FHA Requirements vs USPAP

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FHA vs USPAP - FHA vs USPAP - FHA requirements – Appraisers Caught in Catch 22

FHA Requirements vs USPAP – Appraisers Caught in Catch 22

Excerpt

The new FHA Handbook will become effective on September 14, 2015. There has been much discussion of the implications of changing “should” to “must” in thousands of examples in the Handbook.

As a Board member of the Arizona Association of Real Estate Appraisers as well as being on the FHA Roster, I have taken a good hard look at these requirements and then, it hit me as I was teaching the Uniform Standards of Professional Appraisal Practice (USPAP) which is the basis of appraisal standards for every appraiser in the United States. The FHA assignment conditions, whether under “should” to “must” force appraisers into a Catch 22 or turn down the FHA appraisal assignments. FHA is essentially making it a condition of employment that appraisers violate the Competency Rule. Why did I not see this before? I guess because the two never converged in my mind at the same time and I expect that is what has also happened to other appraisers.

Competency Rule: 2014-2015 Uniform Standards of Professional Appraisal Practice

Lines 344-346: “An appraiser must: (1) be competent to perform the assignment; (2) acquire the necessary competency to perform the assignment; or (3) decline or withdraw from the assignment. In all cases, the appraiser must perform competently when completing the assignment.”

It is an FHA assignment condition that appraisers make the following statement within the report:

“The utilities were on and functioning at the time of inspection and the home meets 4150.2 & 4905.1 HUD Requirements,” and “Other intended users[of the report] are HUD/FHA.”

…the question is obvious, “Is an appraiser (you for example) qualified [competent] to make the statement that ‘the home meets 4150.2 & 4905.1 HUD Requirements?”

Please visit Arizona Association of Real Estate Appraiser (AAREA) for full story.

Joanna Conde, AQB Certified USPAP Instructor, Arizona Association of Real Estate Appraiser (AAREA) representative

Photo credit flickr - gfpeck
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111 Responses

  1. Annemieke Roell says:

    I am thinking of contacting the HOC, in writing, and asking the if it will be acceptable to add a comment that I am an appraiser, not an inspector, and that I am making the extraordinary Assumption that all mechanicals are on good working order but that the lender ought to rely on all inspection.

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    • Koma says:

      Already put a similar statement to that fact in all my appraisal reports.

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    • You would still have to disclose to the client before you accept the assignment that you are not competent to complete the scope of work (SOW) wouldn’t you. You can not just hide your lack of competency behind one statement hidden in the report. It must be disclosed before accepting the assignment.

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  2. Stephanie Will says:

    So what is the solution? I’ve also considered not completing FHA appraisals, but that’s also a significant portion of our work. Also, as you stated in the article there are several clients that require you be on the FHA Roster to complete some conventional and even some REO appraisals. I feel the appraisers have been placed in a very unfair position yet again.

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    • Join a local & national appraisers group & push for the changes you believe in. This is our industry & the only way to save it is for the appraisers to roll up our sleeves & do some of that good old fashioned hard work people used to talk about. “I’m mad as hell & I’m not going to take it anymore” might be a good place to start.

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  3. bubba jay bubba jay says:

    this article re-iterates what i have been saying for a long time now. WE ARE NOT home inspectors! we shouldnt be doing any home inspecting! get the home inspectors FHA qualified. part of the FHA loan document package should be the home inspection report. we should be APPRAISING, and not doing anything else. we are NOT qualified to do any thorough inspections, just like an inspector isnt qualified to do a thorough appraisal. MAKE THE HOME INSPECTORS INSPECT THE HOMES. D-U-H.

    once again another monkey is thrown on our backs because the appraisal industry is run by spineless over-educated idiots lacking any common sense. it never ceases to amaze me that out of the millions of little spermies that were out there on the day of conception, these were the ones that actually got through.

    the bleeding continues . . . . .

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  4. Fritz Vogel says:

    The new requirements take me out of the game. I don’t know ANY appraiser that can inspect a furnace, boiler, AC compressor, Hot Water tank, Electric service et al. When you see an FHA appraiser or appraisal after September 2015, you will know It’s a lie to begin with, before you review it.

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  5. Fritz Vogel says:

    I guess I’m out of the game come September. Most FHA buyers will then be dealing with bad appraisers

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    • bubba jay bubba jay says:

      i dont think “bad” is necessarily the right word. if FHA buyers are expecting FHA appraisers/inspectors to do a thorough house inspection and know what they are doing, then buyers will be dealing with misconceptions, and appraisers will be dealing with even more liability. anyone else starting to get calls from the AMC’s they work with about their E&O limits? i am. i guarantee you they know whats coming next month, and they are already thinking about covering themselves at our expense again.

      more time involved in a report, increased liability, insurance rates probably going up, and pay of course, still frozen at the same rate it was ten years ago. what a lovely profession we all work in.

      the bleeding continues . . . . .

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  6. Steve says:

    This may sound far fetched but #1, the “Client” should first know, and know thoroughly all the “must’s” in the new FHA, and in knowing, ask the appraiser first if they are in fact competent in home/roof/HVAC/mechanical, etc. inspecting under the new FHA guidelines. #2 All these “must’s” are “observation/visual/surface inspections” only and not “tear it apart and inspect every part” inspections, which one comment can be

    “Based on the required observation/visual/surface inspection as required by FHA Handbook “___” and with “X” amount of years experience and being a homeowner also, the “______” appears to meet all FHA requirements, etc.. If it is found otherwise, it is highly suggested that a licensed and professional “_______” inspector do a thorough and in-depth inspection and report to the appraiser the findings to discern whether the “noted issue” at hand will have an affect on value and marketability as per the Clients letter of engagement and/or scope of work in determining the subjects market value as of the effective date of the appraisal.”

    Personally, I’m still on the fence as to whether or not I’ll continue to be on the approved roster list, after 22 years of being approved and now this.
    home inspector, roof inspector, trained HVAC inspector, or mechanical or structural engineer,

    Read more: FHA vs USPAP – Appraisers Caught in Catch 22 | Appraisers Blogs
    home inspector, roof inspector, trained HVAC inspector, or mechanical or structural engineer,

    Read more: FHA vs USPAP – Appraisers Caught in Catch 22 | Appraisers Blogs

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    • Wayne says:

      It is an FHA assignment condition that appraisers make the following statement within the report: “The utilities were on and functioning at the time of inspection and the home meets 4150.2 & 4905.1 HUD Requirements,” and “Other intended users[of the report] are HUD/FHA.” We are supposed to sign the report agreeing with this statement.

      Now we add a DISCLAiMER:  I accepted this assignment knowing full well that I was not qualified to perform the tasks required. This disclaimer is one of those “now you see it, now you don’t” things. I hope to continue earning fees by doing FHA appraisals when I do not have the background, experience or training necessary to meet the USPAP requirements for accepting such assignment. I sincerely hope that you do not suffer any loss from my incompetence and if you do, please do not sue me!

      – – – – – – – – – – – – – – – – –

      Realtor to buyer: You do not need to spend money on a home inspection or a home warranty. This is an FHA loan and the FHA appraiser has already inspected the home to make sure that everything is ok. Go spend that extra money on the new drapes you wanted for the living room!

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      • You would still have to disclose to the client before you accept the assignment that you are not competent to complete the scope of work (SOW) wouldn’t you. You can not just hide your lack of competency behind one statement hidden in the report. It must be disclosed before accepting the assignment.

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  7. Deb G. says:

    This blog is exactly what I’ve been thinking for a long, long time.  Thanks for expressing it all so clearly and succinctly.  I am definitely in the (large and growing) camp of appraisers who will stop doing FHA’s in September, if this doesn’t change in the next few weeks.

