Magazine article American Banker

Comment: Use Already Adopted Guides to Standardize Home Data

Magazine article American Banker

Comment: Use Already Adopted Guides to Standardize Home Data

Article excerpt

As our industry continues to rebound from the turbulence of late 1998, many lenders find themselves faced with the challenge of operating in an increasingly competitive market that offers decreasing loan quality.

Appraisal reviews are one area that seems to really highlight this problem. Many lenders have successfully relied on additional software to improve appraisal reviews. But some have improperly tried to base loan decisions on supplemental reports that have inferior data, such as drive-by appraisals and field reviews. Applying a more uniform standard to appraisal analysis has become an increasingly daunting task.

Many agree that the appraisal review process is both art and science. But we still see many inconsistencies with the supposedly more objective part of this analysis, the science or technical application of appraisal reviews.

For example, in April 1996, with little fanfare, a voluntary standard was adopted for measuring and calculating the gross living area of detached and attached single-family residential buildings.

Though approved two years ago by the American National Standards Institute, use of the guidelines is not mandatory, and they have yet to be embraced or promoted by the real estate profession.

ANSI functions as the coordinator of the private-sector voluntary standardization system in the United States. The intent of the standard is to ensure that the size of single-family homes is measured in a uniform and consistent manner by tax assessors, Realtors, builders, architects, and appraisers. …

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