FNMA - Major Change

Update to Fannie Mae Selling Guide – Major Change!

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Appraisers and report reviewers,

FannieMae issued an update to their Selling Guide on 12/16/14.  It contains this pretty major change to their guidelines:

Adjustments to Comparable Sales

As a result of an analysis of Uniform Appraisal Dataset data specific to comparable adjustments, Fannie Mae has eliminated the 15% net and 25% gross adjustment guidelines and has provided clarification with respect to Fannie Mae’s expectations for the appraiser to analyze the market for competitive properties and provide appropriate market based adjustments without regard to limits on the size of the adjustments.

(more…)

background checks on new appraisers

AQB Proposed Background Checks Focus on ‘Public Trust’

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The Appraiser Qualifications Board of The Appraisal Foundation on Dec. 2 released a new exposure draft of proposed revisions to the 2015 Real Property Appraiser Qualification Criteria. Among the revisions is a requirement that all applicants for real property appraiser credentials have a background that does not call into question public trust.

To meet that requirement, applicants must provide state appraiser regulatory agencies with all information and documentation necessary for a jurisdiction to determine an applicant’s fitness for licensure. An applicant will not be eligible for an appraiser credential if they have been convicted of or pleaded guilty or nolo contendere to a crime that would call into question the applicant’s fitness for licensure.

As currently proposed, (more…)

Sealed Files on Appraisal Scheme

Court Won’t Unseal Files on Washington Mutual Appraisal Scheme

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A federal judge said he will not unseal files related to an alleged appraisal rigging scheme that Washington Mutual launched in an effort to favor mortgage lenders just before the 2008 market crash, Courthouse News Service reported Dec. 3.

The case involves a federal class action suit launched in 2008 in San Jose, California, by Felton Spears Jr. and Sidney Sholl who claimed that Washington Mutual, Lender’s Service Inc. and appraisal management firm First American eAppraiseIT colluded in 2006 to create inflated mortgage-loan appraisals that allowed the bank to sell aggregated security interests in the properties at inflated prices.

At Washington Mutual’s direction, eAppraiseIT and Lender’s Service hired former bank employees as appraisal business managers (more…)

Subpoena and appraisers ~copyright AppraisersBlogs

I Can’t Talk About This Appraisal Even if They Waterboard Me!

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Anyone who appraises real property long enough stands a decent chance of being swept up in a divorce.

Someone else’s.

There you are, minding your own business…opening the snail mail in hopes that your clients have finally sent those checks when… A subpoena pops out accompanied by a check for some chump-change amount.

What you discover is a subpoena originating from a law firm you never heard of…about a couple getting divorced whose name is unfamiliar…but the property address looks vaguely familiar.

Of course!

You appraised this house in 2012…for a refi. But now some strange lawyer wants you to bring this dusty refi report to court with you…next Tuesday!

Upon receiving a subpoena the natural first reaction for many appraisers is similar to finding out that they have a rare and fatal disease. (more…)

Fannie Mae AQM Blacklist Webinars

Troubling Times at Fannie Mae

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Appraisers should be concerned by Fannie Mae’s lack of transparency about its Appraiser Quality Monitoring system (AQM). In their published guidance and in various interviews, in the upcoming print edition of WRE (January 2015) and elsewhere, they remain mum on the specifics of a process that can potentially end an appraiser’s career.

If they have rules, procedures and guidelines in place to evaluate the work of appraisers in a fair and consistent manner, they are not making the details public. We believe it’s time that they do so.

This is from the cover story in the upcoming print edition of WRE, now in production:

Just as Fannie Mae promised in their July 2014 AQM FAQ, appraisers are now beginning to receive warning letters that their appraisals contain inconsistencies, inaccuracies, or data anomalies that may warrant “further action” should such behavior continue. Fannie Mae says that the intent of these communications is for “training and educational purposes” and to provide appraisers with an opportunity to improve their work before Fannie places them on the AQM (do not use) list. Appraisers across the country are receiving such letters from Fannie currently.