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  8. John says:

    Charge $800 to do FHA assignments and hire a licensed inspector to do the inspections for $400.  Include a copy of the inspection in your report.

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    • Koma says:

      No, that is still putting the onus on us as appraisers. Home Inspection “must” be a requirement for an FHA assignment, completed and given to an appraiser before the assignment is given out.

       

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      • If I charged $800 it would STILL mean I am working for less than customary or reasonable!

        I ONLY recommend ASHI Certified Home Inspectors, because I know they must pass a strict two day competency exam comprised of a field exam test and a written report test of that field inspection. I used to work with one of the regional VPs of their organization. I’ve never met an ASHI inspector yet that didn’t do a great job. They ALSO charge more for competency. $450 to $500 might not be out of line for a non complex house.

        That only leaves $300-$350 for me as appraiser. No thanks. Im doing my very best to get $650 or  higher minimum for pretty much everything these days (except for one periodic client). Even when I don’t get the jobs because Im not remotely competitive, I have at least helped someone else justify a $400; $500 or $600 fee….unless THEY squander it by taking $275 or $350.

        Folks there is a moderate amount of non loan production work that pays much more than AMC work. Start going after it. Attorneys (double your low fees and do great work;+ charge $150 to $350 for expert witness testimony depending on your area). Collect the fee up front; and the EW fees in the hall at the courthouse or don’t testify (memory lapse).

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  9. Retired Appraiser Retired Appraiser says:

    Just Add The Following Disclaimer To Each Appraisal…You’ll Be Covered  😉

    “Due to the fact that I am being asked to do twice the work for half the fee and forced into doing 24 hour turnaround you may find several HUGE mistakes within this appraisal.

    Due to the fact that USPAP, HUD, The Appraisal Foundation, and our State Appraisal Board prefer to change the rules for appraisers on a weekly basis you may find several HUGE mistakes within this appraisal.

    Due to the fact that HUD is now forcing me to also do a home inspection on the property free (and with no license) you WILL FIND several HUGE mistakes within this appraisal.”

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  10. gb says:

    Wouldn’t making the report “subject to” certification by a licensed home inspector that appraisal meets HUD/FHA guidelines work?  Lenders might not like it, but in most instances (in southern California) a home inspection is being done anyway…..

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  11. Deb Heger says:

    I agree with gb- Who from HUD /FHA can answer the question:

    Can we make our report subject to an home inspection that covers all the mentioned areas – buyer to choose the inspector – ?

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  12. Scott Whaley says:

     
    There has always been some liability in doing FHA appraisals.  I remember back around 1999 or 2000 when the 50 question test went into effect.  There were a lot of appraisers that quit doing FHA appraisals.  Slowly, they came back and got back on the roster.  Now, we have the 4000.1.  I know there will be a lot of appraisers that will stop doing FHA appraisals at the start.  I will most likely be one of them.  Let’s see how long it takes for them and me to get back to doing them. 
     
    This is something that I noticed in the 4000.1: 
     
    FHA.  An Appraiser’s observation is limited to readily observable conditions and is not as comprehensive an inspection as one performed by a licensed home inspector.
     
    But, right below it, it says, “FHA requires Mortgagees to select qualified, competent and knowledgeable Appraisers.
     

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  13. Thomas Tipton says:

    Scott Whaley is absolutely right. FHA has included a qualifying limitation in the 4000.1 regarding an appraiser’s ability to perform a Home Inspection. This is similar to FNMA recognizing appraiser’s are not qualified to perform an professional inspection for mold, fungi, radon and other similar conditions.

    So, place the above noted FHA language in your appraisal report along with a statement that the borrower and all other interested parties to the loan closing are strongly encouraged to obtain a Home Inspection prior to the closing of the loan due to the acknowledgement that FHA recognizes “An Appraiser’s observation is limited to readily observable conditions and is not as comprehensive an inspection as one performed by a licensed home inspector.” That disclaimer statement provides a defense attorney the ability to stop the type of lawsuit being discussed in this blog.

    The above clarifying statement will also be acceptable to the AMC, lender, and other interested parties.

    With all due respect to others who are concerned about the future of FHA appraisal work, it is my opinion the ‘worst case’ possibilities will likely not occur. I sure hope a lot of appraiser’s stop doing FHA and Rural Housing work because after September 14th those of us who stay in the game will have a very good chance to get a significant increase in appraisal fees.

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    • Craig Masterson says:

      Thomas, I fully agree with you. Here’s my assessment of the author’s argument. The author makes the following argument:

      Premise 1 (P1): If home inspector competency is necessary to certify FHA MPR/MPS conditions, then if an appraiser does not have home inspector competency, then if she completes an FHA appraisal she violates the competency rule of USPAP.

      Premise 2 (P2): Home inspector competency is necessary to certify FHA MPR/MPS conditions.

      Preliminary Conclusion (PC): Therefore, If an appraiser does not have home inspector competency, then if she completes an FHA appraisal assignment she violates the competency rule of USPAP.

      Premise 3 (P3): Most appraisers that complete FHA assignments do not have home inspector competency.

      Final Conclusion (FC): Therefore, most appraisers that complete FHA appraisal assignments violate the competency rule of USPAP.

      A few comments before going further. P3 could also be written to a particular reader, as in apply it to yourself (e.g. “I complete FHA assignments and do not have home inspector competency”). This yeilds a similarly qualified and person specific FC (e.g. “I violate the competency rule of USPAP”). Also, you could write the argument to the conclusion like, “I (or most appraisers) should not complete FHA assignments”. In any event, the force of the argument is basically the same.

      Next, the argument is logically valid, which is to say that its conclusions follow from the premises. The question is whether the argument is sound. If it’s sound, then it’s both logically valid and its premises are true, and we should all accept it. So, are the premises true? P1 seems true enough, just conceptually. P3 also seems true enough, and I think appraisers can intuit this from their own experience and professional associations (e.g. I don’t have the competency of a home inspector, and neither do any of the appraisers I know). What about P2? The author basically asserts this premise with no support, and I think there are reasons (which you’ve already pointed out, Thomas) to reject this premise, and, therefore, reject the author’s argument. Here’s a very simply argument against P2.
      1.       Premise 4 (P4): If FHA required appraisers to have home inspector competency, then FHA would not disclaim that appraisal inspections are not home inspections, and would not urge borrowers to get home inspections (i.e. why would such inspections be needed if an appraiser certified everything a home inspector could?).
      2.       Presmise 5 (P5): FHA does disclaim that appraisal inspections are not home inspections, and does urge borrowers to get home inspections.
       
      3.       Conclusion (C): Therefore, FHA does not require appraisers to have home inspector competency.

      P4 is conceptually strong. P5 is just a fact about what FHA’s handbooks say. C follows in a straightforward and logically valid way from P4 and P5. Done.

      The upshot of all this is just to show, with a bit more rigor where exactly the author has gone wrong, and why nobody ought to be committed to the author’s argument. Of course, I don’t doubt that many appraisers will take his argument seriously, stop doing FHA assignments, and that will only benefit those of us left.

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  14. John Smithmyer says:

    The article makes no sense to me.

    It begins by stating the new FHA protocol will become effective 09/14/2015. The author mentions changing the word “should to must” will force appraisers to violate the competency rule if the appraiser accepts the assignment.

    Then the examples she uses quote the old superseded 4150.2 &4905.1 requirements???

    I thought the article was about the New FHA protocol (4000.1)

    Simply put, 4000.1 page 424 states:
    “iv. Inspection by a Qualified Individual or Entity
    If the Appraiser cannot determine that a Property meets FHA’s MPR or MPS, an inspection by a qualified individual or Entity is required.”

