Last year, around Thanksgiving, I had put together a list of some positive things going on for appraisers. It was/is all-too-rare that we hear positive news regarding the appraisal profession. There is an awful lot of complaining that goes on, most of it justifiable, but little good news that gets shared. Part of the problem is that there is no central source for information regarding our profession which appraisers might utilize in order to find out what is going on across the country and affecting our profession, and could be used to enhance our industry and the citizens in each of our own states.
From what I have seen, most of any good news is being generated on a state basis. Every small victory in one state can be viewed as a seedling for development and further improvement in 49 other states and other territories.
What you see here is a draft, as I am hoping that those reading (more…)
So, here’s the situation; you are appraising a unique property in a limited area with few sales. You inspect the subject on Wednesday and finally get to the write up on Friday morning. As you are searching the neighborhood for sales, you notice a fairly comparable home that sold on the same street. It happens to be the very best comparable you have. The problem? It sold on Thursday…the day after the inspection date. Bummer! But, can you still use it?
In order to answer this intriguing question, let’s step back for just a minute and look at the bigger picture. What is the purpose of an appraisal? Aren’t we here to establish the most probable price the subject would likely sell for in the current market? How do we best do that? Most often, it is through the sales comparison approach to value which uses the law of substitution to determine value. In other words, we find comparable properties which have sold within the current market conditions (or adjust if market conditions have changed). Which is likely more reflective of the current market; a sale from 9 months ago which exceeds FNMA guidelines for adjustments or one from a day after the inspection date which is nearly identical to the subject? (more…)
Many know by now that the GSE’s, primarily Fannie Mae, have instituted a new ‘appraisal scoring’ procedure based on an electronic read of your reports, specifically on a SFR 1004 or the Condo 1073. Those are the only forms currently being analyzed by the CU process.
On Nov. 18, 2014, FNMA released a document named “UCDP Fannie Mae Appraisal Messaging Change Notification” which you can find here: https://www.fanniemae.com/content/release_notes/ucdp-change-notification-01262015.pdf
I encourage all appraisers to actually read this document … all 11 pages.
When you do read this document, you will learn that your reports are being compared to your peer’s reports, and to your other reports, and to some unidentified ‘model’ FNMA uses. (more…)
Beware The New Reviews!!!
Several appraisers have sent review forms to AAREA that were sent to them to complete for $50 to $150. These forms are quicky reviews so that the lender/AMC can meet the federal guidelines which are now requiring that all reports be reviewed.
Remember, the appraiser must be USPAP compliant, not the forms. If you are asked to do a review on any report where you do not have geographic competency and do not have access to the MLS and County records you are violating USPAP and exposing yourself to many problems. You cannot answer the question, “Are the analyses, opinion and conclusions of (insert any section) credible?” if you (more…)
a la mode and National Data Collective Form Partnership to Offer Real Estate Data Services to Appraisers2
November 10, 2014 — Naples, FL — a la mode announced today that NDC (National Data Collective), a leading national provider of property data for real estate professionals, has agreed to integrate its data products with a la mode’s full range of appraisal formfilling systems.
NDC offers a subscription-based data service to appraisers covering more than 130 million properties in all 50 states, with full property profiles, assessor records, deed history and comparables data. Its products are available on desktop and mobile platforms, with an advanced user interface designed around appraiser efficiency. Foreclosure activity is also available, along with flood information, linked deed histories, and more. Customizable packages are available in monthly or annual subscriptions. (more…)
Online Petition to Allow appraiser Access to Data They Provided Through the Uniform Appraisal Dataset (UAD)1
I am asking that you to take a moment to participate in this important industry effort.
Fannie Mae’s Collateral Underwriter (CU) will be available in the first half of 2015. The CU performs automated risk assessment of appraisals submitted to the Uniform Collateral Data Portal based on information that you provided through the Uniform Appraisal Dataset (UAD). The CU provides a risk score, flags, and messages to the lender.
The GSE’s have mandated that all appraisals be submitted in the UAD format; however, currently there are no plans to provide appraisers access to this data. (more…)
It happened again this week. An appraisal was done, the report was turned into the AMC, and this was the revision request: “A preliminary review of your appraisal indicates that the HOA fee was filled out, but the PUD box and PUD section was left blank. Please fill out the PUD information and resend the report at your earliest convenience.” Ugh! I opened up the report and wrote a quick sentence or two in the Additional Comments section explaining that the subject has HOA fees for the private road maintenance, but it was not located in a Planned Unit Development. An hour later, the following revision request was received: “A secondary review of your appraisal indicates that the HOA fee was filled out, but the PUD box and PUD section was left blank. Please fill out the PUD information and resend the report at your earliest convenience. This is the second request!” Double Ugh!
At this point, I emailed the AMC directly and did my best to explain to them that the presence of Home Owner Association fees does not always mean that the house is in a Planned Unit Development. After a very long, cumbersome back and forth, I was finally transferred to a ‘senior appraiser’ who was able to speak English and (more…)
FNMA Collateral Underwriter Flyer showing info about the FNMA Collateral Underwriter process they will make available to lenders (NOT APPRAISERS) in January 2015. You should review it. It has to do with their Enhancement of Risk Controls.
