Appraisal News and Appraisal Tips For Real Estate Appraisers - Your source for appraisal industry news, appraisers' opinions, and discussions of appraisal issues

Indemnity Agreements and Appraisers 5

The Dilemma of Indemnity Agreements – What Should an Appraiser Do?

Appraisers are often required to sign lengthy contracts to obtain assignments from lenders or Appraisal Management Companies. These contracts outline the scope of work, when the assignment is due, how to transmit reports and other items that require review and understanding. Once the contract is formalized, the appraiser is then legally required to comply with its’ provisions. One important and often troublesome requirement is the Indemnity Provision. The concept of indemnity means “security against hurt, loss or damage”. Through indemnity, one party can shift the...

Scope Creep - Appraisers 3

Scope Creep!!!

Scope Creep!! I ordered a sub at a sub shop. I love tomatoes! So I asked for extra tomatoes. I was charged. I took my car in for inspection. I told the mechanic since my car was up in the air and the tires were off to rotate the tires. I was charged. BUT, the tires were off. The cook’s hand was in the tomatoes.  WHAT’s up? I was asked for two listings.  I wanted to charge.  I did a restricted report on an office building (sales comp approach only).  The client...

Automated Valuation Model (AVM) 3

Bottled Water and AVM – Sold on a Lie

Advertising is a powerful tool and very smart people will do some very dumb things, if they are properly motivated. There are many examples of how advertising creates an illusion and how we all fall victim (at least for a while) to smooth ad campaigns. One great example is automobile insurance rates. “Switch and Save.” Every insurance company ran ads promising savings over their competition. Well, of course, they all can’t be true, but for over a year there was a massive switch in policies...

Geographic Competency and Uniform Standards of Professional Appraisal Practice (USPAP) 2

Going the Distance in USPAP

When I was in private practice, much of my litigation work took me to Somonauck, Sandwich and Plano, Illinois. That’s about 45 miles west of where I live. Still, I had so much work in those areas, you’d think I had an office there. However, if I were working for many AMCs, I’d have been considered too far out of my area for the assignment. Some AMCs, under the guise of authenticating geo-competency, restrict assignments to Illinois certified appraisers based upon arbitrary distance limitations. Most...

Federal Housing Administration (FHA) Handbook 0

FHA Delays Handbook Implementation Date

FHA Extends the Single Family Housing Policy Handbook Effective Date June 15, 2015 Handbook Implementation Date Extended 90-days to Give Lenders More Time to Operationalize On April 30, 2015, the Federal Housing Administration (FHA) announced that it has extended the effective date for the policies contained within its new Single Family Housing Policy Handbook (SF Handbook; HUD Handbook 4000.1) from June 15, 2015 to September 14, 2015. FHA recognizes that there currently are a number of competing initiatives occurring simultaneously in the mortgage industry that...

Unintended Consequences & Regulatory Issues Facing the Real Estate Appraisal Profession 4

Unintended Consequences of the Dodd-Frank Law and Potential Remedies

For well over a year, the Columbia Society of Real Estate Appraisers and five other nonprofit appraiser groups have been working on an industry paper entitled Regulatory Issues Affecting the Real Estate Appraisal Profession (subtitled: Unintended Consequences of the Dodd-Frank Law and Potential Remedies). The paper is aimed at informing lawmakers of some of the unintended consequences of the Dodd-Frank law as it relates to appraisers and consumers.  We hope that lawmakers will address and correct some of the issues brought to light in this...

Arizona Association of Real Estate Appraisers (AAREA) Survey concerning the Future of Appraising in Arizona 0

Concerns about the Future of Appraising in Arizona

Arizona Appraisers, AAREA made a commitment to you to keep you informed and give you a voice. We also, on behalf of the Tucson AI, CoAA, NAIFA as well as AAREA made a commitment to the Superintendent of the Department of Financial Institutions, Lauren Kingry, that we would keep him in the loop with regard to issues and concerns of appraisers. In an effort to keep our commitments we are publishing this survey asking for your input about the past and future on several issues...

Appraisal Management Companies (AMCs) 0

AMCs: Two Years Later

We started registering AMCs about this time back in 2013. It was a slow roll from the nascent 9 applications received in March of 2013 to a peak of 42 applications received in August 2013 just ahead of the deadline to register. Since that time the number of AMCs in Illinois has ebbed and flowed. At one point we had 192. As of this writing, we stand at 155. Nationwide there are less than 700 AMC entities. The universe is small. We’ve already completed our first...

Appraiser GLA vs Assessor GLA 8

Appraisers’ GLA vs Assessors’ GLA

Appraisers, today (4/30/15), Freddie Mac released a document showing Warning and Fatal codes that will trigger if certain items are found in your reports sent to Freddie Mac through the Uniform Collateral Data Portal (UCDP), as of June 30, 2015. In 25 pages of codes, only 4 are ‘fatal’ and those are for items you should not be overlooking. See the PDF below and take a moment to look over the document. The very first ‘warning’ code is this one, which has two variations: FRE1001 The gross...

Appraisal Workfiles Risk Assessessment 23

LenderVend Requirement For Appraisers to Upload Copies of Appraisal Workfiles

Many residential appraisers we insure and several appraiser organizations have contacted us in the last few days about an appraisal management company’s new requirement that their panel appraisers upload a PDF copy of their appraisal workfile for each assignment they perform.  The AMC is LenderVend, LLC and, according to its website, it is affiliated with mortgage lender Provident Funding. We understand that LenderVend’s requirement imposes an additional burden on appraisers.  We’ve also heard firsthand from appraisers about the anxiety the policy is creating because of the unknown uses to which...

Should Appraisers Include Their Workfile Their Your Submitted Appraisal Reports 7

Should You Include Your Workfile With Your Submitted Appraisal Reports?

Appraisers, On several forums frequented by appraisers, there has been recent discussions about a particular AMC owned by a lender who is requiring appraisers to include their ENTIRE WORKFILE with every appraisal report submitted (as of 5/21/2015). The AMC is LenderVend, owned by Provident Funding. One reason why this has come to the forefront is because Provident Funding has had to buy back numerous loans due to alleged faulty appraisals and other underwriting issues.  So by demanding the appraiser’s workfile, they are attempting to protect...

The End of ABOA and What's Next 1

No More Board of Appraisal! What’s Going On?

When the State Legislature approved the budget at the beginning of March, they also approved a Statute change that put all the functions of the Board of Appraisal under the Department of Financial Institutions (DFI)  There will be no more Board as we know it.  No more nine people sitting in judgement on appraisers responding to complaints. On July 1, the ABOA as we know it will no longer exist. All responsibility and decision making previously done by the ABOA has now been put in...

Humility to Ask 2

The Humility to Ask

I was recently asked by a local lender to appraise 14 vacant lots. Though the lots were all quite similar, 14 separate appraisals were needed (obviously, a large discount was given for the multiplicity). Once a value was established for each individual lot, the lender came back and now wanted a ‘bulk value’ for 10 of the lots. Hmmm. That certainly changes things. Per USPAP in fact, we now have a new assignment. As I inquired to the bank and got more information, it was...

C&R Fees - Alter Your Thinking 8

Evolution of C&R Fees – Alter Your Thinking

Appraisers, I’ve spent the last two days reviewing the ‘new Rule’ involving the registration of AMCs, which has – buried within it by reference – information relating to Customary and Reasonable Fees for appraisal reports. I’m grateful to an appraiser acquaintance in Pennsylvania for her assistance. Below is a 4 page document that shows the mentions of “C&R Fees” – and how those apply to AMCs. You may forward this to anyone else, or may use this information in any article or publication disseminated to...