    Similar statements are made about 10 times in section II Origination Through Post Closing / Endorsement part B Appraiser and Property Requirements for Title II Forward and Reverse Mortgages

    FHA understands there are things in the new protocol that all appraisers do not have the expert knowledge to perform. And if that is the case, call for a qualified individual or entity to perform the inspection or analysis.

    How could this be a violation of the USPAP Competency Rule?

    Am I missing something??

    John Smithmyer
    AQB Certified USPAP Instructor

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  15. Even if 4000.1 says we can put a statement into the reports that says we are not competent to perform the scope of work & certify these things, we still have to tell our clients before each & every assignment we bid on that we are not competent to perform whatever part of the SOW it is. Did you do that before you accepted the assignment & put the statement into your reports or did you hide your lack of competency from the client & possibly only got the assignment because you did not disclose beforehand that you are not competent to complete the SOW?

    Either way this requirement poses some USPAP issues & should never have been asked of appraisers. It is simple, don’t ask the plumber to be your mechanic, don’t think the home builder will come by & mow your grass every week, don’t think the guy at McDonalds is going to sell you insurance & don’t think the appraiser is qualified to do anything other than appraise. We are smart, but are not experts in everything under the sun. The banks & AMCs need to quit pushing their costs, liabilities & risk onto the appraisers while expecting fees to keep going down.

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    • Koma says:

      I agree with your above statement. For me over the pass couple of years I have been moving towards local clients. One client sends the home inspection report over with the order for an appraisal. Also my local clients do not want it completed in UAD (they put it bold letters) or do they want the 1004MC. Love appraising, but I’m not putting up with the BS. With a shortage of appraisers in my state I get cold calls all the time and it’s only going to get worse. It’s my business and I set my own fees they can take it or leave it. Thanks for every ones input.

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  16. If we are required to do this or even to explain that we are not qualified to do this a fee similar to what home inspectors charge should be added to our appraisal fee.

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  17. you cannot accept assignment and then put disclaimers in reports that say I cannot be held accountable for anything about property condition because I am not an inspector etc. when clearly HUD wants you to “observe”  analyze and report”. Sure they are trying to get around the inspector issue with these words, but what happens when you MISS “observing” something as it relates to property condition or soundness, you are opening yourself up to liability! Appraisers should value property and inspectors should inspect. I totally agree with this blog that HUD should require inspections as well as appraisals. Quit making the appraiser the scape goat to save money on inspections.
    Not to mention there will be loads of inspections required by appraisers when in doubt to cover themselves when they cannot observe everything and HUD lenders will tire of so many request for inspections. They will just use another appraiser willing to compromise themselves for a higher fee. HUD says don’t call for inspections just to cover yourself liability wise. EASY FOR THEM TO SAY! They don’t have a license to worry about keeping!

    And to those saying hey more money for me when more appraisers reject FHA assignments consider this…. If HUD makes it clear that the appraiser is not an inspector and is not required to have such knowledge then why have they required appraisers go up in attics, go into crawl spaces, turn on all appliances, Hvac etc. this is NOT what appraisers do!! You cannot blindly say I am only an appraiser when what you do DURING an FHA Appraisal “looks” like an inspection. If it looks like an inspection… It is one in the courts eyes!

    So don’t get lulled into a false sense of security by using CYA language because trust me if you are in a court of law all of that CYA language will fall by the wayside and your livelihoods will be at stake.

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  18. Johnny Quinones says:

    Whoa! I don’t think the sky is falling. After reading this my knees are shaking like a leaf on a tree. Should I come or should I go now. If I appraise FHA there will be trouble. And if I don’t I’ll be in trouble.

    My point is to what Craig Masterson above made in a more eloquent and lengthy way. FHA defines a roster appraiser as one “who observes, analyzes, and reports the physical and economic characteristics of a Property and provides an OPINION OF VALUE to FHA. An Appraiser’s observation is limited to READILY OBSERVABLE conditions and is NOT as COMPREHENSIVE an inspection as one performed by a licensed home inspector.”

    At the core of the shift in wording from SHOULD to MUST, I believe is that we will be required to formally address each of these particulars in our reporting. In other words, our inspections and reporting are being made more thorough as to the particulars of mechanical equipment and structural condition We may have to check some more things than we have been but we need not go into the properties with amp or volt meters, testing equipment and electrocute ourselves, or crawl in full protective gear underneath a crawl space.  Where there is doubt about a condition of a furnace, roof, A/C, etc. then we as appraiser exercising CYA must condition the report.

    I think there is much ado painting unnecessary scenarios and hair splitting about the new manual. But hey, I could be wrong. I’m just a lowly appraiser without acronyms following my name.

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    • Koma says:

      Johnny, do not know if you took the current FHA class yet, but you do have to get into and observe the full attic, full basement, full crawl space. You do have to observe every item that conveys in the contract are functioning, i.e., refrigerator, dishwasher, stove, microwave, washer, dryer, hvac (weather permitting) and if included lawn mower, hot tub, pool systems, central vac, etc… They want you to check at least one outlet in each room   ( I have a receptacle tester ) and you also have to give an estimate on how much life is left on the roof. That’s why everyone is talking about this. Better suit up for those full attic and crawl space observations. 😉

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      • Mary Thompson says:

        Koma, I took the class and somehow missed having to estimate the remaining life on the roof shingles. I know they only have to have 2 years of life left from what I read. I also thought they removed the requirement to use testers into receptacles, just flip on some lights to make sure they turn on (of course utils have to be on into the home) Yes agree per FHA you DO have to get into entire attic (unless it is a scuttle, then head and shoulders) and you do have to “observe” the entire crawl space, unless there is not enough room to get in there. These among many other things they expect of us, open us up to huge liability and I for one am no longer doing FHA appraisals.

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      • johnny says:

        Hey Koma. Nope, I haven’t taken the FHA class but I’ve perused the new manual. You are correct in that the FHA says you must fully observe the attic, crawl space, etc. But there’s also a caveat if one can not for reasons of obstruction, etc. I still hold there’s, to quote song from yesteryear, a ball of confusion. There’s much over reaction to the new manual and what will be required from us from what I read in this page.That the appraisal process will be more involved going forward, there is no doubt.

        For instance here is verbatim, what the FHA says regarding crawl spaces.

        ” In cases where access through a scuttle is limited, and the Appraiser cannot fully enter the crawl space, the insertion of at least the head and shoulders of the Appraiser will suffice. If there is no access to the crawl space but there is evidence of a deficient condition (such as water-stained subflooring or smell of mold), the Appraiser must report this condition and the Mortgagee must have a qualified third party perform an inspection.”

        So you see, I won’t be donning a Chernobyl suit anytime soon and neither should you. They do expect us to check the appliances that convey as you mention. Observe their performance, they say.  I wonder if we’re expected to invade a house, sit there for 2 hours making small talk with the sellers, while the dishwashing and cloth washing machine go full cycle.

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        • Retired Appraiser Retired Appraiser says:

          Buy a drone with a camera and light and a remote controlled car with a camera and light for the crawl. You’ll have a video of it as well for the file. While you’re at it get your home inspector’s license and move into a worthwhile profession that actually pays WELL. Home inspection. FHA did you a favor by exposing you to the field of home inspection. It’s a $75 per hour job and you can still collect at the door. No kick backs…1/1000th of the liability and 1/50th of the overhead.

          HOME INSPECTION Guys!

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          • Technically drones are illegal to operate for commercial purposes. The FAA does not want you doing this, so certifying that you have broken the law in an appraisal may not be an appropriate work around.

            Just add a charge for a home inspection onto your appraisal fee & eventually they will decide it worth while to pay a home inspector to his job & not ask us to do it for them.