This is what we know as Appraisal Quality Monitoring (AQM) … which was announced almost 2 years ago. FNMA has already been using the ‘scope’ on your reports, but will soon allow the lenders to have access to the software so that they can do pre-submittal exams prior to uploading the loan file, and your appraisal, to FNMA. (more…)
A consumer class action complaint has been filed against a lender and its AMC relating to the subject matter of a prior CFPB investigation and settlement.
Last August, the Consumer Financial Protection Bureau (CFPB) announced that it had taken action against Amerisave Mortgage Corporation, its affiliated AMC Novo Appraisal Management Company, and one of the owners of both companies Patrick Markert. Part of the CFPB’s action concerned alleged overcharging for appraisal services by the AMC and failure to disclose the AMC’s affiliation with the lender. Under a consent order, Amerisave and Novo agreed to pay $14.8 million in refunds to consumers and a $4.5 million penalty. Mr. Markert individually agreed to pay an additional $1.5 million penalty.
On September 10, 2014 (more…)
OK, I admit it. I am old school. I still think you need to understand how to do something manually before you throw caution to the wind and buy into new technology to replace a good, old-fashioned, hands-on process that has worked fine for years. I honestly believe the use of technology without a complete understanding of how to do the basic process manually just lets us make more frequent and more complicated mistakes faster. In other words, if you can’t drive a Chevy Nova very well, don’t buy a Maserati Ghibli and expect it to fix your driving problems. All that will happen is that you will be going faster when you hit the wall.
What does this have to do with the Form 1004MC? In the old days when television was black and white and when reporters reported the news instead of making it up, the officers of banks and savings and loans had to decide what their home loan lending policies would be. First, they had to decide if they would offer home loans at all. Next, they had to decide what cities they would make loans in (typically they would only loan in markets where they had deposits so they had firsthand knowledge of those markets). (more…)
Relationships are important. The bonds we form with a spouse, children, friends, or business associates can be powerful and a strength. When trust is broken, however, deep challenges emerge. Divorce, separation, or permanent dissolution can be the end result when someone’s integrity is on the line. The trust factor between an appraiser and the client is essential if professionalism and continued business is to be amicable.
Last month, I wrote an article about taking drive-by and comp pictures. The comment boards lit up. Most appraisers agreed with me (for a change), but many did not. I read every comment and have spent some time thinking about the insights and opinions of so many appraisers. The question that keeps haunting me is, “why?” Why are pictures required in the first place? I think there are two, equal answers. One has to do with clarity, and the other has to do with trust. (more…)
Representatives of several independent state professional appraiser organizations met in Chicago, Illinois on Saturday October 11th, to further discuss collaboration on issues affecting their membership. The network, which started as a conversation among three State appraiser organizations less than a year ago, now comprises 16 such State Organizations which is expected to continue growing.
The group, which functions as a network rather than a formal organization is unique in its focus and operation. The network has no single elected leader but is comprised of leaders from each participating state organization; it is self-governing by consensus. Participating organizations do not pay dues and market no products. The network has a single overarching purpose: to improve and elevate the appraisal profession. (more…)
Today I received a notice telling me my best customer was changing over to an AMC for all their appraisal ordering. I have worked for this company for many years and have always enjoyed a great relationship. Today that ended. I can longer talk to any person at the bank.
In my application to continue working for this company I have worked with for so long, I have to provide sample reports, a resume, three business references, license info, info about CE classes I have taken. I have to sign to agree to new terms which completely change the way I get paid, how much I get paid, how long it takes to get paid, the amount of comps within my reports, agree to provide them pretty much anything they ask for within 24 hours, give them permission to make deposits and withdrawals from my checking account (in case they make a mistake or I don’t do something they ask), and basically give them more power (more…)
BLACKSBURG, Va., Oct. 7, 2014 – Virginia Tech researchers and students conducted a survey of Virginia residential real estate appraisers to analyze the patterns of fees earned in 2013. Prior to the release of this report, no data existed that defined “customary and reasonable” residential real estate appraisal fees in Virginia.
This report is the third report of its type to be conducted in the United States, and the first in Virginia.
The research was conducted in response to recent amendments to the Truth in Lending Act modified by the Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank. This legislation requires lenders to pay appraisers a “customary and reasonable fee” for residential real estate appraisal services in their geographic market. (more…)
Regulations state that appraisal adjustments cannot be based upon an appraiser’s opinion. According to federal and state law, adjustments must be based on support and evidence- proof if you will, and an appraiser’s opinion is not considered to be “support.” Many appraisers have failed to support their adjustments and as a result have had their licenses revoked, penalties assessed and lawsuits lost, all because the they failed to understand a single but important requirement.
Think about your appraisals. Are the adjustments based on your opinion or do you have proof of the adjustment in your workfile? If your workfiles are reviewed by the state or as part of an investigation or lawsuit, would you have “the right stuff” or fail the test?
When I first got into the appraisal business, the person training me handed me a sheet of paper that listed all of the adjustments I was going to need to complete an appraisal. I bet this sounds familiar to many appraisers. I was also a real estate agent specializing in selling new homes, so I knew what builders were charging for add-ons like a kitchen upgrade, extra bathroom or garage. So between what I was told to use and what I knew builders were charging: “Of course I know what the adjustment should be- $2,500 for a bedroom, $2,500 for a bathroom, $3,500 for a garage and $500 for a fireplace. We are all in agreement…..right!?!” (more…)