(more…)

Industry update FNMA CU

Fannie Mae’s Collateral Underwriter – Industry Update White Paper

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Folks…

I just found this document (PDF attached) written primarily from a ‘lender’ perspective about the upcoming Collateral Underwriter, which applies only to 1004 and 1073 form reports effective Jan. 26, 2015…but probably will be carried over to the 2055 and 1075 form reports after the initial shake out cruise.

13 pages – will help you understand what FNMA will be looking for in terms of appraisal report QC functions performed by AMC’s, and the lender’s appraisal review departments.  Knowing what they will be checking will help you avoid those errors.

Your first level of defense is to (more…)

Collateral Underwriter Risk Score

What’s Going on With Fannie Mae’s Collateral Underwriter?

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The recent announcement that Fannie Mae will expose its sellers to the Collateral Underwriter™ (CU™) appraisal review tool has appraisers wondering if the process will affect their current and future appraisals and even present problems for past appraisals. Well, from the appraiser perspective, the short answer is you probably won’t notice much difference when this change takes place in January 2015.

Fannie Mae’s Collateral Underwriter appraisal review process is not a new concept. This is the same tool that Fannie Mae has been using internally to review appraisals submitted to the Uniform Collateral Data Portal® (UCDP®). Receiving the appraisals as electronic data files allows Fannie Mae to use their proprietary analytic tools to look for potential issues with every appraisal. Data is also compiled about each appraiser (more…)

Marijuana and Appraising

Marijuana and Appraising

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Appraisers…

This topic is sure to elicit many opinions, both “fer & agin” regarding notifying your lender client about marijuana plant growing prior to completing an appraisal of a property upon which you observe this activity…..especially if you see more than the MAXIMUM allowed in your state (see the chart in the article below).

I’ve had this discussion with Washington State appraisers after our initiative was successfully passed.

Some appraisers frankly don’t give a rip about potentially illegal or property damaging activities, and only believe they are there to ‘appraise the real estate.’ (more…)

Picture this

Do Associates Need to Be Licensed to Take Photos for a Property Inspection?

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I received a great question in my email the other day:

I am writing on behalf of one of our appraisal managers who is a certified in Illinois. He wants to send one of his associates only to take the photos for a property inspection, but the associate is unlicensed. Is he authorized to do so, or would the associate need a temporary license of some kind?

In some states this is considered clerical work, and some states are considered volunteer states, so a license is not required as long as the certified appraiser clarifies in the report who took the photos.

There’s a tendency to think that any ancillary work associated with appraising is automatically significant contribution and must be disclosed as such. Taking pictures, drawing the floor plan, putting a tape or Disto to a building or spell-checking a report are all things an appraiser does. But if someone does only one or two of these on behalf of an appraiser, do they need an appraiser’s license? (more…)

Collateral Underwriter Stew

Census Tracts, Hedonic Regression and the CU Stew

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Appraisers………

The new Collateral Underwriter electronic review process developed by Fannie Mae has many appraisers on edge. This will become the ‘ultimate authority’ or gold standard for reviewing appraisal reports as of January 26, 2015… at least as far as FNMA is concerned.  Your reports will either ‘pass’ or ‘fail’, depending on many factors.  Some of those factors are outside your immediate control.

“Big Data” is one giant pile of stuff that is being put into the CU pot, stirred together like a stew.  Except there is no master chef involved that ‘we’ can interact with.  Instead we have a bunch of secret sous chefs each contributing a chunk of meat, a bit of spice, some chopped carrots, and a few potatoes.  None of them, or us, really knows the actual CU recipe, because part of what’s in the stew is a ‘model’ of something unknown. But some of that Big Data in the CU stew could be yours … or it might be data provided by your peer appraisers who (more…)

Some Good News for Appraisers

Some Good News….For a Change? – 2nd Annual List (A Work-In-Progress)

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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…)

Can you?

Can You Use a Sale That Closes the Day After Your Inspection Date?

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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…)

CU Scoring Danger for Appraisers

Fannie Mae “CU” Scoring is a Danger for Appraisers

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Appraisers…

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 1073Those 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 of these new AMC reviews

Beware: Don’t Get Trapped Into Doing These Reviews!

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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 NDC partnership

a la mode and National Data Collective Form Partnership to Offer Real Estate Data Services to Appraisers

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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…)

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