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        • Retired Appraiser Retired Appraiser says:

          Here is one of your two answers, it’s as cheap as $149

          Nobody ever said you had to go into the crawlspace.  You simply have to view the entire crawlspace.  A cheap drone will do the same in the attic.

          Hopefully this will solve 1 of the 1,000 problems that appraisers face today.

          Mobile Crawlspace Video Camera

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          • RA is that urea formaldehyde foam insulation on the one wall?

            Also, slightly too much lime was used in the concrete (white horizontal streaks that are not the spiders).

            Lastly; DON’T Go toward the white light RA!!!!

            I kind of liked it. Course if I could put a mini tank in the attic, Id already have met the head and shoulders requirement. Not sure a flying drone is feasible.

            Could blow the blown in insulation out of place; could short a wire out; and most importantly of all it could COST ME MONEY when I crash it up there and now am forced to go retrieve it.

            Maybe I’ll just buy a cheap step ladder and charge an extra $100 bucks for having to employ it.

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          • Retired Appraiser Retired Appraiser says:

            Mike

            Not sure what’s on the wall of the crawl space. I didn’t shoot the video; I simply found it on YouTube to confirm my suspicion that using a remote vehicle with a light and camera would save many of the older appraisers some frustration with regard to the HUD’s crazy ask crawl space rule.

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  19. sjp says:

    Not sure what I’m going to do yet but I think too many appraisers are confusing what FHA says in their book and what a court or state board will say.  If I’m stating that all appliances or mechanical systems have a reasonable future utility…1. how in the hell would I know that 2. what is a reasonable future utility?  It was working at the time of inspection, two weeks after closing the dishwasher floods the house or washer or AC breaks or there is a gas leak in the stove etc.etc.

    In the court of law they won’t give a #### what the FHA book says, they will say you signing this report certified that it had a reasonable future utility and a few weeks would not be considered that.

    Some of you who think this is no big deal and that people like me are just freaking out remember nobody has your back and its very expensive to defend yourself just from stupid claims from clueless homeowners pissed off at a low value. I would hate to be in this situation.

    Right now I’m likely to not accept any more FHA work for the rest of 2015 so I have time to see how things shake out and either start taking home inspection courses or find out of I can raise my fees high enough to hire a home inspector or require that a home inspection be provided.

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  20. Wayne says:

    Many of us have played this game for a while. We know our fellow appraisers, Mr. Tom, Mr.Dick and Mr. Harry. As far as these new FHA guidelines we know that Mr. Tom will never stoop so low as to be a part of this crap. He is a well known professional appraiser and is respected in all circles. He will not accept FHA assignments. Mr. Dick is one of the the good ol boys and still promotes a professional attitude. You can trust what he says and he is honest. He will not accept an FHA assignment. Now comes Mr. Harry… this dude is the Countrywide appraiser leftover and just exactly what FHA is looking for. He will certify anything and look at nothing. Mortgage brokers love him, AMCs love him…He is the man! This guy is our nightmare!

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    • Mary Thompson says:

      Amen Wayne, Appraisers who are doing their jobs will be calling for inspections, lenders will tire of this and no longer use you. I am one who will no longer be doing FHA appraisals. Another thing to consider is that I bet E &O carriers will jack your rates up big time if you do FHA appraisals. Just a guess, but I will not be surprised if part of the application asks if you do FHA.

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  21. It would be nice if our larger national appraiser organizations got to have some input when these lending institutions set their SOWs. Seems like it would be more in line with USPAP’s Scope of Work Rule that way since the appraisers (through a representative) would have at least some say in the SOW & we wouldn’t just be getting dictated to from on Mt. High by people who don’t really understand our expertise.

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    • Koma says:

      That would make sense, but these lending institutions don’t care about us! They only care about themselves and that money…money..money..money..MONEY!

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  22. Chris says:

    I wonder if the catch 22 could be resolved by putting a lengthy detailed statement of the competency for the required inspections. Perhaps something in the way of ‘The appraiser competency extends to an understanding of basic functions of plumbing, electrical and HVAC systems similar to the common consumer. The appraiser can not forecast the future economic life of mechanical systems, roofs, electric, plumbing etc however at time of inspection utilities were tested to determine if operational. ‘   Just curious if that could help with the legal issues? sounds to me based on the legal questions potentially asked by an attorney, if there was some sort of disclosure then the appraiser could rely on that statement? This would prevent any future liability? Any thoughts?

     

     

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    • I think this kind of disclaimer needs to be given to the client when they are asking for bids also.

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      • chris says:

        I agree Brandon, perhaps have them sign it? FHA is very vague on ‘have reasonable future utility, durability and economy…etc. Also, when we are crawling around in crawl space and attic, what are we to look for exactly? I feel another good thing would be to put in the form that states a home inspection is recommended

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  23. bubba jay bubba jay says:

    i am shocked to read so many comments about accepting a request to do an FHA appraisal even though you know you arent qualified to do the inspection as it is outlined by FHA, and are thinking that a few paragraphs of disclaimers in your report will cover you from all liability. am i reading this correctly?

    let me ask you all this – lets say i ask you to rebuild the motor in my car. assuming you know little about doing this, lets say you accept the job anyway. however, before you begin, you hand me a sheet a paper full of disclaimers that you think will limit you from all liability. really? some of you think even one disclosure statement will somehow protect you?

    let me tell you this, a 200 page book full of disclosure statements wont protect you.

    if you arent qualified to do the job, or you dont want to do the job as required by FHA, the only way to fully protect yourself, is to TURN THE JOB DOWN.

    if you didnt know how to rebuild the motor in my car, you shouldnt accept the job, and you should turn the job down, right? well, if you dont want to do what FHA requires, then you should turn the job down, or risk facing the consequences if you screw up. in a court of law, they will ask you why you accepted the job if you werent qualified to do the job. what are you going to say? what CAN you say?

    if you took your car to someone who wasnt qualified to rebuild your car motor, and the guy screwed your car up, do you think he would be free of all liability because he gave you some piece of paper that was full of disclaimers? (say NO here).

    THIS IS WHY only inspectors should be doing inspections. we are not inspectors. we are not thorough, we are not licensed, we are not covered by insurance to do inspections.

    if you are asked to do an FHA inspection, you either accept all the responsibility for your work or you dont. its that simple.

    the bleeding continues . . . . .

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    • chris says:

      I agree with you Bubba and this is all great in theory. Lets say you take your car to get fixed and 2 years later the engine blows up. Do you then feel the mechanic is responsible? The disclosure discussion is due to the competency level. FHA is stating must have reasonable future utility… what does that mean? 1 week, 1 month, 1 yr, 2 yrs, 5 yrs? Come on. I don’t have a crystal ball nor do any appraisers. The inspections have become more extensive and predicting the future is going to now be part of it. The guidelines are so vague that the appraiser can be sued at any time for any thing. I am throwing out a suggestion as to how to proceed to anyone planning to do FHA appraisals. The blog talks about the box we as appraisers are being put in. Suggestions and/or solutions would be helpful

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      • bubba jay bubba jay says:

        the statute of limitations is one year, so no need to sweat someone coming after you anytime after that. if you do a lot of FHA work, you had better bring a big towel, because you will be doing a lot more sweating real soon.

        let me tell you this, and this information is coming from me, a full-time home inspector from 1995 to 2000. there are a lot of people out there who have ridiculous expectations, (especially first time home buyers), and have more money than brains or common sense. some people try to supplement their incomes by suing people over stupid stuff, and those people buy/refinance houses. the more inspection work we/you get stuck doing, the more liability we/you expose yourself to, and it wont take long before we/you start running into those people with ridiculous expectations, and it wont take long for we/you to get completely wiped out financially doing appraisals for only a few hundred bucks if you get sued.

        if you can charge whatever you want for FHA work, fantastic and congrats to you. if your AMC’s arent letting you raise any of your fees like mine still are, then each of us will have to decide if we think its worth doing them any longer or not. and dont forget, this will more than likely only continue to get worse down the road.

        what a flipping mess.

        the bleeding continues . . . . .

