess is that if it’s sold at ScoopGear.com and backed by Mr. Davis – Florida appraisers concerned with completing the 1004 MC correctly should most definitely check it out.

MLS_Analyzer^TM

I found the MLS AnalyzerTM through surfing around on Appraisers Forum for news about how appraisers are dealing with the 1004 MC.  According to the site, GeorgiaAppraiser.com, MLS AnalyzerTM MLS Analyzer analyzes downloads from various MLS services and provides appraisers with the appropriate entries for the FNMA 1004MC.

I don’t know much about this provider.  Perhaps some of you can help out by way relaying your first hand experience with it.

S.M.A.R.T. APPRAISER

Billed as “The Best Fannie Mae 1004MC Solution,” the creators of the S.M.A.R.T. Appraiser claim that it allows a real estate appraiser or an agent to define the market (i.e. zip code, city, or by geographical boundaries) and download all activity for the previous 3 years.

They also claim that it allows you to breakdown and analyze 1,000′s of records with a few clicks – as the software converts MLS data into “drill down” graphs and pre-populates and creates the new 1004MC automatically.

As with the previous software solution, I don’t know much about this provider.  Any insight you might provide is greatly appreciated.

Final Thought

I’m sure the 1004 MC means a bit of extra work for appraisers, and I empathise with the fact that extra time and effort tends to translate into higher labor costs.

There do seem to be some viable tools out there to assist appraisers with the completion of Form 1004 MC.  I do know this – if I’m paying for the appraisal, I hope the appraiser is using something to speed up to process (and still do a solid job, of course), as many out there are already stating that without an automated solution, the work required to complete the 1004 MC may cause prices may go up by as much as $150.

Related article

• Appraisers brace for industry change (appraisalnewsonline.typepad.com)

I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!

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