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        • You may want to check on the statute of limitations in your state. We just got ours changed in NC to 5 years & before than it was infinite, like for murder. The statute of limitations is different in every state & for every profession. Be aware of the liability you are opening yourself up for & charge accordingly.

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          • bubba jay bubba jay says:

            i agree that every state probably has different rules when it comes to lawsuits. but i was referring to small claims type lawsuits that a homeowner would likely file against an appraiser, for a problem(s) they found later in the home, and for whatever reason, blamed the appraiser for it.

            you are correct – there are crimes like murder and some types of fraud for instance that do not have a statute of limitations. if an appraiser would happen to murder a homeowner, (havent we all wanted to do that atleast once in our careers?), i am thinking that a leaky dishwasher would be the least of his/her problems at that point. and although murdering a homeowner would not violate USCRAP, i would consider it bad business practice, and i would not recommended it.  🙂

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          • Koma says:

            Thanks Bubba! That is what I have been trying to say (not the murdering part..lol) all along. Stop putting all this crap on us the appraisers. Get a Home Inspection done dummy!

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          • I’m not saying appraisers are solely liable for murder or similar crimes forever, but for ANY LIABILITY STEMMING FROM THEIR APPRAISAL REPORT, even small claims type lawsuits that a homeowner would likely file against an appraiser.

            Check with your state because one year sounds very optimistic. We recently fought to get this reduced to 5 years in NC, but that is still a long time & many houses have had enough time to go through the selling process in 5 years. That would be a prime time to uncover durability issues the appraiser certified were fine when the house was purchased years ago & give the homeowner a great opportunity to file a lawsuit, especially if their house is not selling as fast or for as much as they imagined.

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          • State statues are not the ones we have worry about one GSE/FDIC claims. It is the Feds-though they work in  hand in hand with state. Get hammered by one, you get hared by both. Feds have gone as far back as ten years according to some sources I have spoken with (like the national AMC forensic examiners they hire).

            I think three years should be the limit for all. Anyone pays for three years and the loan goes bad it is NOT because of an appraisal.

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    • mary thompson says:

      Totally Agree Bubba Jay….So many are trying to figure ways around this and they know they can charge more due to the extra work. But no amount of money will MAKE you competent to complete these reports unless you go back to school and become an inspector. If it looks like, smells like or sounds like an inspection….it is one! HUD is just trying to save money not requiring an inspection and knowing that there will still be plenty who will accept the extra money and violate USPAP right out of the gate. NO Thank you! Everyone needs to just say NO and they will get the hint….DO NOT require Appraisers to be anything other than Appraisers.

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      • bubba jay bubba jay says:

        i dont see where the savings is Mary. i dont know where you are from, but around here a home inspection is pretty much mandatory because realtors know that it helps protect them from almost all liability. “you found a problem with the house sir? call your inspector, i am just a realtor.”

        but my point is – there are no added costs to anyone if an inspection report already exists. if FHA wants to know about the condition of the property, then they need to get a copy of the inspection report from the inspector.

        make a home inspection mandatory on all FHA loans, and get the home inspectors FHA qualified to do FHA inspections. it only makes sense.

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  24. Mary says:

    Agree make inspections mandatory. In Georgia most but not all get inspections.  IF THEY require inspections that means more costs to buyer and they may not do the loan. Stupid I know. But makes you wonder why would HUD not want that inspection to protect their risk. Instead they want to place the burden on the appraiser and blame them if things go wrong! 

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  25. Wow! Extremely well presented Joanna. Kudos!

    And after decades on the FHA roster I used to think I knew what the hell I was doing. Back in the early 1970’s FHA used to have Value Condition Codes (VC). These were all eliminated back in the 90’s I think. So NOW they are coming back but without the ability to do like the old appraisers did?

    SUBJECT TO; Roofing, termite, plumbing, heating and electrical inspection by state licensed contractors showing all systems operable; roof with a remaining expected life of not less than five years, etc.

    I’m now 64 years of age and after far too many decades of repetitive diving I’m not as flexible as I once was. I also weight 225 lbs, have already had one heart attack ten years ago; and if anyone thinks I am crawling under houses at this stage of my career they can kiss my ever increasing, fat arse!

    I think I have just discovered the brass ring for retirement. An ADA / Age discrimination claim based on FHA’s current property appraisal inspection requirements.

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  26. George Hatch says:

    There’s nothing new about this problem.  The Fannie forms have a couple of questions about conditions that extend beyond the realm of appraising and appraiser competency and which are worded in unqualified terms and require a yes or no response.

    Technically, these *could* all be qualified as unreasonable assignment conditions.  But in real life both appraisers and users make their decisions on the more practical basis rather than in terms of idealogical purity.

    He who has the gold makes the rules.  So appraisers backfill their responses with their own explanations and clarifications, and they trust their users not to take the hardwired verbiage too literally.

     

    This is what happens when appraisal policies are written by non-appraisers and incompetent appraisers.

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    • Ben V says:

      Hi George,

      If only that were true. There was a case in my state where FHA suspended an appraiser for 6 months and sent the appraisal to the state board. The state board found no USPAP violations and exonerated the appraiser. FHA’s response? Appraiser was still guilty and suspension was reduced to 3 months.

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  27. Ben V says:

    Read Page 485. All CONVEYED appliances MUST be operational. Read a definition of operational. So hang around and test the garbage disposal. See if the dishwasher washes and dries properly. Does the micro pop pop corn? Range/oven heat to 400 degrees? Best one… sump pump must be operational, so carry some water with you or a bucket to gather some at the site. Or maybe carry some dirty laundry with you to test that the washer and dryer are operational, if they are conveyed.

    Me, I’m not doing them. It’s not worth the risk of losing conventional appraisal business when you’re sanctioned by FHA. And you have no recourse to explain your actions to FHA until you’re sanctioned. Then, it’s too late.

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  28. Ben V says:

    How long until states become wise to the above insanity? Oh, BTW, I forgot to include alarm systems, central vacs, lawn irrigation systems, conveyed/wall attached TV’s,etc.

    What does an FHA 203K consultant do that’s different than an FHA appraiser? Both must certify that the dwelling meets FHA MPR and MPS and offer a solution/proposal to bring the property up to MPR AND MPS.

    Take quick look at the link. The FHA 203K consultant was determined to be acting as an unlicensed home inspector and fined, even though he stated he wasn’t acting as one.

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    • mary thompson says:

      AMEN Ben to your prior 2 posts. What will happen is only the GOOD, law abiding, USPAP abiding Appraisers will no longer accept FHA appraisals and they will be left with those who think they are in high cotton charging much more for FHA reports and then they find themselves in hot legal water or they will lose their ability to complete FHA appraisals since HUD will eventually sanction them. Then if they lose FHA they could lose all their other Conventional work as you stated.

      HUD is shooting themselves in the foot and maybe soon they will realize what a mess they have on their hands. For me I stopped accepting FHA orders last month. NO WAY I am qualified to do all that they require and NO way can they pay me enough to take on that kind of liability and hazards of the job,

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  29. Ben V says:

    The “logic” behind this is that if the FHA loan is going to fail, it will fail in the first two years due to unexpected repairs required on the dwelling which the borrowers can’t afford. So in addition to being an appraiser, you must protect the mortgage insurance fund from losses. There is a simple solution to the problem if FHA is truly interested in protecting the insurance fund and not hanging appraisers out to dry and still incurring losses to the insurance fund…

    Require that a state licensed home inspector that is also an FHA 203k consultant submit a work proposal to bring the home up to MPR/MPS. The appraiser then values the property based on the work proposal and conditions the report on the completion of the work proposal. There you go, all USPAP and FHA compliant..with the proper people doing their job descriptions. FHA appraisal fees would probably go down as less work would be required. By the time one considers what appraisers are going to charge under 4000.1, the 203K consultant’s fee and the reduced FHA appraisal fee would probably be the same and you’d have the proper people doing their respective job descriptions.

    Too simple. Never happen. LOL

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    • mary thompson says:

      Ben of course that is absolutely what should happen but I agree, Too simple, they cannot do simple math, this makes way too much sense so it will never happen. I plan to tell all Realtors that I work with to make sure an inspection is done ahead of time on homes that have any chance of going FHA and get the work done and then list the home and provide Appraisal to the Appraiser who should defer to the attached appraisal report. But I much PREFER your suggestion! Because that way EVERY home going FHA will have the required inspections and everyone will be doing what they are trained to do!

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  30. John Smithmyer says:

    Ben,

    I agree that all this is a mess but just what exactly is the USPAP violation you refer to?

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    • Mary says:

      The competency rule. If you accept an FHA assignment without having the required competency to do the job and you do not advise your client accordingly and you do not gain the competency you need to do the job, you have just violated USPAP.  most appraisers do not have the competency to complete the report as will be required by HUD in Handbook 4000.1

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    • Ben V says:

      Pick one. When you receive the assignment via the FHA Case number, FHA appraisal guidelines/scope of work become assignment conditions. Screw-up with the assignment conditions and you violate USPAP.

      I could write USPAP for residential appraisers in one or two paragraphs that would eliminate all of the nonsense and put the responsibility back where it belongs.

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      • Ben, seriously-the suggested rewrite should be posted for an objective (hopefully VERY fair) peer review here. Perhaps all won’t agree, but you may well jog someone else into similar thinking with an end goal of achieving exactly what you suggest.

        I used to like USPAP, but it is now used more as a club by regulators, rather than “minimum standards and guidelines.” Even the AI apparently thinks USPAP now sucks as written since they want to replace it in so many instances.

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  31. mary thompson says:

    The competency rule! If you accept assignment without having the required competency to do the job or get the competency you need and do not advise client accordingly you violate USPAP. MOST appraisers do not currently have the competency to complete assignment as required by 4000.1 handbook.

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  32. John Smithmyer says:

    Mary,

    This has been discussed for weeks on the USPAP Forum in LinkedIn.

    Simply put, 4000.1 page 424 states: “iv. Inspection by a Qualified Individual or Entity – If the Appraiser cannot determine that a Property meets FHA’s MPR or MPS, an inspection by a qualified individual or Entity is required.”

    Similar statements are made about 10 times in section II Origination Through Post Closing / Endorsement part B Appraiser and Property Requirements for Title II Forward and Reverse Mortgages

    FHA understands there are things in the new protocol that all appraisers do not have the expert knowledge to perform. And if that is the case, call for a qualified individual or entity to perform the inspection or analysis.

    How could this be a violation of the USPAP Competency Rule?

    You are competent to do everything the FHA Scope of Work requires you to do.

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    • mary thompson says:

      I am happy that you think All Appraisers are competent to do everything that FHA is requiring of you…They are not….They may think they are…..but they are not. If you MISS any observation that should be made. You are in trouble and appraisers will MISS these things.  So what will happen is Appraisers will charge high fees and turn around and require inspections at almost every turn in order to protect themselves from future liability and from being sanctioned by HUD. HUD needs to get smart and leave Appraisers to Valuation and Inspectors to inspections.

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    • Ben V says:

      No you are not.

      If you are not competent/qualified to install or repair a component, then you are not competent to state that it is operational: adjective 1. able to function or be used.

      And one of the biggest reasons that USPAP is useless for the residential appraiser..

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  33. mary thompson says:

    As a follow up….If the appraiser does not think they are competent or is unsure about a component in the home they call for inspection…Well trust me there will be so many inspections called for by appraisers HUD will get the hint….I hope and require them before the Appraiser goes out there.  OR They will just no longer use that Appraiser. Even HUD Says….Don’t call for inspections to cover your You know what….Easy for them to say! If Appraiser accepts the assignment and then presents a report stating the home meets 4000.1 handbook guidelines they better be an inspector because trust me they will likely miss something in the Observe, Analyze and Report functions and once they put their John Hancock on the report stating all is good when they really  did not have the competency to state that as a fact, they will violate USPAP and they will open themselves up for liability issues and HUD sanctions.

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  34. John Smithmyer says:

    Mary,

    You are correct my friend IF the appraiser states that the property meets MPS and they do not have the competency to know – then they have violated USPAP.

    But accepting the assignment is not a USPAP violation.

    In addition, if we call for the inspections we should be calling for we will never get an order from that lender again.

    John Smithmyer
    AQB Certified USPAP Instructor
    Georgia Appraiser School

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  35. John Smithmyer says:

    Ben,

    You stated “If you are not competent/qualified to install or repair a component, then you are not competent to state that it is operational: adjective 1. able to function or be used.”

    I am not competent to repair my car but this morning when I drove it I am fairly sure it was operational.

    I cannot install or repair my built in oven but I just finished making a wonderful prime rib and I am fairly sure the oven was operational.

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    • Ben V says:

      Yep. Try that in court or in front of a state board. You are not a qualified expert.

      The issue is USPAP. Plain and simple..

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    • Ben V says:

      You stated it clearly John. Taking a prime rib with you to test the oven on an FHA appraisal maybe a good idea. Especially if you are asked how you determined that the oven was operational. Have dinner there, then use the dirty dishes to test the dishwasher. Use the scraps to test the garbage disposal and the microwave to heat up the leftovers. See, FHA is requiring appraisers to tread where they should never go. It’s absurdity.

      Seriously, is anybody going to do this and be responsible for it?

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  36. John Smithmyer says:

    If you are not qualified then as the FHA Protocol states “call for an inspection by a qualified individual or entity”.

    Ben, I can assure you there is no USPAP Violation for accepting an FHA assignment.  You my wish to contact:

    John S. Brenan
    Director of Appraisal Issues
    Senior staff contact regarding the work of the Appraisal Standards Board (ASB), Appraiser Qualifications Board (AQB), and Appraisal Practices Board (APB).
    E-mail: john@appraisalfoundation.org

    John Smithmyer
    AQB Certified USPAP Instructor

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    • Ben V says:

      I never said there was a USPAP violation for accepting an FHA assignment. I stated that if you screw up the FHA assignment condition of USPAP that you have violated USPAP.

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  37. John Smithmyer says:

    Ben,

    I agree the FHA protocol is overboard.  I will not perform FHA assignments as I am not entering a crawl space or attic.  I agree with you in principle.  I just disagree with some of the points you have made.

    For example, you just stated: ” if you screw up the FHA assignment condition of USPAP that you have violated USPAP”.

    I was not aware that there was a “FHA assignment condition of USPAP”.   What do you mean?

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    • Ben V says:

      There are many assignment conditions of USPAP. FHA, VA, USDA, FANNIE, FREDDIE and Interagency guidelines are all assignment conditions. Formerly they were supplemental guidelines. All are covered under intended use, intended user and scope of work.

      But most notably under scope of work. And since they are published in the Code of Federal Regulations, they are assignment conditions.

      EDIT. I tried to paste from USPAP but it didn’t work. You’ll have to read the top of Page U14 to see the info on assignment conditions.

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      • Ben V says:

        Let me give you an extreme example of an assignment condition… which makes no sense to me but there is that word MUST in the guidelines of Fannie Mae just like MUST in FHA guidelines.

        You are appraising a new home in a new subdivision. You have several new home comparables and whoopee, there are 5 resales of the same model home in the same development. Slam dunk, huh. You read Fannie guidelines for new construction that state resales are preferable to outside sales. You conform to the Fannie Cert in the URAR by analyzing the most similar and most proximate comparables. So you analyze one new home and the five resales of the same model. You’ve done your job and move on. Have you met the assignment conditions? No. Even though resales are preferable, you MUST still analyze an outside sale no matter how far away or the loan is subject to repurchase by the lender who will not be happy with you for not knowing the assignment conditions.

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  38. Koma says:

    I appreciate all the discussion, but you all know what’s going to happen. NOTHING! The orders will come in and they will be accepted (not by me) and life in the appraisal industry will go on. FHA is the 800lb gorilla in the room and we’re just the bananas in this equation. Actually we are just the peels on the floor..lol Retirement can’t come soon enough. This will all be done by computers within 5 years anyway…jking

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    • Ben V says:

      This is true. The decision to be made is how valuable your license is to you and how much FHA business you do. I do much more conventional business than FHA so it’s a no brainer. I’m not risking my license for FHA so I’m not doing them anymore. If an appraiser does a lot of FHA business, then you “run with the devil” until game over.

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      • mary thompson says:

        Absolutely Ben that is exactly what will happen. I too am very thankful that I do little FHA and a great deal of personal Appraisal Business as I realized a few years ago this is just going to get worse and worse with Lenders, FHA or Conventional. Those who have to “run with the devil” should start right now working on a different business model as they could be out of business 100% not just FHA business.

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  39. 1. Advising realtors(r) and agents to get “home inspections” is dangerous. When I sold houses, most agents selected the inspection “experts” most likely to give them a clean bill of health and LEAST likely to require repairs. They were selling limited components home insurance policies-nothing more. You recommend and insurer that does not cover a claim and YOU become the next one in the list of people sued.
    2. The ONLY home inspection I ever recommend is ASHI. I know they have high standards; and a two day test for certification that includes both a written portion AND an actual home inspection under the critical eye of a highly qualified home inspector. They cost a little more, and as far as I know, you do NOT get a home appliance insurance policy with them.

    But (in my experience) they’ll tell you what’s wrong with the house.

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  40. mary thompson says:

    Mike Ford, Totally agree with you and I am not talking about Home Owner Warranty/Insurance programs. I would recommend they DO get Inspectors who are ASHI certified. Then The Appraiser should attach copy of that report and Defer to it as the one qualified to determine if there are any issues with the home. Make a statement as we always do that we are NOT the inspectors in this equation and due to this a Certified Inspection report is attached and let the underwriter decide what they will and will not let fly. We can report all that we “Observe in addition or alongside this report, but this way the Appraisers are not liable for MISSING anything. The Realtor will be the one choosing and if there is an issue, yes possibly the Realtor will be in trouble but the Appraiser is out of that loop.

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    • Ben V says:

      Not going to fly as the home inspector will not certify that the home meets MPR/MPS. You need a FHA 203k consultant that is also a licensed home inspector.

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  41. Koma says:

    All this talk about home inspections is good, but it calls for more money being spent and it ain’t gonna happen. I’m just gonna sit back and watch it all happen. Good luck with those FHA jobs. Enjoy the intake of cash because the output of cash (protecting your work) will be coming not too long after.

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  42. mary thompson says:

    Koma. AGREE! The cost is precisely the reason HUD does not want to require them. They want the appraiser to be the inspector, Appraiser and the fall guy. If sellers do not want major headaches come FHA lending time from their buyer, they better get on board with spending the money up front and get an inspection and Correct any issues OR reject FHA offers. Of course that would be very hard to do as a seller, so they need to think proactively and get the inspection.

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  43. Ben V says:

    My parting reply on this post is that the author of the post is correct.

    There should never be a scenario of FHA versus USPAP.

    Here’s the deal. And it’s a very simple problem to solve. There should never be an instance where a RESIDENTIAL appraiser in a lending scenario needs to read and comply with two instruction books.

    FHA, VA, FANNIE, FREDDIE, USDA, etc have been created by Congress for the benefit of the American people. No one seems to get it-they are AUTHORIZED by Congress. All have the authority to set their own regulations, hold ‘court’ and enforce those regulations, AKA boot you from their approved lists.

    If you follow their RESPECTIVE appraisal guidelines, you shouldn’t have to worry about a second instruction book’s issues, which by the way,  makes their guidelines assignment conditions of USPAP. It’s redundant and quite frankly absurd.

    Bye USPAP. No man can properly serve two masters.

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  44. Ben V says:

    BTW, anybody bother to read the Zoning part of 4000.1?

    FHA hasn’t a clue there either. I can tell you as a former member and chairman of a zoning board that, I, as a member or the chairman could not opine if a property could be rebuilt, if destroyed, but FHA wants the appraiser to do so? The appraiser has no zoning board authority. Only the entire board has that authority. Then again, there’s always the issue that no one seems to understand USE in zoning.

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  45. Retired Appraiser Retired Appraiser says:

    Why do you guys worry yourselves sick over this sorry ask profession? You can make money from washing cars than you can by staying involved in this low paying, risk infested, ever changing over regulated, excuse of a job.

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    • Almost retired says:

      Cause we’re all working toward retirement like you. LOL. Forget washing cars. The job every appraiser should aspire for is the new business creation exec at an AMC. My kid worked at an AMC. The new business exec got to fly around the country, schmooze potential clients and if he brought them in, $35 of every appraisal ordered went to him. Big $$$. No liability.

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      • Retired Appraiser Retired Appraiser says:

        I didn’t retire from appraising…I ran like L at age 48.  I cannot imagine trying to stick it out to retire in this business.  Anything and everything pays better with 1/1,000,000th of the liability of appraising.

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    • bubba jay bubba jay says:

      with that, i probably should say thank you RA. your comments in the past made me wonder if there really WAS something better out there or not. combine that with the endless insane time-wasting revisions, frozen pay, increasing costs, increasing liability, etc, etc, etc, and finally, all the stress making me get short with my wife and kids on occasion, well, that was the final straw.

      i took your advice RA and started passing out resumes, and all i can say is wow, were you right. there are a lot of very good opportunities out there that pay the same or usually better, have benefits, i get weekends to myself and family again, AND, the POTENTIAL FOR ADVANCEMENT BASED ON MY PERFORMANCE. you know, just like appraising used to be 15-20 years ago. remember?

      well, as of sept 30, i will be joing the other 50k+ appraisers who also told everyone to stick this nightmare where the sun doesnt shine. i have accepted one of the three very nice opportunities i was offered, and i will not be renewing my license in the next few weeks.

      as an appraiser in my mid 50’s, let me say to all the other aging appraisers out there that age is a fools excuse. most younger applicants these days lack talent, experience and ambition. there are more unlocked doors out there than you think, and they are easily opened to the intelligent, ambitious and hard working people that we all are. i urge you all to treat yourself and your sanity to an unlocked door today before things get any worse, because you KNOW DARN WELL that they will.

      my bleeding is almost over . . . . .

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      • Retired Appraiser Retired Appraiser says:

        I knew that you were disgusted with the business but I had no idea that you would actually leave so quickly.  Another STANDING OVATION FOR BUBBA JAY!!!

        Reading your comment tonight made my day.  For six long years I’ve screamed to appraisers boycott AMCs or get out of the business to save yourselves from bankruptcy and (or) insanity.  You’re the first one that I’ve heard from in 76 months had the balls to take a leap of faith and follow through.  It’s not easy by any means (I paid dearly for the decision) but in the long run you’ll be happy that you left.   You may even want to burn your bridges like I did…so you won’t be tempted to retreat.  People have a knack for succeeding when they can’t go back to something to something that was familiar but a money losing proposition.

        STANDING OVATION for Bubba Jay Folks!!!  Our HERO of the month.

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        • bubba jay / Retired Appraiser II bubba jay / Retired Appraiser II says:

          (blushing)

          thank again RA. for the record, let me say that i love appraising. i enjoyed the challenge, i enjoyed meeting the people on the road, and it sure as L beats sitting behind a desk all day long. your comment made my weekend. thank you.

          but looking at my numbers, i see my yearly volume constantly going down because it takes so long to do an appraisal nowadays. i see my expenses going up every year. i see my pay frozen at the same rate it was about ten years ago by greedy AMC’s/banks. i also see half my business drying up real soon as interest rates trickle up and my refinance business starts slowing way down. it doesnt take a rocket scientist to see that this is not a sustainable path for business success. i encourage all appraisers to look closely at their numbers too before its too late.

          for the record, i have turned down an insane amount of business this year! but i refuse to work 20 hours a day, seven days a week, mostly in an effort to try and catch up my shrinking business income. it doesnt take a rocket scientist to see that this is not a sustainable path for sanity/family/health success.

          i applaud those who diversified like mary, and do little AMC work. i didnt mind doing AMC work at first. NAS was my first AMC, and they were a dream to work for. but as time went by, the AMC concept became a twisted abortion, and instead of them working for us as designed, we all ended up working for them.

          seventeen years of appraising is a hard habit to break, and i am as nervous as hell, but i have my families support, and the support of a great company. i am still a 1099’er, and i love that my pay will be 100% based on my performance, because that means my income possibilities are endless again. knowing my drive and ambition as well as i do, i know things will be just fine.

          let me also say that the appraisal world is much worse than any of you know. what you see in forums and read in articles only scratches the surface of all the BS that is going on right now. me not wanting to end up in the Chicago Bears end-zone lying next to Jimmy Hoffa, is the reason i cant give out any more information other than that, but i assure you all, things are VERY BAD.

          anyway, it sure feels good to sleep soundly like a newborn baby again. its been a very long time.

          my bleeding is almost over . . . . .

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  46. Lively and informative discussion all. Thank you

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  47. mary thompson says:

    Congrats to those who found another way to make a good living without all the undue Stress. My plan has been to reduce the amount of lender clients year over year and soon I plan to do nothing but personal appraisal work. Pre-Listing, Pre-Sales, Estate work, Tax Appeal work, etc. As of this year I am about 65-70% average on personal work and loving it. I actually like Appraising, but NOT in today’s lender climate where they question your work every step of the way regardless of the number of years experience you have or the annual continuing education you take. You are lumped in with everyone and the consensus is Appraisers are the low of the low. HOWEVER if you do personal work and create a great reputation with local Realtors and Homeowners, they actually RESPECT your work….WOW what a concept….RESPECT!!! Good luck to all who take that leap and retire from this business. I wish you nothing but great things moving forward.

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  48. Bubba Jay, sorry to see you or any of the old timers go before you had originally planned to ‘way back when we were all new’. But you are right, we ALL have to look to our families best interests. Just a suggestion, why not keep the license active for two years “just in case”?

    Mike Alderman, What you say is true. R.E. IS changing…as it always has. In 1971 I heard a story about old timers writing up offers on napkins on the hood of their cars…so with one of my more loyal clients I did the same thing. Offer made and accepted on a napkin (and cleaned up REAL fast by escrow instructions). Those were the wild and wooly days.

    I got out in ’74 and went into Credit Union work til ’80-’81. Started a diving company in ’83, and then back to sales in ’84 when the Easton Act (disclosure panic) was the big deal in California. By ’86 I remembered why I got out in the first place and became an appraiser. I was an MAI Candidate back then (until licensing); training under an old time MAI; and an SRPA; doing a LOT of work for Resolution Trust after the S&L Bailout.

    Fast Forward to Present- Through ALL the changes in the market the one constant is that the market itself actually WORKS! It gets manipulated, twisted, bent and subverted, but the actual R.E. Market WORKS. Not perfectly (even in open, true honest deals) because the participants are imperfect and have so many different motivations and requirements. But it works well enough to estimate the impact of most of those diverse motivations. Some measures can be proven, and some are derived from that first super computer that all of us ever used; our minds. Early on I was told to listen and pay as much attention to that computer as all the other ‘hard data’. It is NO LESS VALID just because it cannot be quantified mathematically. Even IRS refers to what they call “a smell test” before they decide to open up an audit case on tax returns. PURELY subjective! YOUR computer has already done all the calculations and distilled it down to a few answers.

    We always knew our job was a varied blend of art and science, but those who currently use our services have been conned by software writers and hucksters into thinking it is ONLY a science. That THEY are the only ones with the solution to let non appraisers THINK they can determine values! Merely numbers to be crunched. When THOSE numbers don’t work, then keep searching until you find numbers that ‘appear’ to . The process is more important than the validity of the result.

    Take music. It can be boiled down to almost pure math and pure science. A series of notes, pauses and timing. Take the purest music ever written, and the most technically ‘correct’ non musician playing it and compare him or her to a musical artist; a true musician. The result of one is science and sterile, the product of the other is art that stirs the soul. One teaches small children in a poor school district; the other plays in Carnegie Hall.

    We need to be allowed to go back to practicing our art; coupled with softly applied but meaningful oversight to keep us honest. Professional peer groups used to do that. Now we require State and Federal Agencies to do it. Agencies & GSEs that only see the math and science.

    Like FNMA who ADMITS their historic guidelines have skewed appraisal adjustments away from market perceptions for decades! In fact they have discontinued those fallacious guidelines completely. Well, ALMOST completely. The CU database that they use to tell appraisers that THEIR adjustments are “outside the model” is of course based on those very same ‘guideline’ adjustments that FNMA now admits were worthless.

    Now if “that don’t make ya sit up, scratch yore haid; and say hmmmmm” nothing will!

    I personally think we can direct a return to sanity. It just takes some real effort and cooperation among appraisers, and eventually those we deal with. Later this week I’ll post a draft proposal for a fair national (minimum) REASONABLE fee for our primary products. I’m not focusing on ambiguous “customary” anymore since that metric has been so perverted. Its based on the lower end costs and benefits of one of the higher cost of living areas; but for those so inclined you can recalculate it to your own local multipliers from the data and links it contains. IF we agree it makes sense, then ultimately we will have to stand WITH AMCS to get THEM the amounts from the banks that allows for us to be paid the amounts proposed! Right now, the banks and lenders associations engage in Sherman Anti Trust price fixing (in my opinion).

    My intent IF we can get enough general consensus here, is to submit it to the AGA for review and for further submission to each of the State Coalitions, and Known Appraiser Peer Groups. My belief is we need to go for it nationally rather than piecemeal, state by state though we certainly need all coalitions support to do that.

    YOU folks will find the flaws in it, I’m sure. Those that can be fixed will be corrected, but most importantly we CANNOT AFFORD to take another year to get started on this! Please address it fairly and openly, but without quibbling over minor flaws. We COULD get this in the works in months rather than years. Thank you.

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  49. Almost retired, Id BET that $35 per appraisal came from the appraisers fee and not the AMCs. Also wonder how that squares with appraisers not paying any undisclosed fees in connection with getting work? Since the HUD 1  (& he new TURD) ONLY show it all as a single appraisal cost.

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